Sports trading is just like stock trading. Instead of buying and selling shares of company, we buy and sell bets on sporting events. The real beauty of sports trading is that we don’t care who wins or loses the event. Just if the price moves. Because of this, we don’t have to pick winners to be a winner.
A stock traders main aim is to buy low and sell high. The principles are exactly the same in sports, but we lay low and back high. Making a profit, regardless of the result. If you match the bets and outcomes against each-other, you’ll see how it’s a profit.
Sports exchanges work just like any other financial markets.
Traders from all around the globe use the exchange to place bets with each other. Betfair acts like a referee. By taking real-time information from thousands of football matches, horse races and other sports, Betfair makes sure the winners get paid and the losers pay up. For providing this service, Betfair take a 5% cut on all winning bets.
When you place a bet at a traditional bookmaker, you are (almost) always placing a back bet. This means that you are betting that something will happen.
By accepting your bet, the bookmaker is effectively placing a lay bet. They are betting against you that your outcome won’t happen.
Using a betting exchange such as Betfair, allows us to place both back and lay bets. By doing this multiple times, we can produce a guaranteed profit no matter what the outcome.