Arbitrage theory

6. Next steps of Sports Arbitrage

In a short time you’ll develop your own approach to the above described routine, and all the whimwham will seem quite familiar. You’ll move ahead smoothly with less and less mistakes, although some will remain unavoidable on an occasion. I’ll give you a few bookmakers’ names randomly: Centrebet, Betwin, Expekt, Skybet… What they all have in common is that whenever there is a simply magnificent potential arms, these books offer dangerously low limits – deliberately, of course. So here it is the speed that solves the question. For bookies like Skybet, you have to keep a list of the phone numbers where it is easily accessible, because phone betting works faster and better, and is irreplaceable in situations where attempting to work with their site appears to be a waste of time. You’ll develop your spider senses regarding arbitrage deals after about a month, this is for sure.

It is understandable that the number of bookmaker sites where you’ve got your accounts and the number of arbitrage deals you can count on are closely connected. In theory, anything looks possible, but when you aim to practice – and make real money – you’ll eventually understanding what 30-40 arbs a day include. When you look at the share number of arbs, you can start assuming you’ll be a millionaire in a year, but when it comes to business – what does it look like then?

Signing up to a couple of good, reliable arb services really gives you this number of arbs per day, which is good… but there comes the bad news. You’ll hardly be able to trade every arbitrage deal you come across. Say, your average arbitrage deal is 2.5% , you’re ready to give 500 pounds, and you’re drooling to lay your hands on those potential 12.5 pounds per arb. But why does your mind so conveniently forego the ‘palpable errors’ along with the mistakes you may commit on your own? Okay, let us review a hypothetical situation where all the arbs are spread approximately evenly across all the bookmaker services you use. To trade 10 arbs a day, you’ll already need funds of 5000 pounds total. 20 arbs means 10000 pounds, and 30 means 15000, and… you get t he drill, don’t you? Of course, when you think about the 350 pounds a day available as profit, this sum doesn’t look all that unjustified. But, once again, when it comes to practice, opinions tend to reverse. Especially because in real life you’ll need somewhat bigger amounts of money in order to get all the arbs you want. You will soon discover that there is, really, just a fixed number of books that give you the majority of arbs – and there will be days when only one or two bookmaker sites will be able to offer you what you need. To seize the occasion you’ll need to have enough in each book for 3 or 5 arb deals a day! Also, plenty of arbitrage deals are connected to the future events, so before the bookie settles about 24 hours will pass. To get your sure 10 arbs a day, you’ll need to take your average trade, multiply it by 7 and use the resulting sum for every book. In an essence, this means that each of your books is supposed to contain around 1750 pounds for trading a total of 10 arbs giving 500 pounds for each one. If you use 10 online bookies, you’re need a seed capital of 17,500 pounds if you’re looking for 10 arbs a day, 35 000 if you’re looking for 20 and 52500 is 30 is on your mind. Don’t forget about the errors, commission deduction, money transfer prices and the like – and you’ll see that 10-12% of profit per month is what’s real. You’ll probably use some of it, though, to pay for the Internet, subscriptions to various arb hunting systems etc. Mind that all this can make for several hundreds eventually – in the first months, too, when you won’t make much.

Another thing is that arbitrage will eat up plenty of your time before you really manage to make a living doint it. If you think that you are going to devote an hour or two to trading in the morning and then do whatever you want for the rest of the day – and get enough money living so – than, alas, you’re completely wrong. Of course, there is that distinct possibility that you’ll get a large, large sum of money per arb… but I think I’ve already shared the thought that it is highly unlikely to become a system, unless you’re using the multiple accounts trick (more about that later). Most online bookies profess the low limit religion, with maybe the exception of Ladbrokes and Pinnacle – the top bookmakers that are criticised at every corner, but prove to be excellent at what they do once you’ve really started trading.

I’ve mentioned that in UK there is a surge of arbs when our homeland books open up, and another one in the afternoon when the ones from the US follow. However, in my own personal experience the best arbitrage deals can often be found throughout the day, outside the surges. It may be so because less gamblers are involved at those hours. One may expect the bookmaking business of today working literally around the block, but quite often there still are delays, for example, with settling the bets – which could make your funds tied up for several days. You can see how this aspect calls for the need of even more funds on your account! If you’ve already tried trading – with exchanges – you must be spoilled rotten by the quick turnround you used to get. But Internet books a different. Prepare for an irritating wait – and put more in so that you can later get more out! When it comes to arbitrage it means that the more time you devote to this activity, keeping vigil dutifully at your PC, the more good deals you are going to receive. As for me, well, I’ve had days when I stayed by my computer for 14 hours on end. Some have called me crazy for it… which is, of course, completely irrelevant to the subject matter. The point is, for an hour of hard arb-related work you’ll receive 2-6% of the trade turnover you’ve gotten used to – in general. If you’re used to 500 pounds in bulk – prepare to receiving 10-30 pounds per hour.

Of course, the number of funded accounts you have must always be taken into account, as well as the season. The less arbs usually happen in July… I’ve rated every month a year, in fact, on a 1-10 scale. Have a look!

January 4
February 4
March 5
April 8
May 10
June 8
July 2
August 6
September 4
October 6
November 3
December 3

Of course, I’m being slightly subjective here – you may be using different books from me, after all, for example, you may want to turn to the bookmakers specialising in certain kinds of sports.

What I enjoy the most about arbitrage is that you can get whatever you want as profit. There are limits, of course – we’ve talked this over already. But if you start slowly, you can develop your own attitude and treat arbitrage as casually or as seriously as you find it convenient. Remember that there is always implicit threat of deciding you should stop doing what feels very right for you – when it comes to arbs, it is. I’m talking about potentially influencing your arbitrage deal. Let me give you an example, shall I?

Influencing  Arbitrage – Biased Deals

So you’ve got an arbitrage deal concerning a tennis game. The price for the favourite is 1,6, and for the underdog it is 3,0. Nothing out of place about it, right? If you’re going to place 100 on the favourite, you can also through n 53.33 for the underdog and get an arb profit around 4.35 %  – you’ll get 6.67 pounds despite the actual outcome of the match. But if you turn out to be a tennis expert who with certainty estimates the price for the favourite as 1.3 or less, there is a possibility to play with the bet in order to increase your profit in case the favourite wins. However, you understand that there’s always a chance in stock for the underdog, so you bet no more than 50 for this player. In the end, if the favourite wins, you get 10 pounds of profit – but for the underdog’s victory, you get 0, but you don’t lose anything. Such a situation is not unlikely, and, if rightly used, it can give you 6.67 % arb profit instead of 4.35 %. Anyhow, it is dangerous to overdo this – avoid using the biased deal option with every favourite who’s got a short price. But the option is certainly deserving of you being aware of it – for the times when you’re 100 % sure what you’re doing. You can download an Excel spreadsheet with a calculating program helping to determin such a possibility from OddsandBets.

Another reason for influencing your trades can be a bookmaker clearly underappreciating the favourite’s chances – in comparison to other bookies. Look at the example I’ve made above: you may not be an expert in tennis, after all, but if all other bookmakers give you the favourite for around 1.3, you already can think about making a biased deal, can’t you? 10 clever books and single error is more likely than the opposite variant! Of course, the erring book won’t last long, but if you manage to get in fast, you should at the very least think about biasing this deal. I follow tennis quite closely – and I’m using this technique time after time here. The underdogs do win occasionally, but a lot more often I smile and get my 10% from the favourite. After all, even in the worst case – in case of the underdog’s victory – you don’t lose a single penny, you simply don’t win anything… if you’ve been careful with your calculations, that is. Now that the concept of biased arb trading is in front of you, try playing around with number a little, at least in theory – and act on it! But don’t let yourself be carried away with it. A ‘feeling’ is good when it really is a ‘feeling’, not an addiction. And the coldminded calculation has to always take place in the process, too.

After several weeks of trading you’ll probably start getting tired of following the severe rules, keeping to the stern borders and pulling your profits out of the bookies. Sports betting doesn’t include a sudden enormous fortune raining on you – because in point of fact it is not exactly betting. It’s a whole another thing – trading, a thing that isn’t for, say, rapt gamblers. Although those gamblers that have tried blackjack should feel right at home in the trading world, for they already know from experience how letting yourself get wild for the shortest while almost always results in a catastrophe. Both blackjack and arbitrage have rules that need to be followed strictly – and frustratingly. This is a stage that you will regret profoundly if you succumb to that little hazardous demon urging you to be blatant, straightforward, creative and brave… instead of sticking to the limits. The good thing is that the monotony you get so sick of doesn’t last forever. With time, having mastered the regular arbitrage opportunities, you can become as creative as you like… although you’ll still have limits. Anyway, keep your emotions in check and focus on the soon-to-be profit – and you must be all right.

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