Binary Betting ( Mini Spreads ) explained

Binary Betting Explained

As the number of ways that punters can bet increases, the number of ways that punters can make mistakes increases. 

Unfortunately, the level of sympathy from bookmakers towards punters making those errors seems to be at an all-time low.

Anyone can make a mistake but the bookmaking fraternity split them into two distinct categories. 

A bookmaker's mistake is deemed a “palpable error” and the solution is to state that the bet is void.

A punter's mistake is a schoolboy error and the only solution is to go and cry behind the bike sheds until you feel you have learned your lesson.

In this never-ending battle the bookmaker is always coming up with new markets to bet on and new ways to do it.

You can view all the different types of bet available at the betting school. 

Whilst the occasional punter may find a way of winning money on these new bets and ventures, the vast majority will lose money, many because they do not fully understand what is happening. 

Once too many people come to terms with this new toy and find a way to make a profit, either the odds will become less advantageous, the successful punters will be unable to place a bet on it or the new toy will be replaced by another new toy. 

Where is this leading us?

Initially on course bookmakers had a monopoly ( legally anyway ) and the first legitimate alternative was the Tote which operated much like football pools where your winnings were the total of all stakes ( less operating % ) divided by the number of winning bets. 

Of course, bookmakers became legal in 1963 and since then have sought different ways of relieving punters of their cash.

This blog is not about the ever-increasing markets but rather the most recent type of market," the BINARY market ". 

Primarily used on Forex markets ( Foreign Exchange Rates ) it has gradually found its way into the Spread Betting industry's armoury.

In some ways, this is a helpful tool to introduce punters to the concept of Spread Betting because as we shall see, the limits on profit and loss are known from the outset, similar to betting at SP on a horse race or fixed odds on sports such as football.

Let us use this season's Premiership as an example.

WHO WILL WIN THE PREMIERSHIP: This is not a possible Binary market as there are theoretically 20 possible winners.

WILL THE WINNER COME FROM MANCHESTER, LONDON OR ELSEWHERE? is similarly unsuitable as it still has 3 possible answers?

The 3 markets below are all possibilities as the answer can only be YES or NO.

• WILL THE WINNER COME FROM MANCHESTER?
• WILL THE WINNER COME FROM LONDON? 
• WILL CHELSEA FINISH ABOVE ARSENAL?

How Does Binary Betting Differ From Other Spread Betting?

Spread betting brought something new to the table for certain events such as how many cards will be shown or how many corners will be taken. 

The firm set a marker and the punter was required to bet on whether the result would be higher or lower than the range quoted. 

If the result was outside that range the punter could win or lose an amount that was many times their stake in extreme cases and so a stop loss was included, limiting profits and losses under certain circumstances.

Some markets such as WHERE WILL A TEAM FINISH IN THE WORLD CUP are made on a graded scale which also meant the result would be finite and liabilities known in advance. 

An example could be 100 for 1st, 50 for 2nd , 25 for 3rd , 10 for 4th, and 0 for outside the top four. 

The punter's stake was based on probability with Spain maybe 30, Italy 15, and ‘ pot 4 ‘ teams at 1 or less. 

The return was the graded score so if Spain won your return would be 100 and if runner up would be 50 representing a profit of 70 or 20 respectively.

For this exercise I am going to base the probability of the winner coming from Liverpool as 10%, Manchester 40% and London 50% as they are easy numbers with which to play. 

They would translate into odds of 9/1, 6/4, and Evens ( 10.0 , 2.50, and 2.00 ) and would be the approximate exchange odds with bookies being slightly less due to the over-round.

Binary is an extension ( maybe simplification is a better term ) of the spread principle and whilst the odds available will be similar to what a bookmaker would offer in a match bet, they will be lower than the exchanges should the market be available.

The calculation is straightforward enough but an understanding of odds conversion comes in handy.

You BUY if you think they will win and SELL if you don't.

Further reading is available at the betting school, most notably in the article titled - WHAT IS SPREAD BETTING?