Sports trading means backing and laying sports betting odds for a profit before the event comes to an end.
Backing is the same with betting. Laying is bookmaking, which stands for offering odds to bettors. By laying at short odds and backing at higher odds, sports traders are able to make money either in-play or even before kick-off! What’s more, sports trading can be applied in almost any sports market, even in financial and political betting or in special bets, such as TV shows and music contents!
Personally, I went full-time sports trading in 2004 and quit in 2007. During those years I traded millions in horse racing markets and gained experience that helped me make the move to stock and forex trading. At the peak of my sports trading career I traded 3 millions of euros in a single month.
Read on to find out how I started, my bankroll requirements, my advice on money management and tips on how to improve your predictions and how to use betting charts.
How I started sports trading
I found betting exchanges in 2004. I used to bet the regular way in online bookmakers till then and like most, I initially found it difficult to understand what is going on in a betting exchange. Odds were moving up or down, there were money waiting to be ‘matched’ and we could act as bookmakers ourselves! A total chaos that drove me away in the beginning.
Little did I know that I would return a couple of weeks later and become a full-time sports trader!
That happened when I bumped into a video online, where a sports trader explained how he was making money by trading horse racing betting odds. He bragged that he rarely had a losing day! You know the saying: when something seems too good to be true, it’s because it is.
Adam Todd, the sports trader in question, made me spent considerable time on comprehending betting exchange’s mechanics. Finally, after watching his video over and over again, I pulled the plug and deposited my first 500 euros in Betfair. That was my first and only deposit I made in the betting exchange.
The kind of trading that Adam showed and I built my skills upon, is called scalping. Scalping is trading miniscule odds movements, making small but constant profits. Imagine buying oranges for $2 and selling them for $2.04 ten seconds later. Yes, scalping is trading on steroids.
You need speed for scalping. No, a 24Mbps internet connection does not guarantee the speed I am talking about. It’s the lowest ping you should be after. Ever played a video game online and experienced lag? Those milliseconds that cost you a virtual ‘kill’ may mean hundreds of dollars in sports trading and scalping in particular.
Now comes the best part: I began scalping with a 56Kbps dial-up internet connection. Odds were refreshing every 2 seconds minimum. At times, I submitted orders and didn’t know what was happening for about 5 or 10 seconds! Talking about dark ages.
Even under those circumstances, I managed to double my bankroll during the first month of sports trading. Yet, it was obvious I was handicapping myself.
What to avoid in sports trading
Upon installing a broadband internet connection a month later, my winrate skyrocketed. I did have losing days, but never did I have a losing month, like Adam. Skillful traders could actually make money in almost every horse race!
The best handicappers and sports bettors could not beat that. The best sports betting strategy can have days in the red. Sports trading was an entirely different beast.
Losing money when scalping meant you didn’t trade well. You made bad predictions, you chased your losses or you had bad internet connection. I cannot think of another reason to lose money. No, the rule of “cutting your losses short and letting your winners run” does not apply in scalping. That’s because you always cut your losses short and you seldom let winners run in scalping. Thus, if you do not cut your losses early on, you are not scalping but gambling.
- Bad predictions: In scalping, much like in trading, you make money when you predict odds movements correctly. If you constantly trade in the wrong direction, you are going to be broke. In scalping, that means you suffer many small losses instead of scoring many small wins. By improving your predictions in scalping, you increase the win/lose ratio, not the money won/lost per trade. This means you will ultimately have a lot more winning trades, yet the net amount won per each trade will remain about the same. I’ll explain later how I improved my predictions in horse racing and in pretty much any other market I traded.
- Chasing your losses: This is lack of discipline. Being a scalper, sports trader, a position trader or an investor, chasing your losses is one of the biggest leaks. This leak can and will bring any profitable strategy to its knees. Chasing losses is found in any form of gambling, therefore if you caught yourself doing that, you are not ready yet for sports trading. Because of the high betting frequency in sports trading, your lack of discipline can have a devastating result in a much shorter time. Make sure you are not prone to tilting and losing temper, before delving into sports trading.
- Bad internet connection: This doesn’t need much explanation. If your internet goes down during a trading session, you are toast. You should have a backup plan in case of that emergency, which usually includes a backup internet connection. That second connection does not need to be that fast but it should be reliable. You are only going to close your open trades with that.
In fact, there is another reason to lose money in sports trading before the horse race starts, but I needed a headline instead of a bulleted list to address it.
Never go in-play when sports trading
Unless you were supposed to trade in-play, letting a trade open on the race’s official starting time is a recipe for disaster. But why would you do that in the first place?
- You are losing more than you expected in the regular trading session and are looking to gamble a bit to recoup losses quickly.
- You are aiming for that one tick to get out of the market but odds seem to have come to a halt.
- Races start on specific time, which you missed. Although today’s trading software set alarms on for you to avoid that error, you’d be surprised how often traders neglect keeping an eye on their clock!
Whatever the reason you are willing to let a trade go in-play, restrain yourself from doing it ever again! Accept your loss, take your one-tick-less profit and move on to the next horse race. Trading never ends, the next opportunity is just a click away.
You have no excuse to put your bankroll in such a high-risk environment.
In-play sports trading demands a different approach and certainly puts you in a severe disadvantage when you are risking 50% or 100% of your trading capital! And speaking of capital, let’s now say a few words on money management.
How much money do you need for sports trading?
As little as possible! Since you are reading this, I assume you are at best an amateur when it comes to sports trading. Therefore, you should invest the minimum amount of money until you become familiar with sports trading. Why?
Because, as they say, you are going to lose that money – consider it a tuition towards your trading studies. So, why spend much when a few hundred dollars can teach you the same lessons?
I myself began with just 500 euros, although I had studied about financial trading and chart analysis, while have proven myself that I was disciplined enough in gambling. What makes you think you are going to win from Day One, without ever reading a trading book?
Remember that practice beats every book, but you do need some background to get your feet off the ground.
After allocating a specific amount of money for your trading endeavors, you should manage that money properly. How to do that? Jump over to my sports trading’s money management article. Then come back.
Did you read that?
Ok, now you know perfectly well what I did, in order to become a successful sports trader and get interviewed by popular sports websites. In fact, this particular interview of mine has become quite popular and you can find more details of my sports trading career in that post.
A career that ended in 2007.
The curse of a professional gambler
Gambling and investing usually present themselves with many money-making opportunities. Unfortunately, those opportunities do not seem to last for long.
When word is out and more fishermen jump into the pod, fish become extinct. The edge is severely affected and sometimes the market has balanced itself so much, that there’s no edge at all anymore! On the other hand, old strategies fail while new ones prosper!
That’s what happened in my sports trading. More traders with fast internet connections joined the party, more astute bettors converted to traders and more sophisticated trading systems emerged to beat the old-fashioned ones. I had to evolve, much like I evolved after casinos barred me from playing blackjack (due to me card counting).
And that is the curse of a professional gambler: Adapt or die.
I adapted by taking a look at another opportunity emerging at those times. That opportunity would allow me to go back to playing cards again. Read my poker story here.
Resources for sports trading
People very often ask me for advice on how to start in sports trading. I now give them a link to this very article. If you read the lines above, you already know:
- how much money you need;
- how to apply money management, and;
- what to avoid in your first steps in sports trading.
Yet, you still need to predict the market correctly if you were to become a profitable sports trader. I tried to explain that via showing my trading style in a numerous videos I uploaded at YouTube. The video that attracted the most viewers is this, so I guess it will appeal to you the most as well.
In my opinion, you stand a better chance if you study about stock markets and technical analysis (here’s my advice on how to move from sports trading to stock trading). You’ll better comprehend market depth’s behavior and be able to pick better spots to back or lay after learning chart analysis. With that in mind, here are some resources I strongly recommend you spend some time on.
Unfortunately, to my knowledge, there isn’t a single book for sports trading. Maybe there’s a void in the market for me to write one myself! Until I do though, here are my recommended books for sports trading, majority of which discuss about financial markets.
- Come into my trading room – Dr. Alexander Elder
- The Master Swing Trader – Alan Farley
- Trade chart patterns like a pro – Suri Duddella
- Japanese Candlestick Charting Techniques – Steve Nison
- You can be a stock market genius – Joel Greenblatt
- Trading in the zone – Mark Douglas
- The disciplined trader / Developing winning attitudes – Mark Douglas
Fortunately, there is a vast amount of free knowledge circulating the web. Just check out the following websites to get a grasp of markets’ behavior and psychology. Don’t forget that any form of trading is a psychological battle between supply and demand.
Sports trading software
In modern times of sports trading, sophisticated and advanced trading software is necessary. Otherwise competition will always be a step ahead. This software offers chart analysis, instant order placement and greening-up functionality to name just a few of their advantages. Before you decide on which software you are going to use in sports trading, make sure you time-trial it. Also, do not be afraid to share your credentials with officially approved software vendors but avoid sketchy ones.
The following list includes software I have personally tried and used over the years.
Geeks Toy, a Betfair betting & trading application, has been designed in such a way as to make it simple and easy to use but at the same time take advantage of numerous new innovative and powerful features.