Is there money to be made looking for short-term movements?

After the May 3rd elections at least one other spread-betting firm will be offering a general election seat market to run alongside that from Spreadfair (see latest price above) on how many MPs each of the main parties will get next time. If the next election follows previous ones then this form of betting and these prices will play a key part in the next two years or so.

For on these markets the likely number of seats punters think the parties will get are seen like a share price and go up and down as views of the possible outcome change over time. And the great thing is that you don’t have to wait until the votes have been counted before you can pick up your winnings.

One of my most profitable punts on the 2005 election was a BUY at the 58 seat level on how many seats the Lib Dems would get which was tipped here on June 16th 2004 a few weeks before the Leicester South and Hodge Hill by elections. By October 5th 2004 the SELL price on the Lib Dems had edged up to 72 seats and I suggested closing the transactions down pocketing big profits there and then. The fact that the following May that Charles Kennedy’s party only got 62 seats was irrelevant.

The key thing for politically aware punters is to anticipate the way things will move and have the confidence to back up their judgements with cash. You’ve also got to work out when it might be best to get out of a position – to consolidate a profit or cut back on a loss.

Last weekend I place a small (for me) sell bet of £10 at the 277 seat level on Labour for the next election. My reasoning was that sentiment about the party’s prospects might be affected by the May 3rd elections and the spreads will move downwards. That might be the time to get out and bet the other way in order to profit from the projected “Brown bounce”.

With spread betting the more you are right the more you win and the more you are wrong the more you lose.

If my bet is still standing on general election day and Labour finishes up with, say, 300 seats I will be 23 seats short. So my losses would be 23 times my stake – £230. If the Labour seat total is 250 seats then my profit would be the 27 times the stake level – £270.

Another feature that can make this form of betting attractive is that the spread firms offer credit accounts – so that you don’t have to put any money up front now. This is unlike other forms of betting where you have to lock in cash when you place the bet.

Much more detailed advice on how to do this can be found in my book “The Political Punter – How to make money betting on politics” which will be published by Harriman House next week.

Mike Smithson