New blog post by Martin Futter! Betfair Sports Trading - Using Scientific Research to Find an Edge
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Have you ever wondered how to find your edge in Betfair sports trading and just felt like you had no real starting point?
We talk a lot on BTC about the importance of having an edge in sports trading but a lot of people still struggle to find their trading feet, instead opting to just jump straight in at the deep end risking money without really knowing if they can win long term. Obviously, 99% of people who take this approach will lose money and quit the game before they have really started. It's a sad reality of the industry, there are a lot of potentially great traders who go too deep too soon and end up packing it in before even bothering to learn it properly.
So how can this be stopped?
Sports trading is a science not an art, there may be creative way of doing it but the reality is there is only one result that really matters, increasing your finances. No one enjoys losing money, so let's figure out a sensible way to make some!
If sports trading on Betfair is a science then we must act like scientists but don't worry this does not mean we have to dust off our vague knowledge of GCSE Biology, Physics or Chemistry. There is a very basic formula that can be used to help you win at sports trading and it is very simply this:
1. Have a working hypothesis
2. Test it
3. See if it works
4. If it does then move forward with it and start testing something else in the background.
So what do we mean by have a working hypothesis?
1. A working hypothesis is esentially a theory that we want to test. So to give a sports trading example, you may have spotted something that happens a lot in the markets and may think that there is a trading angle there. Here is one that we know is true and has been tested (and by tested I mean our members have made a lot of money from this edge over the past 5 years!).
- In test cricket the draw price is often seems too short as draws in test matches are much rarer than the market suggests. Therefore laying the draw could be a profitable trading strategy.
So there you go, our study of the markets has found this as a great example of what was once a working hypothesis and is now a brilliant Betfair trading strategy for us. If you have spotted a trend in a market or have an idea you want to test then this is your working hypothesis.
2. Testing your idea is the next stage of this process, sometimes it is good to test for a year to see if it rings true or if you are less patient we suggest testing the strategies and systems you want to trade on for at least a minimum of three months before risking any of your hard earned cash. To give you the best chance of making money on a good strategy and more importantly not losing good money on a bad system! You can also test a variety of different ways of trading your hypothesis, such as as straight bets compared to trading in-play.
- I will test this idea for the next 12 months to see if it is indeed profitable to lay the draw in test cricket - I will test it as a set and forget straight lay strategy but also test how it would work trading in-play at shorted lay odds.
3. Once you have concluded your initial research and gathered your data of results it is time to see if the strategy works and has legs as a long term trading system. You can come to some conclusions and this will give you more confidence if you do decide to trade the given strategy and also will help you avoid a losing strategy as you can happily ditch it if it turns out to be unprofitable.
- After 12 months of testing I have concluded that it is profitable to lay the draw in test cricket as my results have shown this to be true and profitable.
4. Time to start using the strategy but also let's not rest on our laurels, test something else whilst we now have more time for testing again.
- Now I will start trading this chosen strategy using small stakes to begin with whilst it is still a relatively new theory. I will also start testing my next idea which is that football clubs with a big global repuatation will be overrated by the markets even if they are in bad form.
Then it is time to begin testing all over again using these 4 key points as a guideline.
There you have it, a very simple way to begin building a working theory to test and try to make some money from.
