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.

A Floating Binary is the most common type of binary bet.  It is a bet where the binary price moves but the strike price (the price the market needs to reach for the event to occur and therefore make up at either 100 or 0) is fixed.

For example, if the bet is "Brent Oil will end down on the day" the Buy and Sell prices might change during the day but the proposition itself will remain the same.

A Fixed Binary is a bet where the binary price remains fixed but the strike price (the price the market needs to reach for the event to occur and therefore make up at 100) is moving.

For example, if the bet is that "GBP/USD will end up 25 points by the end of the betting period", and you can buy this at 95, the buy price would remain at 95 though the target price for the bet might change to GBP/USD being up 21 then 19 then 13 then 7 etc.

Clearly fixed binary and floating binary bets are opposites of each other. With fixed binaries the buy and sell prices remain fixed whilst the target price moves. With floating binaries the buy and sell prices float whilst the target price remains static.

Closing Out

A floating binary bet - and only a floating binary bet - can be closed out before the end of the lifetime of the bet.  This allows you to take an early profit or cut your losses if the bet is going against you.

To close out, you bet in the opposite direction to your open position. Go back to our original example of the FTSE to close up on the day, which has a binary price of 38 to 43. You bought at 43 for 10p per point.

Later in the day the FTSE has risen and we are now offering a price of 87 to 92. To close this bet and take an early profit, you would sell at 87 for 10p per point. Your profit on this bet would be:

(87 - 43) x 10p = 44 x 10p = £4.40

So if you bought you can sell the same amount to close, or if you sold you can buy the same amount to close. Further, you can perform a partial close where you buy or sell less than you originally sold or bought, therefore leaving part of the bet running.

There are two ways to close out your binary bet:

(1) Use the "Close Out" button on the Positions table. This will fill in the betting slip. To close out a bet you must click "Confirm".
(2) Manually close out all or part of your bet by filling in the betting slip with the opposing bet, rather than clicking the "Close Out" button.

Generally you would use the "Close Out" button. However, you should note that if multiple positions are open on the same instrument and bets are closed out manually (by filling in the betting slip rather than clicking the "Close Out" button) they will be closed out on a "first in, first out" basis whereby the positions will be closed in the order in which they were placed. Therefore using the "Close Out" button is the only way to close a specific bet where multiple positions are open on an instrument.

Try it now

View our binary prices by clicking on the "Bet" tab above followed by the "Floating Binaries" tab. Click on a price in the betting area to fill in the betting slip; the slip describes the bet, and if you enter a stake (remember, in a binary bet your stake is per point) you'll see how much you could win if that bet is successful. Click confirm to place your bet or cancel to clear the betting slip.