Following his, er, mixed fortunes at the famous Galway Race Festival, Nick Leeson stumbles across binary betting. Will he be able to resist, or has he come up with a plot for the sequel to Rogue Trader?
Although I live in Galway, this is the first year I’ve been here for the famous Race Festival. And it’s true – the whole town, other than the bars and restaurants, really does shut down.
Gambling during the day and sometimes into the early evening; finding something to eat and then drinking too much in order to forget the day’s events – kind of reminds me of being in Singapore! There’s a great buzz about the place, and I can highly recommend it for next summer.
I was recently asked to do a little bit of filming for Sky TV for a new programme called ‘The 50 Worst Decisions.’ I asked them which one they wanted me to do, as I was sure that I could fi ll all 50! So it’ll be no surprise for you to learn that I took a beating on the Monday, mirrored it on the Tuesday and scraped a bit back on the Wednesday, only to lose on the Thursday. It was kind of apt that they were showing Rogue Trader this week on the television. I called it a day, despite being the biggest eternal optimist that the world has ever seen. The only advantage is that my wife keeps a closer eye on the finances than Mr Baring ever did, so we won’t be going bankrupt any time soon.
Still, if you’re not really into the horses, Euro 2004 is a distant memory and the stock markets are stuck in a range, what do you bet on? The spread markets on the Premiership are really tight, both for the championship and relegation unless you have a very definite opinion about one team.
Arsenal, Manchester United or Chelsea will win it. With the field – except Liverpool – offered at seven, there aren’t any surprises in store. I’d been looking longer at the total Premiership points for 2004/5. I expected a few of the teams likely to be relegated to get a few unexpected points in the first six weeks, then deteriorate with Man U starting slowly as well. These would all be short-term transactions which I would want to be out of within the season’s first eight weeks.
Nothing really grabbed my attention, however, until I stumbled across binary betting at IG Index. It’s interesting because binary bets are not subject to regulation by the Financial Services Authority and, due to their fast-moving nature, they are only available online.
One thing sprang to mind: futures and options! I should have stopped there. Didn’t I have a problem with them some time in the past? I should have unplugged my laptop and forgotten all about it. But I was most intrigued. What money I do have these days is precious and I try to guard it better than I have in the past. Nevertheless, I thought I would have a look and get my feet wet.
As it’s unregulated, binary betting may seem open to manipulation. As the events or markets being wagered on are all sophisticated and well established, though, this is highly unlikely. In practice, you can choose to bet in two different modes – decimal or binary. In each case, the odds offered are mathematically equivalent, so it really is up to your personal preference. The decimal mode will be more familiar to those who follow sports betting, while the binary mode will be more natural to someone who trades the financial markets.
There are two-way prices on every proposition, so you can bet on the event happening or not happening. The prices are updated in real time and even in running for a large number of events. The prices are streamed directly to you, so you never have to refresh the screen. The prices will appear on the screen automatically.
When you have placed a bet, you can see it as an open bet until the event is over, with continual valuations of your bet at the touch of a unique ‘close’ button, available to accept the valuation at any time. You’re always aware of your maximum exposure and the maximum possible gain that your bet can realise. And you can trade in and out of your bets, as events unfold, with the real-time prices.
‘Final-outcome’ and ‘one-touch’ bets are available. The more specialised one-touch will pay out if the desired outcome occurs at any time before the bet, such as the FTSE to climb more than 50 points during the day. I can feel myself running to the screen already: the sequel to Rogue Trader is on the way!
In my opinion, hybrid bets are definitely the way forward. They remind me of the way that the derivatives markets have continued to evolve over the last 20 years. Yes, they should be treated with caution – but they also provide excellent opportunities to turn a profit. Best of luck.
