Informed Decisions

This post was written in reply to Altobelli (great name) who posted this on the Betfair Forum:

I'm thinking of taking the big step into exchange trading and am looking for some advice. I'll be out of a job at the end of the month so will have a bit of time on my hands. I'm not looking at making this a career choice just yet but want to utilise the spare time i have to practice and develop my skills. So basically I need some advice on the best way of getting started. I understand the basic concept of trading but I need to practice and develop my own strategies. Can some of you experienced traders on here suggest a starting point? What is good trading software to use starting off with, are there a couple of good books I could read, would it be worth my while doing an exchange trading course? My main betting interests are football, particularly the Correct Score market, so I'd probably look at that as a starting point. Would appreciate any suggestions and advice.

My reply: I’m not sure some of the advice above, although no doubt well intentioned, is necessarily the best for a novice trader.

The generalization that “people who make ‘informed decisions’ on betting markets lose in the long run” is simply not true. It all depends on where you get your information from, and how you use the information you get.

What IS true is that you will lose in the long run if after processing the information available, you do not have an edge over others.

Optimism alone doesn’t cut it. Gamblers by nature are optimists, who feel that the laws of probability somehow do not apply to them and that 1.01 means a certainty. See how many threads are posted on here every time a 1.01 loses. Assuming the 1.01 is accurately priced, they will lose 1 in 101 times – not really that rare given the number of races, matches, events and markets there are each day. From the reaction they receive from some, you'd think aliens had landed, or that there IS a god.

So you need an edge, and it’s up to you to find one. No one is going to give you theirs. What sport you decide to use is up to you. If you like football, and think you know something that thousands have missed, then try it. The big matches certainly don’t want for liquidity.

Horse racing is similarly liquid for the most part, but if you’re like me and don’t have access to inside information, you’re probably going to struggle because plenty of people do have inside info.

Someone suggests tennis – but then cautions that you need to know a lot about it. He's right - you do. You are in a competition with thousands who know far more than you do, some of whom have done this for years and may be sitting court-side or in contact with someone who is.

You don’t need any fancy software. If you don’t have an edge, the fanciest software in the world isn’t going to help you.

The suggestion to start small is solid advice. If you have an edge, you don’t need a big starting bank - it will build up on its own quickly enough.

Discipline is essential - can’t argue with that. Things will go wrong, and the worst thing you can do is compound your losses when the red mist surrounds you. Stick to the plan, and always be prepared for the worst.

Specialising is solid advice too, although if you specialize in a short-season sport such as NFL, you might want to add a couple more sports to your bow.

The exchanges offer you the best chance to make money from gambling. As someone mentioned, the High Street is full of bookies, there because they continue to make money, not because they are a charity shop.

There are a few books out there on trading, but while some are a good read, I can’t say any of them have really helped with trading betting markets. It all boils down to being able to find value, and no text book teaches you that.

Bottom line is that trading profitably isn’t easy. You are highly unlikely to sit down next Monday and start making money. Be careful with that redundancy money. Be patient. It took me close to two years part-time to find an edge, playing with the same initial bank of £97.50 for all that time, up to four figures at one point, down to £21 seemingly the next!

I had much to learn and so do you. Good luck.