A Start To Trading & How It Works
This month at the Football Advisor, we're going to be focussing on trading.
Trading, if executed properly can be a consistent source of low-risk profits. For those that have mastered the art, they can make a decent second income or even a full-time living from it.
The only downside and something that puts people off is the time constraints and the lack of “excitement”.
However, I bet there are plenty of people that don't get much excitement and are bound by time constraints from their jobs!
So, for the uninitiated, what exactly is trading?
In its simplest form, we're buying and selling probabilities. It's a similar concept to buying and selling on the stock exchange.
Let's break this down –
Selection A is priced at 3.0 on the exchange.
We place a back bet with a £10 stake and will win £20 plus get our stake back.
Ten minutes later, the same selection is now trading at 2.5. We place a £10 lay bet to which we will be liable for £15.
If the selection wins, we win £20 but lose £15. This gives us a £5 profit. If the selection loses, we lose our £10 back bet but win our £10 lay bet, meaning we're break even.
Now we look at the buying and selling aspect of the trade.
The selection priced at 3.0 has a probability of winning the race of 33.33%. By backing the horse at this price we're “selling” its chances of winning at 33.33%
When the horse becomes 2.5 in the market, it's probability is now 40%. When we lay this off we're “buying” back the bet at a higher probability than when we sold it.
Don't be overwhelmed by all of that, as we're going to be covering this in a lot more details over the coming weeks 🙂
So, let's look at an example.
Arsenal is 2/1 or 3.0 in decimals to win this particular game. Having placed a £10 bet, we can see that our profit will be £20.
Now, we wait for Arsenal to shorten in the betting (Don't worry, we'll be showing you how to predict these movements, in the coming weeks).
We can see that our liability is now £15.
But, look at how the market has changed, now that we've traded this selection –
If Arsenal wins the game, we're guaranteed to make £5 (minus commission) and lose nothing should either the game end in a draw or Newcastle win.
Now, that's just an example and it's possible to make much more but also things can go wrong.
Don't worry though, as we'll be covering all aspects of trading as the month progresses.
On Wednesday, we'll be looking at a seasoned traders perspective on certain trades. On Thursday we'll also be looking at a beginners journey through, how he started and where he's at now, three months later.
Have a great week and we'll be back tomorrow.