Binary Betting

Binary betting is surprisingly straightforward. It's similar to spread betting, only with a fixed upside and downside.

Why do a binary bet?

As well as backing something to happen, you can bet on something not to happen - a bit like laying a bet.

You can "close out" in-running to take an early profit, or cut a loss if things are going against you (read on for details on how to do this).

What you need to know

The three key facts about binary betting:

(1) Binaries involve a "two-way price" - that is to say a "Buy" and "Sell" price - between 0 and 100.
(2) If you think the bet will happen, you buy at the higher price. Conversely, if you disagree with the bet and think it will not occur, you sell at the lower price.
(3) Each bet will settle or "make up" at either 100 (if it happens) or 0 (if it doesn't). No other outcome is possible.

Example One:

Take the daily FTSE. The bet could be "FTSE to rise at 16.30".

The binary price is trading at 38 to 43.

- If the FTSE finishes up at 16.30, the bet makes up at 100
- If the FTSE finishes down at 16.30, the bet makes up at 0

If you think the FTSE will be up at 16.30, you would buy at 43, say for 10p per point.

You are correct and the FTSE does close up. Therefore the market makes up at 100. You bought at 43 for 10p per point, so your winnings would be:

(100 - 43) x 10p = 57 x 10p = £5.70

Binary bet winnings and losses are calculated in the following manner:

When BUYING, Profit/Loss = The closing price minus the opening price times your bet size (per point)

When SELLING, Profit/Loss = The opening price minus the closing price times your bet size (per point)

Example Two:

Take the same bet, "FTSE to rise at 16:30", trading at a binary price of 38 to 43.

As above, you think the FTSE will be up at 16.30 so you would buy at 43 for 10p per point.

This time, the FTSE does not close up on the day. This means the market makes up at 0. You bought at 43 for 10p per point, so your losses would be:

(0 - 43) x 10p = -43 x 10p = -£4.30

Example Three:

Take the same bet again, "FTSE to rise at 16:30", trading at a binary price of 38 to 43.

This time you think the FTSE will NOT be up at 16.30 so you would sell at 38 for 10p per point.

You are correct and the FTSE does not close up on the day (i.e. it closes down). This means the market makes up at 0. You sold at 38 for 10p per point, so your profit would be:

(38 - 0) x 10p = £3.80

If you are new to binary betting, we recommend you start with small stakes (from just 10p) to get a feel for binaries before risking too much. Click "More" below for more on binary betting...

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