What Is Sports Trading? A Beginners’ Guide

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Updated: 04 November 2020

If you are looking for an explanation about what sports trading actually is, then you’ve come to the right place. Most people are familiar with placing a bet to guess the correct outcome of a sporting event, and increasing numbers also know about laying a bet, which is when you actually bet against a specific outcome.

However, the full extent of sports trading online goes way beyond these two simple concepts, and today you can use the methods available via online betting exchange trading to have a much wider choice of how to potentially make money.

Read on to find out exactly how sports trading works and the best platforms to use.

Sports trading for beginners

When you start out with any new method of dealing with finances, you really need to do your own due diligence and make sure that you know exactly how things work.

When it comes to sports trading for beginners, the easiest way to start to get to grips with things is to think of it all as being quite similar to other forms of financial trading, such as stocks and shares, forex markets and so on.

A range of common concepts apply across the different disciplines, as all are trying to turn a profit. Spread betting is, at its core, the same as predicting price movements, and it has some similarities with trading CFDs because it can be done in a totally ‘emotionless’ way, as long as you don’t let allegiance to a particular team or sporting personality bias your behaviour.

Betting exchange trading is based on the practice of taking two positions (or placing two bets) in opposition to each other but on the same market selection. The principles of ‘buy low, sell high’ that apply to stock markets are the same for sports betting, except that it’s actually ‘lay low and back high.’

Sports trading is simply the name given to these processes when used on a betting exchange rather than a stock market or with a forex broker. The aim is still always to end up making a profit.

Spread betting: sports vs financials

The two sub-divisions for sports trading mirror various other financial trading styles.

Trading with a betting exchange allows you to ‘buy’ and ‘sell’ sportsbook bets, while sports spread betting is basically the same as financial spread betting or CFD trading, but based on sporting events instead.

Having said that, there are, of course, important differences between sports spread betting and financial spread betting. Both are seen as complex forms of betting, and, of course, both are volatile and involve a potential for larger losses than would normally occur in the straight laying and backing styles of betting.

Financial spread betting is often seen as the domain of financial professionals who might have some kind of ‘inside info’, but, in fact, many thousands of people around the world are taking part today. With high variables on financial markets bringing a built-in volatility, the risks can be very substantial, so it’s not for the faint-hearted.

Sports spread betting might seem a strange concept, as instead of betting for or against a specific event result, you’re actually speculating on the movement of the market. An example might be taking the total number of points that a Premier League team will accrue over a season.

The spread will be set at a certain figure so you’ll, therefore, predict a result above or below that and bet a set amount per point. If you bet higher than the set end figure and the team achieve more points, you will win your set amount for each additional point. However, if they miss the target and end up with fewer points, you’ll lose that same wager amount multiplied by each point that they fell short.

There are many different markets that offer sports spread betting opportunities, and some of the most popular include player goal minutes, where the spread is for a star striker to score, first goal scored or conceded, first corner of the match, etc.

Top 3 Sports Spread Betting Brokers

 

Spreadex Minimum Deposit: $1 Go To Broker
Football Index Minimum Deposit: £10 Go To Broker
Sporting Index Minimum Deposit: £10 Go To Broker

Betting exchange trading

Betting exchanges allow you to both buy and sell odds because you can use the traditional form of a ‘back’ bet, where you place a wager on a particular result, but you can also ‘lay’ a bet, which means that you are taking the opposing position and betting against a set outcome.

Essentially, this means that you can choose to take the traditional role of a punter or decide to play the part of the bookie. In other words, backing on a better exchange is the form of betting that most people – even those who don’t enjoy the occasional wager – will be familiar with. Laying is really a simple form of bookmaking, whereby you are the one offering odds to other players in the same market.

By doing both, you can even make money on the same event by laying at short odds and backing at higher odds – so an experienced sports trader (or lucky novice!) can use almost any sports market to come out on top.

Top 3 Betting Exchanges

Betfair Minimum Deposit: £10 Go To Broker
Smarkets Minimum Deposit: £10 Go To Broker
Matchbook Minimum Deposit: £5 Go To Broker

Risk management

Any form of financial trading is likely to carry risks, and these can vary greatly. Placing a ‘back’ bet means that you have a risk exposure that is easy to calculate – it is quite simply the amount that you choose to place as the wager. It’s much the same if you decide to take a ‘lay’ position.

However, with spread betting, things can get much more volatile as depending on the market and the potential spread, losses can mount up quickly.

Whether you are a naturally risk-averse person who will be drawn to safe trades and bets or you have a more daring streak that means you are willing to take a greater leeway position when it comes to the risk/reward ratio, the golden rule is still never to bet more than you can afford to lose.

Having a distinct risk management strategy is key to success as even the most experienced player will never be able to get it right every time.

  • Having a plan for how much you stake in comparison with your available funds is vital, but you should also be aware of the various tools and methods you can use to minimise your exposure to losses.
  • A mechanism called a ‘stop loss’ is an automated tool offered by many platforms. This allows you to set a limit point that defines a level in your bet that, if hit, closes the wager and limits further losses.
  • Even though this approach can play a large part in an overall risk management strategy, having the right mental attitude is perhaps the single most important aspect to get right.

A successful sports trader understands that there are bad days and good days. Even so, losing is never pleasant, and if you are to turn things around, mental discipline is required.

Unfortunately, there is no magic word or quick fix to achieve this state of mind – only research and experience will give you the understanding you need.

Conclusion

Sports trading for beginners can be a risky business, but learning about betting exchange trading isn’t difficult – it just needs attention to detail and some time to get to know the ins and outs of how to get started.

Some people see it as a way to build up trading skills before moving over to other more traditional financial trading markets, while others look at it from the other side and think that the opportunities offered by sports trading are more varied and more interesting than CFDs, forex markets or stock exchanges.

Whichever view you take, there is no denying that trading on sports markets is a good option to add to your trading toolkit. What’s more, if you like CFDs because of the ‘emotionless trading’ style they offer, the same can easily be applied to sports markets that you might not have a particular interest in. Again, the reverse is also true, as many sports fans put their knowledge and experience to good use in taking positions on betting exchanges.

The only conclusion that can be drawn from any sports trading beginners’ guide is that there are plenty of opportunities to make a profit, many different markets and positions to take, and several extremely good and well-respected platforms and exchanges offering excellent service and good value for money.

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