Many spread betting brokerage firms will offer their traders an exciting product known as binary betting. This product was introduced in the UK in the earlier 2000s and offers the traders another fixed odds product of betting on the market.
Binary betting is fast moving and gives the trader two possible event outcomes. The investor will do their research as they would with spread betting, stock market trading, etc, and then they place their bet. The outcome will be either yes or no, as this basic example scenario: Will the DAX 30 close 'up'. The binary bet would be yes it will or no it won't. Naturally there is much more to this, but that is the basic concept.
The binary betting product can be sold or bought, which allows the trader to make profit from either of the outcomes (yes, no). The trader has many options such as the most basic being betting on the outcome of the market movements in terms of by hour, by day, by week. Many brokers will also offer 'Handicap Markets' where they are betting on if the outcome may be higher or lower at a certain time from the previous day.
The spread broker will have in place certain odds which are from 0 to 100. The binary betting bid or spread offer can be converted to general fixed odds. As an example if a bid is placed at 5 the fixed odds would be approximately 20 to 1 (20/1) that the event will happen. If the binary bid is placed at 33, the fixed odds would be approximately 2 to 1 (2/1).
This seems a bit confusing to the trader whom is not familiar with financial spread betting and placing bids or spread bets. However, once it is fully understood, binary betting offers the trader a way to invest with within a controlled environment controlling risk. The trader will know at the time of placing their bet what their maximum loss or maximum profit will be.Binary betting also allows the trader to open and close their bets when the broker is open. It also offers traders hourly, intraday as well as weekly markets to bet in. Even with the overall volatility the trader knows what their loss or profit will be. Within the United Kingdom binary betting also falls into the same category as financial spread betting, which at the time of this writing is not taxable as it is classified as a form of gambling.