Posts Tagged risk

Give me five minutes with somebody and I can teach you how to put through enormous sums through a market at relatively little risk, you wont make or lose much, but you will be able to say that you gambled millions that day, an impressive feat; or is it?

I have often been misquoted, especially when it comes to numbers. But one thing that is fairly certain in the modern betting age, is that racking up bets in the millions is actually quite an achievable feat, even for a novice. Sometimes this has been put up as a negative, that people are using exchanges for ‘serious’ activity. But the reality couldn’t be more stark, lets have a look at the real deal behind the numbers.

Lots of products exist out there now for putting bets on while you are busy doing something else. We have two very useful tools in Bet Angel, Guardian, the multi market, auto switching tool and Excel spreadsheet integration. Using these two tools you can set up Bet Angel to places bets in your absense and it will happily chug away to your exacting criteria all day and night.

One of the huge draws to betting exchanges is the small overound on the book. In the bad old days bookmakers could print money by maintaining a super high over round. This ensured even given a bad run that they would end ahead. On exchanges the book is very very close to break even and with each year that passes it gets even closer. The hurdle to profitability is actually very small now. To jump that hurdle and make it worth while you need to do things.

First, you need an edge, even a very small one will do nowadays. Your edge could be timing, selection based, system based, logic, psychology; there are many. For example, a strong winning run in a sports events leads gamblers to often assume that the chance of something happening is more likely. Value is often created at this exact point for the opposing reason. Your edge can be quite small now and still be profitable thanks to exchanges. Once you have found your edge you need to exploit it with money, but the contradiction on exchanges is that while the hurdle is small, the market is very efficient and therefore any edge is also very, very small.

So the answer is to put lots of money through the markets to magnify any edge you have.  Tomorrow, a public holiday in the UK, we have ten race meetings and total over 60 horse races. If you put through a £100 bet on each race you would place in total £6000 in just one day! Of course you only need a tiny bank to do this as each race starts and finishes quickly (excluding races that clash). Increase this amount to £1000 and you would put through £60k in one day. Is this realistic?

This is where betting on the volatility of odds really comes into its own. If you don’t want to risk £1000 in one shot you can break it up into chunks of say £100 or ten lots to reach your £1000 in bets. If we took the low assumption of just 10,000 races a year on average, your £1000 per race would scale up to the astonishing sum of £10m a year in gambles. Even a tiny, tiny edge on £10m can make things a worthwhile endeavour, all this with a tiny bank. On the flip side though, I should point out that if you don’t have an edge then your bank will disappear in double quick time as that negative edge multiples on the downside. When people talk about an edge, the image that springs to my mind is a cliff edge. To make money in the long term in any market you need to know where the edge is without falling off it!

But, in summary, even using small amounts you can effectively leverage that into what seems fairly astonishing sums just by re-using it as often as you can. This allows you to earn good money even with a tiny edge.

Finding an edge can be rewarding but carries risks!