Online sports betting and trading are both growing rapidly, but while betting has been around for many decades, the increased interest in sports trading has come about in more recent times.
Most people that bet on sports don’t really know what trading is, even if they are familiar with Betfair, which operates the biggest betting exchange in the world along with its traditional sportsbook.
Any Betfair customers that have had a look at the exchange may have been overwhelmed and put off at first glance, but it is not as difficult or daunting as it might appear. The same can be said for other sports trading platforms, of which there are several.
What is sports trading?
Sports trading works in the same way that stock trading does. Just as you buy and sell shares on the stock market, you can do the same with sporting events.
You can complete your trades before an event has even started, or you can let it run in-play and see the prices fluctuate as the market reacts to the action taking place.
The main aim of sports trading is to back an outcome at a certain price and lay it at a lower price in order to secure a profit.
What do ‘back’ and ‘lay’ mean?
When you back a selection on a sportsbook or betting exchange, you are placing a bet on that outcome to happen. Any bets you place on standard online betting sites can be classed as ‘back’ bets.
A ‘lay’ is a bet on the outcome not to happen. This is essentially what a sportsbook is doing when they accept a ‘back’ bet from a customer.
In sports trading, you could either start with a lay bet and then place a back bet at a bigger price later on, or you might begin by placing a back bet before laying it off when the price is shorter.
Is trading as risky as betting?
There are many different trading strategies, and some are higher-risk than others, but many of them are designed to eliminate risk, especially compared to standard betting.
When you place a straightforward bet on a sportsbook, your risk is your full stake, as you are going to let the bet run its course. The potential rewards are high if the bet wins, but ultimately you have liability if you are not successful.
On the flip side, traders are rarely looking to let their back or lay bets run through the duration of a sporting event with no further action.
You can gradually remove liability throughout an event, or remove all of it before it even gets under way.
If you back a horse at a price of 8.00 on the morning of a Cheltenham Festival race and then lay it at 6.00 a minute before the off, you have successfully executed your trade and you have a profit regardless of which horse wins.
How can I get started?
The first thing to do is to take in as much information as you can, and read about all of the main trading terms and strategies.
If you already have a basic understanding of sports betting or stock trading, it should be a relatively simple transition to sports trading.
Have a look at some betting exchanges and watch how the markets move before and during events. Some of the most popular sports for trading are football, tennis, cricket, and horse racing.
When you feel like you are ready to give trading a go, make sure you start with small stakes, as you can easily be caught napping and leave yourself overexposed – it has happened to everybody!