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In part 2 of our comparison series, we look at how value betting compares to sports trading.
What is Sports Trading?
Perhaps the simplest explanation is that sports trading involves placing two bets against one another, in the same market, to make a profit. Exchanges such as Betfair and Betdaq are the home of savvy traders who make the most of price movements to generate a guaranteed profit.
The most common method of profiting from sports trading is to place a ‘back’ bet in the belief that the price will drop as money floods in. When this happens, you place a ‘lay’ bet at odds lower than your original ‘back’ bet to lock in profit.
In the example above, if you placed a £100 ‘back’ bet on Sendacard at odds of 2.98, and the price subsequently fell to 2.88, you could place a ‘lay’ bet at odds of 2.90. In this example, you would earn a profit of £8 if Sendacard wins, but you also get a cash-out option.
In a live example, I placed a £10 ‘back’ bet on the odds-on favourite, Mason Jar, in a horse race at odds of 1.77. As I wasn’t using software, I immediately placed a ‘lay’ bet of 1.74 in the anticipation that the horse’s odds would fall even further.
In the end, the odds dropped, and my lay bet was matched at 1.74. I now had the choice of a free bet with a £0.30 win if Mason Jar finishes first, or else I could cash out for a £0.17 profit. In ROI terms, it equates to 1.7%. For the record, Mason Jar was available at odds of 1.84 a couple of minutes previously.
If you do some research online, you will find that experts such as Psychoff and Jim Makos make a living from sports trading. As for how much you can make, there are too many variables to consider to provide an accurate summation. It depends on:
- The size of your average trade.
- How many trades you make each day.
- Your appetite for risk.
- The percentage of successful trades you have.
- Market liquidity.
Pros and Cons of Sports Trading
Pros
- Since you trade on an Exchange, there is no issue with possible restrictions.
- As long as you avoid in-play markets, your entire stake isn’t at risk.
- There are different trading tactics, such as scalping and swinging.
- You don’t necessarily need knowledge of the sport.
- It is possible to make a profit in seconds.
Cons
- You can’t realistically succeed without investing in software.
- The market can turn against even the most knowledgeable of traders.
- You need a thorough knowledge of how the software works.
- A sudden event during an in-play market could jeopardise your whole stake.
- As you usually only make small profits, patience is needed.
- If your equipment (software or Internet connection) malfunctions, you are powerless.
- You need to understand the Weight of Money to make profitable trades.
How Does Value Betting Compare?
There are a few differences and some similarities between value betting and trading:
- With value betting, the goal is to find a wager that offers favourable odds.
With trading, you’re attempting to read and act upon market behaviour. - Trading is a much quicker process where hesitation can prove fatal.
- It is arguably easier to read market behaviour than correctly identify a bet’s outcome.
- Both have long-term profit potential, as they are both scalable; although liquidity is crucial in both instances.
At Mercurius, we are currently focusing on finding and exploiting value bets but we are working towards a way of using AI to merge value betting and trading in a single strategy. It is akin to the financial world practice of investing in a ‘value’ asset but monitor your position, and manage it through trading. In the end, we will offer the best of both worlds.
