The article is part of an ongoing series on educative sports trading topics and on treating the sports betting market as an investment opportunity:
”Investing is the act of allocating capital to assets with the goal and expectation of generating a profit. Good investing involves research, risk analysis, managing capital responsibly, and diversifying investments. Successful investors follow a long-term strategy or a system that matches their goals and tolerance for risk, and they follow that system non-emotionally.”
There is a lot to learn for newcomers when it comes to sports trading. You might find the market and the terminology unfamiliar. Let’s look at some of the key concepts to help you get started.
Finding opportunities in the betting market
Sportsbooks have a lot of similarities to the stock market. They are marketplaces where investors have the opportunity to invest capital in future results. And just like in the stock market, there are loads of those opportunities available and most of them aren’t that great. Investors need to be smart about choosing their spots.
At ScoreMetrics, we find these by exploring hundreds of hypotheses and conducting thorough research to find out if we have something in our hands that meets our rigorous criteria. We create rules, analyze every piece of relevant data we can find, and backtest our theories to make sure that they’re profitable over long periods of time.
The patterns that meet our criteria will then become active sports trading systems in our portfolio.
The people acting in the market can be roughly categorized into three groups with different approaches:
- Gamblers, who make bets based on gut feeling in order to have some fun or to try to score a big, long-shot win.
- Handicappers, who analyze single games and make decisions based on their analysis.
- Sports Traders, who take a systematic approach to exploiting long-term patterns and approach the market in a similar fashion that traders in the stock market do – as a long-term investment.
For more on that, have a look at our article on the differences between gamblers, handicappers and sports traders.
Understanding the methods and the odds
The available methods of investing in the sports betting market might seem confusing at first. You will bump into many weird-looking terms. For a novice, “getting +250 odds for Boston +5 against the spread” might be incomprehensible.
But fear not! If you are not quite sure how the most common methods available in the sports betting market (such as the spread, the moneyline, points totals, parlays or teasers) or the odds work, we’ve got you covered in our article on investment methods in sports trading.
Besides understanding how the methods and odds work, it is also extremely important to have a grasp of what good and bad odds look like. In our article on shopping for the best available lines, we concluded that investing in sports is a game of margins, and not looking for the most favorable option each time will cost sports traders in the long run.
In that same article, we gave a simple example that demonstrates how investors can spot the best odds available:
”Let’s say that two NFL teams are facing each other, and for the sake of keeping the example as simple as possible, let’s say that they have both averaged 25 points per game during this season.
Let’s also say that both of them have rather weak defenses, and after analyzing the matchup you think that there is a high potential for the points total to go over in this game.
Now would be the time to check out what different bookmakers are offering for the over/under line of the game. Maybe you’ll find that most have it at 50.5, but some offer 49.
In this case, you should naturally invest in the lowest number that you can get for the over/under line.”
Acting non-emotionally and being analytical
The right mindset is everything when it comes to being successful as a sports trader.
Gamblers act based on emotions and make uninformed decisions. Becoming a part of the small majority of actors in the market who base their decisions on research and analysis and act non-emotionally – almost robotically executing their systems – gives you a huge edge.
Reading, learning, staying humble and trying to be better every day are some of the things you should be practicing if you want to make big returns in the market. Testing and documenting your performance are also key. The ScoreMetrics Lab has made things easier for you by providing a load of informative articles for free.
The sports betting market offers a unique opportunity for smart investors to diversify their portfolios and get access to a non-correlated market that is full of uninformed gamblers throwing away their money.
Are you ready to take advantage of these opportunities?
To learn all the basics of trading in the sports betting market, make sure to check out our head trader John Todora’s new book – “Zero Correlation Investing – The Score Metrics Secret”. It’s currently on sale for a limited time, so go get yours now!
The ScoreMetrics Lab is the engine that runs the Sports Trading System operation, consisting of a team of researchers and writers who are constantly testing and retesting algorithms. They work hand in hand with our Head Trader and Creator of ScoreMetrics, John Todora to help find new breakthroughs and develop new systems.