Sports Trading Archives - Smart Sports Trader

Understanding Variance in Sports Trading and Betting

Variance can be defined as the expectation of the squared deviation of a random variable from its mean, and it informally measures how far a set of (random) numbers are spread out from their mean.

If you struggled with that don’t worry your not alone. This definition doesn’t help those of us that are not very mathematically minded but there is a simpler way of looking at variance.

Variance is one of the key reasons why a lot of people struggle with sports trading and betting. It is something that I myself struggled with a lot when I first started sports trading and betting.

Understanding Variance in Sports Trading and Betting

Heads or Tails?

If we look at a coin flip there are two outcomes heads and tails. An equally weighted coin means that there is a 50% chance of it landing on either heads or tails. The nature of variance however means that if we flipped a coin a 100 times it may land on heads 63 times and tails 37 times or heads 44 times and tails 56 times.

The results of a 100 coin tosses would not be exactly 50/50 very often.

We know however that with a fair coin toss the odds are 50/50. With a greater volume of coin tosses the number of heads and tails recorded should move closer to evens.

Variance isn’t always negative and we sometimes do better then expected.

Understanding Variance in Sports Trading and Betting

Variance exists in sports trading and betting. There are several variables that we need to take into account when we looking at variance in our own betting and trading results.

We need to be aware of the odds that we betting/trading, the sample size of results that we have and what our expected edge is in the market we are trading or betting in.

It is important to develop a better understanding of variance as a sports bettor or trader. When we don’t understand something it often to leads to feelings of frustration and anger.

These feeling often have a negative effect on our sports trading. By breaking down and understanding the different aspects of sports trading we become better more profitable traders.

I am not an expert in probability and statistics it is something I am constantly learning about and trying to develop a greater understanding of. Luckily we live in an age were we can easily access articles and books published by experts in these fields.

Here is some recommended reading if you want to develop a better understanding of variance.

The first time that I really took gambling seriously was when I started to play online poker. A big influence on me managing to make a consistent profit from poker was from a book called “how to treat poker like a business.“

One of the best poker books I have read.

Now sports betting and trading are different from the game of poker but a lot of the same principles apply. In this article I will look at how to treat your sports trading like a business.

Treat Your Sports Trading Like A Business

Record Keeping

So lets start with what might be the most boring aspect but also one of the most important.

You need to be recording your trades and bets. Its important to see where you are making money and where you are losing money. What is the most profitable part of your trading business is it pre match trades, inplay, favourites, underdogs etc.

All good businesses will have detailed record keeping to know where they are making their profit and look at where they may be potentially losing money.

It is fairly easy to keep on top of this with so many software programs available to help with record keeping.

Recommendations

Open Office

Bettings

Look at the small margins

Small margins amount to big profits in the long term. Increasing a profit margin by 2% or 3% is going to make a huge difference to your profit over the course of a year.

One of the best ways of looking to increase those small profit margins is to look at Matchbook and Smarkets.

This year I have really looked a lot more at Matchbook and Smarkets as obviously the 3% commission difference between these exchanges and Betfair is a big factor.

Betfair is still the most ideal platform for trading it has the most liquid markets and the most real punters. There are markets you can trade on Betfair that you couldn’t on either Matchbook or Smarkets.

Matchbook and Smarkets are however growing and you see more and more liquidity becoming available in these markets. If I am looking to make a standard bet or pre match trade on the bigger football leagues its Smarkets and Matchbook that I look to use ahead of Betfair.

If you can transfer some of your trading or betting to Matchbook or Smarkets then its going to make you are lot more profitable in the long term.

Invest in your sports trading business

If you are treating your trading like a business then you should not be afraid to invest or reinvest some money into it. Even simple investments like a comfortable chair or extra monitor might pay dividends in the long run.

Don't be afraid to put money back into your trading. — Sports Trading and betting could be looked at as your new startup business.

If you prepared to invest in a more formal trading education there are some good traders out there that are offering face to face courses. Peter Webb, Steve Howe and Caan Berry all offer courses that focus on trading the horse racing markets.

If you are trading fast moving markets then you should probably look at using some api software such as Geeks Toy, Bet Angel or Gruss.

You can take a look at some of my recommended betting and trading products to see if there are any that would benefit your sports trading business.

Structure

Structure is very important in trading and betting. You really want to structure your trading and betting to be as efficient as possible.

Successful business’s don’t trade at random and erratic times. They have a structure in place to capitalize on the most profitable times and most profitable customers.

You want to do the same. You want to make sure you are trading when the best opportunities are available.

What is the best day to take off? When should I spend time with friends/family? How can I trade around work?

Spend some time structuring how and when you are going to trade. This can make a big difference to your mentality and help maintain discipline when trading.

If you treat your trading and betting like a serious business you have a much greater chance of making it a success.