Betfair Official Blog

Betfair Launch Tradefair

Its not just George Bush moving home in 2008. Financial bettors get packing...

Our shiny new product (available at www.tradefair.com) can currently be divided into two categories, binaries and spreads.

Binaries:
Click on the binaries section of our site. Look familiar? Good - that's because its similar to a traditional Betfair exchange, which means better value and the ability to trade out of a bet. You can even use money available in your Betfair wallet to play with our binaries.

Binary markets can be settled in one of two ways - either 'yes' or 'no', and this is represented with the figures 100 and 0 respectively. For example, the market may be whether the FTSE will go up in the next hour. If it does, the market settles at 100. If not, the settlement is 0. Hence the higher the buy price offered, the more likely it is to happen. The lower, the less chance of the market coming good.

On the exchange, there is a 'buy' price, and a 'sell' price, the rough equivalent of the Betfair 'back' or 'lay'. If you think the event will happen, you buy, whereas if you think there is as much chance of it happening as there is of Andy Murray ever smiling, then you sell. As with Betfair, if you are dissatisfied with the buy or sell figure, you may request a price and wait to get matched.

Your profit is calculated in a different way to fixed-odds betting. If you buy at 67 for 10p per point, and the market does indeed go up, your profit will be a mighty £3.30 (100-67 x10p), If however the markets dives, the fellow punter who matched your bet by selling at 67 will be expecting to win £6.70 (67-0 x 10p). And that money comes out of your pocket.

Spreads:
Spread betting is a tax free cost-effective alternative to traditional share trading. It allows you to speculate on the movement of stocks and shares without using a stockbroker, therefore you do not have to pay commission or fees. We make a spread around the live, underlying market price and you can bet on whether this market will rise or fall. Not only is it more versatile, by allowing you to either go long (buy) or short (sell) a share, it is extremely cost effective, as you do not pay commission or fees. You can also use the product as a hedging tool, to protect investments in an existing share portfolio.

The "spread" in the phrase 'spread trading' refers to the Sell (Bid) and Buy (Offer) price quoted by a spread betting company. This price is calculated around the live (or the estimated future) market price of a financial product. For example, if the Daily FTSE is trading at 4729 our quote might be 4727-4730.

When you make a spread trade , you do not buy the stock or share but instead you make a bet as to which way you think the market or share-price will move. At Tradefair Spreads , only small deposits are required to open a new position (as little as £10-£40 for a £1 bet depending on the market concerned). Once you have chosen the market on which you wish to bet, you can then bet the stake of your choice, which will represent your profit or loss per point movement in that market (each market has its own individual maximum allowable stake).

You can then bet as little as - £1/ $1 / €1 per point/tick/cent on the movement of spread prices that we quote. You can choose to bet that the market will rise, or alternatively, you can bet that it will fall. If you are right, you will make a profit of your stake multiplied by each point that the market moves in your favour. If you are wrong you will make a loss of your stake multiplied by each point that the market moves against you.

For this reason you must be aware that your losses can increase dramatically if the markets move substantially in the opposite direction to your bet (i.e. if you make an Up bet in the FTSE 100 and instead of going up it goes down).

All profits made when trading with Tradefair Spreads are recognised as the winnings of a bet, and are therefore free of Capital Gains and Income Tax in the UK

So there you have it - financial betting as it should be. Now you can stride into the local, and nonchalantly inform fellow drinkers how you have been trading oil all day. City analysts informing all and sundry, "it'll go up, no it'll go down, or maybe it'll go back up, forget all that, it'll go down." - who needs them? You are now the one in control. Don't forget: your guess is not as good as theirs. Its better.

Spread bets carry a high level of risk so you should only speculate with money you can afford to lose. Stop-losses are automatically allocated with each bet you make. All stops are not guaranteed. You can lose more than your initial deposit and stake. Before you open an account, please ensure that spread betting matches your investment objectives, familiarise yourself with the risks involved and if necessary seek independent advice. The terms bet and trade are synonymous. You will be in fact placing bets and consequently you are not entitled to the rights to the underlying instruments you would be if you were trading. Tradefair® is part of the Betfair Group. TRADEFAIR® and the TRADEFAIR LOGO are trade marks of The Sporting Exchange Limited. Data on all Betfair Group website(s) (including pricing data) is protected by © and database rights. It may not be used for any purpose without a licence. Parental supervision (e.g. using NetNanny, CyberPatrol) is advised and encouraged. Tradefair® Binaries is licensed and regulated by the Gambling Commission. Licence No: 105-002062-R-104133-001 Tradefair® Spreads is a trading name of London Capital Group Ltd (LCG) which is a company registered in England and Wales under registered number: 3218125. LCG is authorised and regulated by the Financial Services Authority (FSA), a member of the London Stock Exchange. Registered address: is 4th Floor, 12 Appold Street, London EC2A 2AW.