The football season is in full swing, and that means that the legal NFL betting markets will be going wild!
In this article, we will cover the basics of how to make smart investments in football games. If you are new to sports trading and investing or just want a fresh reminder of how to approach the market now that the action is kicking off again, this one’s for you.
Without further ado, let’s get to it.
1. Understand how the market works
Making smart investments requires a base-level understanding of how the legal sports betting market works. You also need to understand how the odds and the investment methods work.
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.
For more on market basics, read our guide on how to get started in sports trading.
2. Have the right mindset for long-term success
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.
Earlier this summer, we talked about five key rules for sports trading success; setting realistic expectations, understanding that you are in this for the long run, going for compounding effects, keeping on investing more, and diversifying your investments.
Being in the right headspace and following a strategy are some of the most important difference-makers for success in the market.
3. Avoid the “sucker bets”
This one is also tied to understanding how the market works. Parlays and teasers can look very enticing to beginners in the market – you are getting higher odds or more favorable lines, after all.
But most of the time, these are the sort of “opportunities” that are meant to lure in uninformed gamblers who are making casual bets for fun. When you start doing the math, you’ll notice that these are losing investments in the long run.
For more on that, read our article on investment methods in sports trading.
4. Go for the best available lines and odds
An investor is never guaranteed a winning trade in the market – with a good system, you’ll be making more winning than losing trades, but the margins are often close. That’s why it’s important to find the best available line for the game you are investing in.
Here’s a concrete example from our article on shopping for the best available lines:
“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.”
Investing in sports is a game of margins, and not looking for the most favorable option each time will cost you in the long run.
5. Keep track of your investments and measure performance
Documenting and tracking your investments is super important – otherwise you’ll find it impossible to assess your performance. Excel and Google Sheets are great tools for this.
When trading in sports, your minimum aim should be to beat passive investment opportunities, such as stock index funds. One easy way to measure if you are successful in sports trading is to compare your annual returns to that of the average annual return of the S&P 500 index, which has been roughly at around 8% (from 1957 through to 2018).
Generating a return that’s less than that 8% number means that you are using your time in actively managing a system while making less money than you would be making if you would have invested the same amount with a single click on a low-to-zero cost index fund.
Of course, when you are trading actively, you are also investing your time. And most likely you would like to make a lot more than that 8% annually. What’s a good target ROI then? Ask yourself how much time you are willing to invest, and what would be a suitable return for the tradeoff.
For more, we’ve got you covered with our guide on how to measure the performance of your sports trading system.
To take advantage of the return of sports and to learn everything you need to know about smart investing in the sports betting market, 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.