Trading sports online can be a very profitable pastime and as increasingly more people get involved that means just one thing… liquidity. With the invention of the betting exchange as well as the rise and rise of the main one, Betfair, there is increasingly extra money being traded on sports events.

From horse racing to tennis and great football to greyhound racing there are many markets to select from and specialize in. There are actually even markets for financials and politics.

In-play betting and the capability to place “lay” bets have revolutionized our ability to make the most of these markets (for anyone not within the know a lay bet is betting that an event will not occur ie a horse will not win a race). Just watch any in-play tennis match and find out how the odds move. Making sense of these patterns and developing successful strategies to make regular profit is the holy grail for many individuals.

The fundamental theory behind all this is that you may need to back at a greater price than you lay. It really is the same as business all around the world, you buy a product at one price and you sell it at another, the real difference between the 2 being your net profit.

An example is I back a horse at 2/1 for Ł100. That is 3.00 in decimal odds. If it wins I win Ł200 and obtain my stake back. Before the start of the race the odds come down to 6/4 or 2.50. I then lay it for Ł100 and should the horse wins I have to pay out Ł150. The difference between my back winnings and my lay liability is Ł50. That is what I would win if this horse wins and if it doesn’t, I lose nothing! A zero cost bet. The really neat trick is to “hedge” your winnings out so you win the same amount no matter what horse wins. Within the above example I could lay the horse for Ł120 guaranteeing me a Ł20 profit.

The obvious problem is exactly what happens in the event the odds rise? You are left with a bet you can not sell or get rid of without losing at least several of your stake. This is where the real difference between traders and gamblers comes in. A gambler takes risks in order to possibly achieve a profit. A trader is happy to take a series of small losses safe within the knowledge that the wins will outweigh the losses.

There are several and varied approaches to trading but the most important thing is discipline. As soon when you fail to close a trade which has gone against you you are no longer trading but gambling. Sure, you could get away with it but when it goes wrong you will certainly lose a whole lot more than you bargained for. The top way to focus your mind and stop the gambling tendency arising is to work to strict strategies with defined entry and exit points.