Why Trading is so good

It’s been a welcome return to Tennis Trading for me this week. I haven’t traded too many matches since most of them are at ridiculous o’clock but I’ve made some really good profit and I’m actually enjoying it again.

I’ve always maintained that I find trading much easier to profit long term than betting but it still takes a fair bit of skill and just dipping in for a few ticks here and there is not the way to do it. Done properly by sensible staking and reducing risk where necessary/possible trading can be very lucrative.

In case you weren’t aware trading is preferable to betting for a number of reasons but mainly because you end up paying a lot less commission. Take this example I found floating about the Internet in several places.

 Betfair’s commission structure also greatly favours price traders making small, consistent profits over those that gamble on the result of the race. This is because their commission is charged on your net winnings for each market.

As a gambler you expect to have many losses but also some big wins to pay for those losses and therein lies the problem. As you are evening out your results over several different markets this means that when you do hit the big win the previous losses that you had are not taken into account and you must pay commission on the whole amount.

You don’t get to pay the commission on your net profit because your profits and losses were spread over different Betfair markets. As a result you end up paying a much higher proportion of your winnings back in commission than a trader who made the same net amount does.

For example, say you’re gambling on each race, if you win GBP 200 on a race, then lose GBP 180 on the next race and then win GBP 200 on the next race and then lose GBP 180 on the next race you have made GBP 40 profit overall from 4 races. 5% commission charged on your 2 winning races is GBP 20 so you end up with GBP 20 profit.

Even though commission is only 5% you have actually paid out 50% of your winnings in commission.

Now, if you had been trading those same 4 races and made an average of 10 pounds on each race, not only would you have made the same profit from a smaller bank without having to stomach the 2 big losses but you would pay much less in commission also.

5% of each GBP 10 profit is 50 pence so you would end up with GBP 38 out of your original GBP 40 profit. 5% commission when you don’t have huge swings to take into account actually means 5%.

You also reduce variance by trading and this means you don’t need as big of a bank as you don’t need to cope with horrendous losing streaks like you do with betting.

It’s a good job the trading is going well because the Drawfinder strategy is still just short of breaking even after just the one draw found last round. Here are this week’s selections. This will be the last week I post the selections on this blog but you will be able to find them and some of my other tips on another site (more on this later). The plan is to talk more about stuff like the above than just provide selections which is in truth a bit boring!

Date	Home	Away	Best Odds
12-Jan-12	QPR	Tottenham	3.9
12-Jan-12	Everton	Swansea	4.36
12-Jan-12	Reading	West Brom	3.46
12-Jan-12	Stoke	Chelsea	3.5
12-Jan-12	Sunderland	West Ham	3.3