Sports Trading Explained:
Interest in sports trading is growing.
Despite this, the
average bettor doesn’t even know what sports trading is. Some don’t even realise an
exchange is different to a sports book!
Betfair’s Exchange is the biggest. Founded in
2000, it’s now a public company with millions of active users. Betfair’s Exchange
claims to have 20% better odds than the average, old-fashioned bookmaker.
In this
article, I’m going to:
Introduce you to sports trading, showing you the basic
concepts
you to sports trading, showing you the basic concepts Explain why sports
trading is growing in popularity
why sports trading is growing in popularity Answer
some of the most commonly asked questions
some of the most commonly asked questions
Give you some of the best sports trading resources around
Sound fair enough? Let’s get
cracking…
What Is Sports Trading?
The simplest explanation I could think of:
Sports
trading is the practice of placing two bets against each-other, on the same selection,
in order to profit.
In essence that’s it. Although it’s an extremely broad explanation,
here it is in a little more detail…
Sports trading is just the term used to refer this
kind of behaviour on a betting exchange. Be it BetConnect, Betfair, Betdaq, Matchbook,
SMarkets or any other.
One way to explain it is: sports trading is just like stock
trading. Instead of buying and selling shares of company, we buy and sell bets on
sporting events. The real beauty of sports trading is that we don’t care who wins or
loses the event. Just if the price moves. Because of this, we don’t have to pick
winners to be a winner.
A stock traders main aim is to buy low and sell high. The
principles are exactly the same in sports, but we lay low and back high. Making a
profit, regardless of the result.
Just like this… (before the race started).
If you
match the bets and outcomes against each-other, you’ll see how it’s a profit. Explained
in more detail shortly…
How Sports Trading Works… (In 3 Stages)
Sports exchanges work
just like any other financial markets.
Traders from all around the globe use the
exchange to place bets with each other. Betfair acts like a referee. By taking
real-time information from thousands of football matches, horse races and other sports,
Betfair makes sure the winners get paid and the losers pay up. For providing this
service, Betfair take a 5% cut on all winning bets.
However, the more you turnover the
less your commission will be. The lowest commission rate is 2% on Betfair, but you
would have to be a huge player to get down that low! Other Exchanges like SMarkets and
Betdaq offer a permanent low of 2%. Liquidity is anywhere near as good though – making
it tough to match bets without added risk.
When you place a bet at a traditional
bookmaker, you are (almost) always placing a back bet. This means that you are betting
that something will happen.
By accepting your bet, the bookmaker is effectively placing
a lay bet. They are betting against you that your outcome won’t happen.
Using a betting
exchange such as Betfair, allows us to place both back and lay bets. By doing this
multiple times, we can produce a guaranteed profit no matter what the outcome.
I’ll
show and explain the mechanics of a successful trade in a second. Before I do, keep in
mind that betting exchanges are very different to using a bookmaker in the sense
that:
they won’t limit or ban wining accounts
you’ll nearly always get a better
price
The only downside being; some have additional charges for the highly successful,
such as Betfair premium charges.
Let’s look at the matching behind a successful
trade:
(1) Opening Bet:
To make a successful trade in any instance, we have to have a
reason we expect the price will move – or at least get both our bets matched.
For the
sake of this explanation, we will assume we’re very confident the price will move on
Mershardal. In this case Mershardal is likely to drift in price, being shorter than it
currently is before the start of the race. We open the trade by placing a lay bet at
[4.8] 5 minutes before the start. Our lay bet of £100 is fully matched, as seen in the
image below.
At this stage we merely have a lay bet (liability expressed on the
left).
On to stage two…
(2) Closing Bet:
As expected Mershardal’s price has drifted.
This leaves us in the opportune position. We now have a bet that is of ‘value’ when
compared to the current market price.
Why? Because if we were to lay at the current
price, we would have to outlay more liability. Assuming we now expect the price is
where is should be, or better still, higher than it should be. We simply need to ‘trade
out’ of our position. Closing the initial bets liability (amount we previously stood to
lose).
Notice we now have a position where we will profit should Mershardal win the
race, but nothing should the horse loose.
Seen below…
(3) Hedging/Greening:
In order to
spread our result, be it profit or loss – we need to hedge up. Otherwise known as
greening.
To do that, I personally use software (it saves extra calculations).
Basically, there needs to be an extra lay bet in our example to guarantee a profit. No
matter what happens – before the start of the race. I’ll explain the different stakes
and why that is in a moment. For now, take a look at the ‘hedged’ image below….
And
there you have the understanding of a successful sports trade.
Now I’ll explain compare
and explain the bets…
You’ll see on the right of shot (above) that ‘average odds’ is
ticked. This means our backers odds have changed a little along with the lay stake,
this is because I had to place a ‘hedge’ bet of £9.43 at the available price.
If you
compare the two bets against each-other:
Lay bets totalling £109.43 at 4.84 carrying a
liability of £420.53 and a payout of £109.43.
Back bets totalling £100 at 5.3 carrying
a liability of £100 and payout of £430.
Should Mershardal win the race:
Win £430 from
the back bet
Lose £420.53 from the lay bet
Total position = +£9.47
Should Mershardal
lose the race:
Win £109.43430 from the lay bet
Lose £100 from the back bet
Total
position = +£9.43
Makes sense right? This is how you end up with a minimum return of
£9.43 profit. A successful trade.
How Much Can You Make Trading Sport?
Sports trading
profits can fluctuate massively. There’s a huge set of variables at play; sports
traded, advantage size, bankroll, skill set, speed advantages – many factors come into
the mix.
Realistically, many won’t reach the upper levels. I’ve had the privilege of
meeting a few top earners who make mind-blowing sums, but on the flip-side have heard
of many never making a penny. Some time ago I addressed this topic for the Q and A
playlist on YouTube….
If you’d like to see the full question and answers playlist on
YouTube, see this link.
Or better still; See some results here!
Sports Trading
‘Systems’
A few words about sports trading systems… many find their way to this site in
the search for a fixed ‘sports trading system’.
There’s a problem though: in most
cases, they don’t exist, and where they do and or have, they aren’t fixed. Why? Because
of the nature of a betting market. We are not making money from a bookmakers offer
here. Period.
Each betting market consists of a huge amount of variables. Some
influence the market more than others, that’s understandable. Over the years I’ve tried
most things, not all, but most. The overall findings being; the best and easiest ways
to make money in Betfair’s (or Betdaq’s) markets is to understand the situation.
Understand the variables, the market characteristics, why things happen. Once you do
this it becomes far easier to make money, and more consistent too. Unsurprisingly, this
is why I created the trading guide and video package. I love to help others, but there
has to be some upside to spending my time teaching… plus it helps with the dreaded
premium charge!
Experience counts for a lot in the markets, aside from having an edge
you’ll need to control your actions.
So if we look at our edge as system or method of
approach, it’s important to start from the ground up. Building a successful sports
trading system isn’t so hard as long as you are prepared. I’ve said it elsewhere before
but, focusing on specific facets of the market is the right place to start. It’s a bit
like building a wall; you don’t just think about a wall and it appears. You have to
pick up each brick at a time, study it and what you’re about to do next!
Here’s a few
easy steps, if you understand me fully:
Pick a sport – one you understand the rules for
or limitations at least. For example: greyhound racing. Go deeper – what part of that
sport are you going to focus on? example: Sprint races. Develop a hypothesis – why are
you doing this? example: I believe the markets are bent. Confirm or deny – is the
market reacting as you’d expect?
Once you’ve proved or denied your thinking, pick up
the next brick…. get me? Knowing the influences within the market is key.
Sports
Trading Techniques
There are countless ways to trade sport.
Each trader might have
their own “style,” but they all use similar techniques. At the end of the day, all
we’re looking to do is:
Back high and lay low.
Of course, there are many different
techniques used to achieve this.
Value Betting
Technically, value betting isn’t
actually a form of sports trading. However, I thought it was important to include as it
forms the basis of a lot of sports trading techniques.
Value betting is the act of
placing a back or lay bet on something if you think odds are good value. Let’s use a
coin flip as an example:
A coin has a 50/50 chance of landing on heads or tails.
If you
bet £1 that the coin would land on tails, you would stand to win £2 if you were
correct. That’s £1 of your original stake plus an extra £1 of winnings (less
commission).
The effective odds of the bet above is even’s, or 2.0 in decimal odds.
If
you were offered £3 for every £1 you bet on tails, that would be a great value bet. The
odds offered would be 2/1 or 3.0 in decimal odds.
Getting odds of 3.0 for a 2.0 bet is
a value bet… a successful trade you might say.
Value bettors know that not all of their
bets will win. What they do know, is that they will be in profit in the long run. So
long as they only bet on are of good value.
The coin flip example above can be
translated into any sports betting environment. We can look at recent performances of
football teams, amongst other factors to calculate our own odds. There’s no right or
wrong way of calculating your own odds for sports events. Some people like to include
all kinds of factors into their calculations.
Others prefer to keep it simple.
It’s
important that you test your value betting strategy before using real money. Trading,
and closing out is just another way of taking the value – instead of letting results
pan out, through variance, over a large sample of bets. Why? Because it’s rarely that
long until odds return to a ‘true price’ on Betfair. Or any other exchange for that
matter.
There’s always a debate on how long you should test you betting strategy for.
The answer is for as long as possible – the stronger the data set the more confident
you can be that it will be successful. These days everyone wants to do things fast; but
successful strategies take time to build up. A minimum of three months is reasonable,
however the longer the better is always a good rule in this department.
Stealing Small
Moves (Scalping)
Scalping is a term that’s commonly used in financial markets. It’s
used in a very similar fashion throughout sports trading too.
Scalping is a trading
technique that involves trading small price movements.
Typically, scalper’s use a tight
stop-loss and only aim to make 1 or 2 ticks. This technique is best used in very stable
markets where the price isn’t moving very much. In other words, there is less
volatility. You may want to save it for later but, you can see a full guide to scalping
on Betfair here.
Example: Cheltenham Market Previous Blogs (look how the prices don’t
move much)
Trading Price Shifts (Swinging)
Almost the opposite of scalping, swing
trading aims to profit from bigger price movements. Stop-losses are generally further
away from the current traded price. This is because swing trading is more suited to
volatile markets where the price is jumping around and liable to move.
Impatience will
often lead to loss through this kind of sports trading technique.
It’s important to
have a clear plan before you enter a swing. When will you enter? Under what conditions
will you exit? Ideally, you should use trading software and working out where you plan
to exit – before entry.
Software For Sports Traders
You can do a lot with the Betfair
website but you’re missing a big trick if you’re not using trading software.
What are
the benefits of using sports trading software?
Use of advanced charts & trading
ladders.
Real-time odds (the Betfair website takes longer to update odds).
One-click
betting.
Full market depth, multiple markets.
If you’ve seen my pre-race trading videos
and want to have a go yourself, it’s essential that you use trading software. The added
speed and data advantage is arguably the biggest and best. Most trading software
refresh Betfair information (odds/money available etc) every 200ms. This is miles
faster than using the Betfair website.
As well as being able to see the odds faster
than on the website, you are able to place your bets quicker too. At the click of a
button, you can place a bet using a pre-specified stake amount. Without this feature,
you would have to click on the odds, type your stake amount, click bet and confirm. The
time you save can make the difference between missing a big swing and catching it at
the perfect moment.
The software I use when trading horse racing markets is Geeks Toy.
For more information about Geeks Toy and how to use it, check out this post. All new
users of Geeks Toy get a free trial. If you like what you see, Geeks Toy is one of the
cheapest sports trading software’s available.
YouTube Video Here
Sports Trading
Communities:
In recent years there seems to have been a lot of small sports trading
communities pop up. The trouble is, most of them aren’t that great.
And when you get a
good one, who’s worth listening to?
Advice about sports trading communities: Pick a
longer-standing reputable one. Read through old posts and you’ll soon see who the best
contributors are… sadly, most of the profitable ones don’t comment so much these days
(to my knowledge). If you look hard enough though, there will always be a few gems!
The
most reputable communities tend to be the top software vendors forums, GeeksToy, Bet
Angel and Gruss. They’ve been around the longest. Excluding that, there’s the Betfair
forums although traders don’t seem to use them anymore…
We’ve also added a forum to the
site, full helpful members. If you have any questions or would like the chat about
trading check it out here.
You’ve also got Twitter and Facebook, but it’s hard to know
who’s-who. Most of the aliases that tend to post won’t even show their identity… tread
carefully when following advice.
Learning to Trade Sport
There’s never been a better
time to learn to trade on Betfair.
When I first started, there was very little
information available. Now, there’s quite a bit of content out there. If you bookmark
half the links on this post, there’s plenty to be learnt from the individual
articles.
It’s not just the blog though, another great resources is my YouTube channel.
I’ve uploaded hours of free videos explaining various aspects of sports
trading.
Talking of videos…
One of the best things I did when starting out was to
record my pre-race trading. I used screen recording software (just like I use on my
YouTube channel) to watch what I did during each trade.
It was extremely helpful to
look back and see what mistakes I’d made. After watching yourself trade, you soon learn
that it’s quite easy to be right and still lose! But on the contrary, it’s very
important to see what you did right when you make a profitable trade.
Sometimes, it’s
hard to soak it all in. Markets move so fast, and when you’re still learning, it can be
mind-blowing. Being able to see exactly what happened when you’re in a more relaxed
state of mind, can be worth its weight in gold. One of the main problems with sports
trading is the mental outlook on a trade.
The Mental Side Of Sports Trading
If you’re
going to be a successful sports trader, you have to be mentally strong. It’s so
important. Understand that you are going to have bad days and sometimes weeks, and
although these will be cancelled out over the long-term, it’s still tough to deal with.
Losing is never easy, you have to be disciplined.
Keeping a journal to note your
experience is always a good idea. Learn to walk away from the screen when you aren’t
fully focused and know the signs of when you might chase. Life outside the screens can
impact your trading. If you know the triggers; avoiding the daft mistakes is
easier.
There’s no quick ‘hack’ to disciplined behaviour, but get prepared. Read about
it in books, keep your own records. If you’re letting a trade run too long; ask
yourself why?
The answer is often right in front of you. Get your discipline right and
sports trading becomes easier.
5 Common Sports Trading Questions:
Most new sports
traders ask similar questions. To that end, I’ve complied five of the most-asked
questions below. Additional questions are answered in further depth on the playlist
linked earlier in this article.
Enjoy…
Which Resources Would You Recommend?
An
extremely broad question. Depending largely on what you are intending to trade, and in
which manner.
Betfair themselves have a learning directory where they recommend a few
reputable characters, myself included. Aside from this, there are several different
statistics based services that are of use. Namely Proform and Patternform. They’re
excellent resources because there is so much data. You can pick a focus and zero in on
it fast – front runners for example.
Many seem fond of the YouTube Channel, probably
because of the learning format. And of course the sports trading forums mentioned
further up this article.
Is Sports Trading Profitable?
Absolutely, but it requires
work. It’s a skill that needs nurturing.
There’s no fast way of making consistent
profits on Betfair. You will need to put the work in. Study the markets inside and
out.
Whilst the majority of Betfair users aren’t profitable, those that are can reap
massive rewards. Take a look at this article I wrote a while back where 6 successful,
full-time sports traders answer 3 questions exclusively.
Many come into sports trading
through arbitrage or matched betting. Both of which are good ways to make some extra
money. Sports trading however, is quite different in the sense it is no a fixed
‘system’. To look at it like this is counter-productive. There are many striking
similarities and it’s likely if that’s your background, it’ll be a little easier
getting into trading. You’ll already have the core concepts of backing and laying for
profit, but it will require more work!
The upside being: you can make way more through
effective sports trading.
Is Sports Trading Gambling?
Technically, yes. But only by
dictionary definition.
Gambling: the activity of betting money, for example in a game
or on a horse race.
The problem is, gambling has a bad name. The media is filled with
horror stories about big losses on fixed odds slots machines. The stereotypical gambler
is somebody who places a bet because they are “feeling lucky”. Essentially, they are
betting without an edge.
All successful sports traders are profitable because they are
gambling with an edge. That edge will depend entirely on the individual. Some traders
might be extremely knowledgeable about a particular sport. Others may have a good
understanding of market forces which helps them to trade pre-race horse odds. To my
mind, that’s not gambling…
Therefore it’s important to always have a plan before you
start trading. If you’re trading without an edge, you are gambling. Pure and
simple.
Why Trading Over Straight Betting
If you’ve an account already, the chances are
you’ve placed a straight bet some time or another. Trading is different.
It’s not quite
as simple as placing a bet and then checking the sports results later on. But the most
rewarding things in life are rarely so simple, financially anyway. When you place a
‘straight bet’ on an event, the amount of variable factors contributing increase.
You’re at the mercy of said team or horse. With sports trading there is far more
control on the things you bet. For example; if you are trading a specific horse down at
the start of a race and it’s behaviour should change, you have the option to close out
that trade. If you were placing a straight bet, it would still stand.
Trading brings a
level of flexibility straight betting just can’t.
How Much Capital Do I Need To
Start?
Often an early concern for many.
Firstly, you don’t need much. Because starting
out in the markets doesn’t have to be costly. Most software has a training mode
setting, allowing you to lose nothing but your time while learning.
Beyond training
mode, I would suggest starting small. If you’re succeeding, the numbers will start to
add up quickly. Consistency is the most important element to master. Starting with a
£200 bank on £2 stakes isn’t a bad thing. Try to look at sports trading longer-term.
Over the years I’ve seen many come and go, often because they expected too much too
soon!
What To Be Aware Of When Trading Sports
If you’re new to trading exchanges there
might be a few things that you haven’t experienced yet. I’m going to list a few common
things that go hand-in-hand with trading on exchanges that you can look out
for:
Track-side Betting: This is when people bet from the stadium, or race course, or
any event! They are very common and will have a time advantage over the traders
watching on TV. Its why they do it! They can still make mistakes; it’s not a golden
ticket. However if you see the odds moving dramatically ahead on time – you now know
why. Tennis is a prime example of this; have a look!
Be Aware Of Your Feed: This goes
hand-in-hand with track-side betting. Always know how far behind live you are. A good
example of this is checking how far behind ITV or At The Races are with SIS. There
might be no track-side betting from an event, but you could still be massively behind
because other pictures.
Have The Best Software: I’ve touched on this above but it’s so
important. Speed getting in and out of the markets is key when trading. Research what
type of screen suits you – it could be ladder trading or simply just the normal three
box market with one click betting. Find one that suits and give yourself the best
opportunity to hit the right trades.
Know The Market Rules: This is a basic one but
important. For example, when a One Day Cricket game finishes a tie all bets are void.
They have an additional market called “Tied Match” where you can bet on Yes or No.
Sports are always changing little rules here and there; knowing how the market will
react to these could be a massive edge.
Always Ask Yourself Why: This is a brilliant
way of thinking in my opinion and I’ll end with this. If a horse is getting backed
heavily after three very poor runs; ask why?
That answer is obvious but it’s a good
example. If a football team is getting backed heavily before the teams are announced
someone more than likely knows something you don’t. Always stop and ask yourself why
the market could be moving; rather than just dive in and think “this is wrong.” Some
people will always have insider information but if you know the signs and are looking
out for it, you can avoid getting stung.
