Financial Fixed Odds Trading Guide
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Financial Fixed Odds

Financial Fixed Odds


Welcome to the CleanFinancial.com guide to Financial Fixed-Odds

Quick and simple answers to the most common Financial Fixed-Odds questions:

Where Can I Trade Financial Fixed-Odds?


Financial fixed-odds betting offers an excellent way to trade markets with small limited stakes yet with big potential gains.

You can currently trade Financial Fixed-Odds at:

Live Trading Chart


The following chart should give users a good guide to UK stock market.

If you prefer the candlestick format, click on the candlestick icon Candlestick Charts Icon above.

The above CFD chart from Plus 500 is typically based on near-term futures.

Looking for another market eg gold, oil, EUR/USD, Dow Jones (USA 30) etc. just use the search bar above.

All BetOnMarkets account holders can access charts via the BetOnMarkets website where you can also add a range of indictors, from Simple Moving Averages to a Relative Strength Indicator (RSI) and from Bollinger Bands to Fibonacci Fans.


Example fixed odds chart

Free Financial Charts


About Financial Fixed Odds Markets


Financial fixed odds trading on the financial markets allows you to speculate on a wide variety of markets, with the knowledge of how much you could win or lose from the outset. It's called ‘fixed odds’ betting because your returns are fixed at the point that you place the trade.

Like betting on sports, you make a calculated prediction on a future event and you are offered odds based on the betting firm's prediction of how likely this event is to happen.

These odds are expressed in an amount of money the bet will cost you to buy in relation to the amount of money you want to win. You will see the total amount of money you will win, the price of the bet, the net profit should your bet win and the percentage return. Note that if you lose your trade you lose 100% of your stake.

Financial Fixed Odds Trading Example


Market: UK Index (FTSE 100)
Trade:UK Index to Closer Higher than 5800 in 7 Days
Price for the Trade / Stake:£16.55
Return/Payment (if you are right):£50.00

Potential Loss:

£16.55
Potential Profit:£33.45

Potential Loss (as a percentage):

100%
Potential Profit (as a percentage):202%


If something is very unlikely to happen you could be offered returns as over 1000%, which means you would be risking £20 to win £200. High risk traders seek to correctly predict unlikely events for large returns, whereas more conservative traders look to build their nest egg slowly but with a higher number of low risk trades.


Video Guide to Financial Fixed-Odds Markets


A video looking at the main trades used in financial fixed-odds, i.e. Rise/Fall, Higher/Lower, Touch/No Touch and In/Out.

The video explains what these trades are and how you can select them.



Financial Fixed Odds Trading - Four Important Variables:


  • The Type of Trade: There are many bizarre bet types you can try but the bread and butter of most traders will be:

    • A ‘Touch/No Touch’ or ‘Stays In/Out’ trade. This means you are expecting the market to either ‘touch’ or ‘not touch’ a certain barrier some time during the duration of the trade, eg the FTSE will not touch 5900,

    • A ‘Higher/Lower’, ‘Rise/Fall’ or ‘Ends In/Out’ trade. It doesn’t matter where it touches, it just matters where it closes, eg whether or not the FTSE 100 will close above or below the level it was at the beginning of the year.

  • The Barrier(s): This refers to the exact level you think the market will ‘touch’, ‘avoid’, or ‘close’ higher/lower than. Some financial fixed odds bets can have two barriers such as an ‘In/Out’. This basically means that you are predicting the market will stay between or go outside two set points.

  • The Time Limit of the Trade: This refers to the time you are going to bet on for the market to hit/avoid the level you predicted. Your trade might be over a few hours or over a few months.

  • The Price Offered: This is the final and, in some ways, the most important part of fixed odds trading. If something is likely to happen, the fixed odds firm will offer you returns as low as 5%. This means you would be risking £20 to win £1.

What are the Main Fixed-Odds Trades / How do they work?


There is a wide variety of bets available eg:
  1. Flash Trades (short-term)

    These are made available for short periods of time, eg a few minutes. They will pay out if the market rises (up bet) or falls (down bet) over that period of time.

    Good for:

    • Letting traders take advantage of very short-term trends
    • Bets on US markets such as the Dow Jones, S&P500 and NASDAQ, especially around market moving news events such as the FOMC interest rate announcements


  2. Intra-day Doubles / Trend Multipliers

    Traders who can spot stronger and more persistent trends can capitalize by using these bets to back a rise or fall in successive 15-minute to one-hour periods.

    Bet duration: 30 seconds to 4 minutes

  3. Bull / Bear

    These fixed-odds trades pay out if the market is either above or below a certain specified level at the end of the bet.

    Bet duration: hours, days, months.

    Good for: Taking a directional view of the market or hedging.

  4. Expiry Range / Expiry Miss

    Chartists use these to make money when the market either finishes between a high (resistance) and a low (support) barrier or outside this range respectively.

  5. One Touch / No Touch

    A One Touch trade pays out if the market hits the specified level within the chosen time frame.

    A No Touch trade is the exact opposite.

    These can be used in a number of ways, including backing a breakout from support or resistance.

  6. Barrier Range Trade / No Touch Range

    These can be used to make money from range-bound markets by stipulating that the price will not hit either the specified higher or lower level during the life of the trade.

  7. The Up or Down Trade

    This is a pure volatility trade. It pays out if the market touches either the higher or the lower level within the lifetime of the trade. Some traders use it with wide boundaries ahead of an important economic announcement in anticipation of an extreme move in either direction.

What Financial Fixed-Odds Markets can I Trade?


There are a whole range of things that you can trade. For example you can speculate on:
  • Whether the Lloyds Group share price will hit 90p within the next month
  • If the Euro/Sterling rate will hit parity this year
  • What Gold will do over the next 10 minutes
These days the financial fixed-odds operators offer a good range of bets and you should expect to see:
  • Indices: FTSE 100 (UK 100), DAX 40 (German Index), S&P 500 (US SP 500 Index), Dow Jones (Wall Street Index) etc
  • Forex: Euro / British Pound, Euro / US Dollar, British Pound / Japanese Yen, British Pound / US Dollar etc
  • Commodities: Gold and Crude Oil
  • Shares: A selection of UK and US equities
Also see - financial fixed-odds markets.

What is the Difference Between Fixed-Odds and Spread Betting?


Spread betting lets you profit from a market going up or down. In the most simplistic terms, the more right you are, the more you win, the more wrong you are, the more you lose.

With spread betting, your liabilities are bigger than your stake.

With fixed-odds, your maximum liability is your stake.

Many Spread Betting Companies offer a Stop Loss so if the market moves a certain amount of points against you, your would bet would be closed. This helps protect your downside. However sometimes spread bets are closed due to a short term contra movement.

Let’s say you think Sterling will strengthen against the Euro and you make a spread bet with a stop loss 100 points away. The trade starts off going in your favour but due to an unfavourable economic release Sterling crosses your stop loss before rebounding. That would close your bet.

The main advantage of a fixed-odds trade over a spread bet with a stop loss is that the position cannot be stopped out early (apart from a One Touch bet). This means a bet could go wrong but then rebound and finish in profit.


A Big Win for Minimal Market Movement


Another difference between fixed-odds and spread betting is that you can still make a big gain with just a small market movement. Take the example of a “one-day Double Up” trade on gold.

The objective in each trade is to make a £100 profit.

The fixed-odds position would pay out if the price finishes higher than the entry point plus the spread. With the market at $850 and a spread of $1, this means that a bet costing £100 would give £100 in profit as long as gold ended the day anywhere above $851. A double bet pays a 100% return less a small factor which is the financial bookmakers margin.

An equivalent one-day spread bet with a stake of £3 per point would require a stop at 33 points below the current price to limit the potential loss to £100. This runs the risk of being stopped out early and would only make £100 profit if the price finishes 33 points up.

Having said that, your spread bet remains open if the market moves 40 points up, 50 points up etc so you still have the possibility of a larger upside.

In this case, if you are not expecting a big market movement then the fixed-odds trade might be the better option.


Why Fixed-Odds?


The point of fixed-odds trading in my view is not to say that fixed-odds is better than spread betting or CFDs or buying shares etc. Fixed-odds should be viewed as another string in your bow. Some days the markets suit a spread bet, other days a CFD, others a fixed-odds trade etc.

There is also the added benefit of reducing your risks by using different trading formats to hedge eg opening a spread bet but using a fixed-odds bet to cover extreme movements.


Where can I find Free Fixed-Odds Demo Account?


If you are looking for a free Practice Account / Test Account where you can trial financial fixed-odds, including Indices markets like FTSE 100, UK and US Shares, Gold etc then you can you can always try: The above currently offers a free demo account.


The above comments do not constitute investment advice. The author(s), Clean Financial and any company mentioned do not accept any responsibility for any use that may be made of them.


BetOnMarkets » Live Prices & Charts, No Commissions, No Fees.
Financial Fixed Odds on Shares, Indices, Forex,
Commodities and more » BetOnMarkets review.



Applying Technical Analysis Set-ups to Fixed Odds


Certain trades are better applied in specific situations based on the trend and volatility so you should be aware of big up coming announcements like Interest Rates and US Payroll Numbers.

Volatility is a big factor in the success you will achieve with trading. When the markets are swinging wildly as they did in May 2013, for example, then it might be better to avoid trade types that benefit from lower volatility, such as 'no touch' bets or 'stays in' bets.

One Touch Trades

Let’s say you believe the market will touch a given level, at least once, before the end of a certain period. The market only has to touch the level you have chosen once in order for you to make a profit, this could be just moments after the bet is placed, days after, or at the last moment of the last day of the trade.

Time is against you when it comes to 'One Touch' trades, as every day that the markets move away from your One Touch target, the odds are moving firmly against you. You have to pick the circumstances when the market will not only move, but will move quite quickly.

The best time for One Touch trades is during the calm before the storm. If you know there is a big announcement coming up, such as a crucial interest statement or US Non-farm Payrolls, the chances are the market will be coiling up ready to spring once the announcement comes.

Just before most big announcements, traders will be nervous about taking big positions, which might make it appear like a low volatility environment, when it is actually quite the opposite.

‘In/Out: Goes Out’ Trades

Remember, just because you are in a high volatility environment doesn't mean it will continue. Be cautious of placing a one touch trade presuming the market will continue to move quickly. Chart formations might suggest a significant trend and all the facts might lead you to assume that it can continue, however markets can be very unpredictable, and can quickly disappoint.

In the following example, an ‘In/Out: Goes Out’ trade was placed just before the US interest rate announcement in September 2007. An ‘In/Out: Goes Out’ trade is two ‘Touch’ trades in one; you're predicting the market will touch one of two points in the future. You just need the market to move in either direction considerably for you to win. If it bumbles around without any significant change, you would lose.

Leading up to the interest rate cut, the market was very cagey, as nobody wanted to take any big positions before the highly important US interest rate announcement. If the US Federal Reserve cut rates, the market was going to shoot upwards. If they left them on hold or didn't cut them enough, the market was going to drop.

However, there was no way of knowing which way the decision would go. What seemed highly likely was that the market would move significantly on the news, however which way was unknown.

On the day before the announcement (the 17th), the S&P 500 was around 1480. An up or down trade with the triggers set as 1510 and 1480 could have been placed with the expiry 9 days later.

BetOnMarkets were only offering odds of 1.07 on this. However in my view the post interest rate movements weren't fully priced into the market yet, making this a ‘value’ trade. As it turns out, the US surprised many by cutting by half a percent. The upper one touch level was hit within a day. In hindsight perhaps these levels could have been stretched out further for an even bigger gain, but it is always easy to be wiser in hindsight.


Pricing a Financial Fixed Odds Trade


A lot of people don't realise that pricing the trade is the most vital part of making a successful fixed odds bet.

Fixed odds website offers you a price based on the calculated odds of your forecast being correct. When trading you should also estimate the probability of whether or not your prediction is correct. Your aim is to seek out ‘value prices’ ie where your estimate of ‘the probability of something happening’ is higher than the probability predicted by BetOnMarkets.

For example, you might think that the FTSE 100 has a 50/50 chance of hitting 5900 before the end of the year which equates to a 100% return. If a fixed odds firm, such as BetOnMarkets offers you a 150% return, there is value in this trade.

The way to higher profits using financial fixed odds trading is to gain an edge. If you believe the market will collapse, there may be no edge if the chances of a collapse are already priced in to the trade: The percentage return will be respectively low.

The aim, therefore, isn't necessarily to always predict the market direction correctly: Market-beating profits come from identifying opportunities whereby the percentage return offered is high in comparison to your estimated probability that your bet is correct.

Money Management


Money management is somewhat different for fixed odds trading than it is with other forms of trading.

With other types of trading, much of the skill is in monitoring open trades, and knowing when to close them. Whilst this is true to a certain extent for fixed odds trading, the onus is on getting it right up front, because you can just let the trade run to expiry, if you choose.

This is one of the great advantages of using fixed odds trading: it encourages you to do your methodical research, and get your money management right before you open the trade.

In the short-term, trading the financial markets using a leveraged product such as spread betting, many professional traders advise that you risk no more than 1% of your trading capital on any one trade. This is because the exposure to potential loss can be far greater than the preliminary stake.

With fixed odds trades you can potentially be more flexible. You know exactly how much you stand to win or lose from the beginning, meaning there won't be any unpleasant shocks. Even if the market collapses, all you lose is your stake.

You could therefore choose to risk a higher percentage of your starting amount, depending on the odds that are offered. If you and BetOnMarkets estimate that an event is highly likely to happen, you are less likely to lose, and may make a strategic decision to risk more. If an event is unlikely by your estimates, but more likely than the odds imply, you are more likely to lose, so you therefore might stake less.

With experience you will learn about your appetite for risk, your ability to handle the emotions and ultimately your ability to trade financial fixed odds. A comprehensive trading plan with scheduled reviews at regular intervals will you appreciate what the risks are.

As part of your trading plan, you should give serious thought to the amount of money you apply to your account: You should never trade with money that you can't afford to lose.

Please Note: Financial fixed odds can become addictive. It may not be suitable for all investors. Only speculate with money that you can afford to lose. Please ensure you fully understand the risks involved and seek independent financial advice where necessary.

'Financial Fixed Odds' edited by Jacob Wood, updated 22-Feb-17

For related articles also see:





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