Advantages of trading over betting


In play trading involves backing a player, team or selection and laying or backing against them with the aim of locking in a profit. This is usually performed on the betting  exchanges where this is simplest but there are many people who also like the use of bookmakers like Pinnacle who have great value odds and high limits. Some like to have this option available at all times just in case of exchange outages which are quite common especially with Betfair!

More bettors now able to try trading

In years gone by to trade you had to use your own maths, play around with the ‘whatif’ function on Betfair or use some kind of betting software to calculate the appropriate stakes for your trades but in recent years Betfair have deployed their own ‘cash out’ functionality. The cash out functionality will offer you the worst case and although it will match you at better odds if it can it’s not the most effective way to find value in trading.

Trading has advantages but gives false security

It is however because of this that many more novice bettors can now understand the trading process a lot easier . It’s common for people who discover trading for the first time to think they have found the holy grail and that trading is so much easier than betting. Much of this is down to the sense of security they feel when they are able to ‘cash out’ of their Man Utd bet when they go 1-0 up but what people tend to do is cut all their winning bets short but never cash out of their losing bets. Long term this is most likely going to make you a long term loser and there is much more to understand about profiting from trading.

Trading is effectively still betting and you still need to be able to find value in your trades for example. That said, trading does offer advantages offer betting and in this blog post an d the next we look at why trading is better than betting and some of the common trading mistakes that novice traders make.

Reasons Trading is easier to profit from than betting

1)      Commission structure – benefit lots of small wins than big wins and big losses

The commission structure on the exchanges benefits traders more than it does people who bet only and let their bets run. This is also the main reason that the premium charge was introduced. A lot of people think this charge is unfair but in truth most are unlikely to have to pay at least until they’ve made many thousands of pounds and not paid a fair amount of commission in relation to their winnings.

Here is an example of how trading works out better than betting. Let’s say you make a £100 bet on a tennis player at 2-1 (3.0) and it loses. Then you make another bet on a tennis player at evens and it wins. Your total profit and loss is +£100 but you’ pay 5% on your one winning bet of £200 which is £10, giving you  an after commission profit of £90.

Now let’s say you backed at 2-1 (3.0) but layed of at evens in both bets giving you a profit of £50 in each match. It still gives you £100 profit but you only pay £2.50 commission on each match meaning you take away £95 after commission. This £5 may not seem much but the effect of being able to make such trades over and over again has a big effect.

2)      Many in play models based on pre-match odds and points/score changes

I’m sure most of you are aware of just how accurate pre-match odds are as they are easy to model long term. Most of the in play liquidity will be based on these pre-match odds and the factors that are easy for computers to take as inputs. By this we mean things like score, time left etc and so if a price was value pre-match, there’s a good chance it still will be in play to a certain extent regardless of what is happening.

3)      Easier to gain an edge in-play as you can spot non calculable things

It is obvious that by watching a match you can better judge who might be a better bet because you can see things like motivation with your own eyes. You won’t be the only one looking out for these thing though so aim to spot things other’s may have missed or might not have considered to get a bigger edge. A good example of this was a few years back when someone on the Betfair forum informed everybody that they’d heard Wozniacki’s dad tell her in Polish to retire at the end of the set and she did!

4)      Fewer losing streaks with trading compared with betting

Profit and loss can fluctuate wildly in betting results and trading profit/losses will generally be less volatile. Value bets don’t always win but when you trade and find value there’ll be lots of opportunities to lock in profits. With trading you can often find poor value but still have plenty of chances to trade out and make a profit and when betting you can regularly find value and lose. When trading you might sometimes choose to take a few small profits other times big but if you’re staking is sensible you should be able to keep these profits fairly consistent.  Having less volatility and less variance is mentally easier to cope with for us humans.

5)      Much easier to predict what the market thinks will happen and what it will do than it is to predict the outcome.

The way in which the prices move in play can be very predictable on the exchanges. For example, in markets where there is a huge favourite that is in danger of losing it often doesn’t take much for the price to move drastically. This kind of market can be volatile and a couple of points won in a row and the markets faith is restored. People are looking for turning points and generally over react to things that they think fulfill their own beliefs on what they expected to happen. 

Again we should iterate that trading does not offer guarantee successes and there are pitfalls to avoid which we’ll discuss in the next blog post. There are time costs associated with trading and it can be very stressful. It’s also harder to profit from it than it was in the past as the markets are much more accurate in play due to the introduction of Betfair’s cross matching system. But it is still very much possible to make lots of money by trading in play.

Markets which provide good opportunities to trade are usually ones that have lots of odds fluctuations and where liquidity is decent. Having no set finish time is also important because these markets are more difficult to accurately model in play.

To finish here are 5 of the best sports for in play Trading:

1)      Tennis
2)      Cricket
3)      Darts
4)      Baseball
5)      NFL