First it fell fornine days in a row. Then it rose for three. Now it's falling again.
Yes, the FTSE 100 is pretty volatile right now even as it drifts steadily downwards on the back of almost unending bad news from the eurozone. For spread betters it can feel both difficult and risky to punt on its next move using a traditional spread bet. After all, get it wrong and you face big losses unless you spend money on a guaranteed stop.
So, as an alternative, why not limit your betting to a single day and also cap your downside using a binary bet.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Let's say it's just before 4pm and the FTSE 100 is trading at 5,300 points having drifted down all day. You decide it will rally towards the end of the trading day it's only got around half an hour to go. You are offered a binary price of 20-24. You are right and the FTSE does move up to close at 5,305. Your bet size was £10 per point. Now what?
Well, with a binary bet your win is 100 24 points, which is 76, all times £10, so £760. Had you got it wrong you would have lost 20 points x £10 or £200. That's 20 points less zero (the minimum possible) x £10 (your bet size).
Note that to win, you only had to beright about the FTSE closing up. And even if it had closed up 100 points (unlikely but possible) your win is still £760 at £10 a point as all winning bets close at a price of 100 points.Equally had it plunged at the close you can't lose more than £200 as all losing bets close at a price of zero points.
Obviously as a beginner, it's better to start with a lower bet size most providers will let you drop it to as low as £1 per point while you learn the ropes. Also, do take advantage of any simulations provided by your broker before you trade for real.
-
Which UK region has the most in savings? Average savings by areaThe amount people have in their savings differs from region to region in the UK. How does your nest egg compare to those living nearby?
-
Doug and Mary Perkins: Specsavers’ clear-sighted foundersHelped by the deregulation of the sector in the 1980s and brilliant advertising, Mary Perkins and her husband Doug have taken Specsavers to the top of the optometry market
