In the sports betting markets odds (prices) fluctuate for a variety of different reasons. The biggest influence is when new information enters the market. Information such as changes in a team’s line up, injuries, managerial changes or weather conditions can all cause a team’s odds to rise or shorten depending on the view point of the market. Betting exchanges such as Betfair and Smarkets allow users to open and close trading positions before the start of an event. This is known as pre-event trading. This is an excellent strategy to use in the sports betting markets: in a lot of cases it’s incredibly low risk but has potential for very high rewards.
Let’s look an example and see how pre-event trading works.
Pre-Event Trading Example
In the above image you can see that I placed a series of trades on an NFL game between the Cleveland Browns and the Denver Broncos.
If you look at the above image, on the right side is the amount of money matched on my trade. In this trade I had backed (bought) the Cleveland Browns at an average price of 2.03 for £2906. The next day I layed (sold) that price at 1.79.
Let’s break this example down a little bit more.
Backing is simply buying the odds of a team. In the above example you can see that I placed back bets totalling £2906.67 at odds of 2.03
Now as a traditional bet this would mean I would be staking £2906.67 to win £2993.87
2906.67 X 1.03 = 2993.87
For every £1 invested a return of £1.03 would be made should the Cleveland Browns win the match.
However betting exchanges allow you the option to sell your odds. This is known in sports betting as laying the odds or lay betting. Lay betting is when you bet against a team to win. This is what I chose to do with my position the next day.
The reasoning behind this trade was that new information had emerged regarding the Denver Broncos line up. It was revealed that key players would be missing from the upcoming match against Cleveland.
My strategy when opening the trade was to allow the market to react to the news and then exit the next day. This news led to a ripple effect in the market as people started to back Cleveland and odds on Denver had to rise. Which in turn meant that the odds on Cleveland would have to drop creating a profitable trade.
The next day I layed (sold the odds) of the Cleveland Browns. Lay betting is when you take on the role of the bookmaker and are basically accepting someone else’s bet.
In this example I ended up laying £3807 at odds of 1.79
This meant that for every £0.79 invested I would win £1 should they lose.
£3807.85 X 0.79 = £3008
Meaning that I was risking £3008 win £3807 if the Cleveland Browns lost.
This gave me the following scenarios:
Cleveland Browns win = £2906 risk to win £2993
Cleveland Browns lose = £3008 risk to win £3807
This left me with the following outcomes:
Cleveland win £2993 – £3008 = -£15
Cleveland loss £3807 – £2906 = £901
I was in a very good position here which had a lot of value given the implied odds. The beauty of betting exchanges is that they allow you to hedge your positions across all outcome of an event which is what I chose to do here. Hedging means backing both outcomes of an event in order to reduce your overall risk. This left me with a profit of £457 should Cleveland win or a profit of £448 should Denver win.
Trading on sports events in this way is, in effect, the same as buying a stock at a lower price and selling it as its value increases. Team news is one of the most effective ways to trade the sports betting markets, so how do you find information which can help you make profitable pre-event trades?
Finding Information For Profitable Pre-Event Trades
Sports coverage is huge!
From social media to fan forums, sports channels, online magazines, press conferences, sports journalists there are numerous ways to get information related to the sports betting markets.
One of my favourite ways to find information about upcoming football games is through Twitter, using official sports teams twitter accounts as well as following a number of journalists. Fan forums can also be a good way of collecting information about a smaller teams’ upcoming line up. Experience will tell you which sources are the most reliable until eventually you will have a number of reliable resources that help you make informed decisions when trading. Think of this as the sports trading version of fundamental analysis.
Team News Trading Example
Let’s take a look at another example from the Standard Liege vs Arsenal game on the 12th of December in the Europa League.
You can see that initially when the odds opened Arsenal were backed in quite consistently.
They opened at odds of around 2.0 and spiked up to 2.25 in the early markets when liquidity is low and the odds can be more volatile. On match day Arsenal were backed in all the way to odds of 1.8. When team news was released on Arsenal’s official Twitter page, about 90 minutes before the game, many of the regular Arsenal line-up were not in the starting team.
On the image above I have highlighted this point and you can see that the market reacted to this and steadily pushed the price back up to 2.15. If you reacted to the team information you could have layed (sold) Arsenal at around 1.8 and then as the odds rose and news filtered around regarding the team backed (bought) Arsenal at odds of 2.15.
In this case our strategy would have allowed us to hedge our bets and guarantee a profit across all outcomes.
Opportunity In The Sports Betting Markets
In this article we have looked at one strategy to effectively trade the sports betting markets. This strategy is very simple and relies only on being aware of the impact that news can have on sports betting odds.
You can use this strategy across all sports football, basketball, boxing, tennis. It is pretty much applicable across all betting markets.
For anyone new to sports trading this is a really low risk way of starting to learn about the sports betting markets. If you are a sports fan already then it is likely that you have some excellent resources for team information already.
If you are not the biggest sports fan but are interested in trading. Then the sports betting markets are relatively simple and offer some great trading opportunities.