Top 6 Ways to Find an ‘Edge’ in Sports Trading Part 1
If you don’t have an edge on the market you will never make money over the long term. There is a reason the pros continually make money trading and it isn’t dumb luck, it is that they consistently outsmart the markets. This is not easy to do but with the right application and discipline these top tips will give you a good foothold in the battle against the oddsmakers! (NB: This article became so big I have split it into two blog posts).
Work from a hypothesis theory -
This is a really simple way to start looking for an edge and is how I start all of my systems off. I work with an idea/theory I have on how to beat the market and then test said theory to see if my prediction is correct. To give you a clear understanding of this concept I will use a real life example of one of my earliest ‘Draw No Bet’ football systems. This system derived from something I spotted whilst watching football markets, that they often fail to react to momentum in matches. They only really react to goals, major incidents (like red cards) or the time left in the game. So for example Manchester United could be playing away to West Brom, kicking off at odds of 1.33-1.4 draw no bet, after 25 minutes with a scoreline of 0-0 West Brom could have five shots on target to Man U’s zero and still be major underdogs despite clearly dominating. I figured I could have an edge here as the market did not seem to have a lot of interest in momentum and what they could see in front of them but was rather fixated on the pre-match odds and only adjusting according to the major events listed above. I adapted this a bit and had guidelines for when I thought it was a value bet, testing it for three months before putting money on. Testing went well and it has been profitable for me regularly over the years. The key thing is I started from a working hypothesis that ‘the market does not react enough to momentum and pressure in-play during football matches’ I tested it to check I was correct and found an edge. If you have a similar theory follow the steps above to find out if it is in fact profitable.
Spot markets/events/teams/players that oddsmakers often over/under estimate -
Sounds great but how do we do this? The only way is to study the markets and work out which outcomes are often priced wrong. This falls under my ‘Man Utd theory’, a theory that suggests that big teams with a great history like Man Utd will almost always be too short odds, no matter what form they are in or how badly they have done the past few years. Bookmakers react to punters and the reality is historical fan favourites get backed very heavily by mug punters (think England football team during a major tournament!), as such teams like Utd, Liverpool, Barcelona etc are unlikely to ever be a value bet but rather a value lay. A great example of this is when Leicester were underdogs late in the season about to win the Premier League in incredible home form playing a very mediocre Man Utd side. Why on earth were Utd favourites in that position? Simply because of their name and history. This kind of thing happens in nearly all sports a more recent example in tennis is Andy Murray, you would have made a fortune laying him at short odds this year, he has multiple injuries and is in dreadful form for his standards, yet people will back him below 1.1 pre-match and in-play, in a one man sport. So to profit from this we need to track which teams are overrated, have a rough idea of how we would price the market (this is where the study comes in) and not be afraid to take on the general majority...which leads me nicely to my next top tip.
Go against the ‘crowd mentality’ -
I must credit Richard Futter for this one as he gives me this advice on a regular basis. It is human nature for most people to ‘go with the crowd’ and by that we mean follow what they do. This is well documented in sports betting. Horse racing is one of best sports, how often do we see a horse's odds get smashed in with At The Races saying ‘someone must know something’ and then watch it lose as it turns out no-one knew anything. Of course they win sometimes but I would say the majority of them are just nonsense market moves. As I have said above it pays dividends to take on the crowd (that’s pretty much single handedly where bookmakers make all of their millions) but it takes a lot of courage as people like to back favourites not lay them. If you see a price you don’t agree with or you find out some information that makes you think a market is badly priced, then take advantage. Often we see markets where the favourite its sub 1.1 and people are talking like the event is over and then thego on to lose. Daniel Johansson is a master of this in tennis, regularly taking on 1.0X shots and watching as they lose momentum and start trading above evens leading to monsters profits. If the market thinks an event is over and there is still time for a comeback which there is a small chance of then take that market on. Your edge here is your ability to go against the grain and not be suckered into thinking momentum cannot change in sporting events.
That’s it for this week! Make sure to check us out next week for the final three top tips to getting an edge in sports betting.