Sports Arbitrage Trading
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tcraig20
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Yeah, Ive done it before. I did it for a couple of months on the weekends and in the evening managed to turn about 5% a month. It works, but you have to be real careful about making sure that bookmakers rules match up.
Two things turned me off it in the end, first was the risk/reward. Usually, you can make 1-3% per arbitrage trade. You dont bet the lot on one thing, I used to limit myself to 10% of my total bankroll to a trade. So that means that I was effectively risking 10% of my cash for a reward of 0.1-0.3%. 10:0.3 is an insanely low risk/reward even with a very high win/loss ratio. At an average of 2% win on a trade, you would need to make 50 successful trades to make up for a single error of judgment. That's before you even begin to consider the costs associated with moving money between bookmakers.
The other thing I didnt like was the frequency at which good arbitrage trades turned bad due to bookies 'misquoting' prices. I began to suspect that they did this deliberately to trap arbitrage traders (it makes sense). A misquote means that you basically have to lock in a loss of 5-10+%, which is a lot when your upside typically doesnt exceed 3%.
In the end, what Im trying to say is that it's possible, but its not really worth it. These days I just concentrate on currency trading. Much more attractive risk/reward ratios (typically 1:2 or higher), even if it does have lower win/loss ratio.
Two things turned me off it in the end, first was the risk/reward. Usually, you can make 1-3% per arbitrage trade. You dont bet the lot on one thing, I used to limit myself to 10% of my total bankroll to a trade. So that means that I was effectively risking 10% of my cash for a reward of 0.1-0.3%. 10:0.3 is an insanely low risk/reward even with a very high win/loss ratio. At an average of 2% win on a trade, you would need to make 50 successful trades to make up for a single error of judgment. That's before you even begin to consider the costs associated with moving money between bookmakers.
The other thing I didnt like was the frequency at which good arbitrage trades turned bad due to bookies 'misquoting' prices. I began to suspect that they did this deliberately to trap arbitrage traders (it makes sense). A misquote means that you basically have to lock in a loss of 5-10+%, which is a lot when your upside typically doesnt exceed 3%.
In the end, what Im trying to say is that it's possible, but its not really worth it. These days I just concentrate on currency trading. Much more attractive risk/reward ratios (typically 1:2 or higher), even if it does have lower win/loss ratio.
