In this lesson we will briefly discuss the Gambling vs Trading disputed topic.
First, we’ll compare exchange betting and traditional betting. Are both a form of gambling? Do we have any chance to become profitable?
Then, we’ll see if sports trading (exchange betting) is or is not the same as financial trading. What are the similarities? But what are the differences? How can we take advantage?
You must understand these concepts. Each of those has its own rules, and you have to play by them. Otherwise, it’s like going spearfishing. Possible, but not profitable…
Exchange Betting vs Traditional Betting
Traditional betting and betting exchanges are two distinct ways to wager on sporting events and other outcomes. Chances are expressed by odds.
Both have different advantages and disadvantages, and the choice between them is frequently a matter of personal preference and betting strategy.
Let’s briefly highlight the key aspects.
You place bets against other traders rather than against a bookmaker
Instead of simply accepting bets and setting odds, betting exchanges allow you to find and match bets with other users. As a result, you have more flexible and advantageous odds and a greater variety of betting options.
Traditional betting, on the other hand, offers you odds for sporting events that are already set. You do not have the possibility of negotiation.
The odds are fair
Bookmakers make money from their “overround” or “margin”. This ensures that they will make a profit regardless of the outcome of the event.
Therefore, in a perfectly balanced tennis match, you will have odds of 1.97 and 1.97, for example.
Betting Exchanges will offer you fair odds, respectively 2.00 for both players. You can even ask for better odds (more to come about this topic).
However, Betting Exchanges are charging a small commission on winning bets.
You can bet against an event to happen
Betting Exchanges give you the opportunity to place a lay bet. This type of bet is placed on a particular outcome not happening, as opposed to happening. The beauty is that you can act as both punter and bookmaker, offering your own odds on a particular event.
But more about this in the next lessons…
The Cashout feature is also fair
Another way traditional bookies make money is by providing you an unfair cashout. They simply offer you an amount, take it or leave it.
Betting Exchanges offer you the possibility to cashout (trade out) purely on available odds at that particular time.
It’s more about skills
Most use betting exchanges for gambling, relying on luck. It’s just that the platform can be used differently. You can increase your skills and knowledge to reduce the need for luck.
This also applies to betting at a traditional bookmaker. For example, matched betting or arbitrage depends almost exclusively on skills and not on luck.
You can’t bet on everything you want
While betting exchanges provide more flexible and advantageous odds, they also carry the risk of liquidity issues, in which there may not be enough bets on a particular market to match your desired stake.
Bookmakers, on the other hand, offer odds that are typically more accurate but may limit the size of wagers or restrict the accounts of successful punters.
As mentioned, bookmakers can (and do) limit or restrict your account. Especially if you are successful.
Exchanges offer you more freedom and you get banned only if you want to cheat.
Sports Trading vs Financial Trading
For accurate gambling vs trading analysis, we need to also see the similarities and differences between financial trading and sports trading. Those are two distinct forms of trading based on distinct underlying assets and markets.
Traders in sports wager on the outcomes of sporting events with the intention of profiting from fluctuations in the odds. Sports trading requires an in-depth knowledge of the sport, the teams or players involved, and the variables that can influence the outcome of an event.
Financial trading involves the buying and selling of financial instruments such as stocks, bonds, commodities, and foreign currencies. The traders seek to generate a profit by capitalizing on price fluctuations in these assets. Financial trading requires an in-depth knowledge of the financial markets, as well as the capacity to analyze market trends and data and make informed decisions.
Depending on the number of similarities, we can say that betting exchange is closer to trading than to gambling.
Sports trading and financial trading have the following in common:
- Buying and selling
- Broker commission
- Use of skills and knowledge
- Use of tools
- The existence of graphs
- Price fluctuation and variables (news, events, etc.)
- Use of “stop-loss”
So, what should you choose between gambling vs trading?!
Both gambling and trading involve the risk of losing money in the hopes of making a profit, but they differ in significant ways.
Typically, gambling refers to the act of placing a wager on an event whose outcome is uncertain, such as a sporting event, horse race, or casino game. The goal of gambling is to win money, but the outcome is frequently dependent on luck or chance, and there is frequently a high degree of risk involved. Generally speaking, gambling is viewed as a form of entertainment and leisure activity.
In contrast, trading refers to the purchase and sale of financial instruments such as stocks, bonds, and commodities (and why not, sports). The objective of trading is to generate a profit by capitalizing on market movements and price fluctuations. Trading, unlike gambling, is based on analysis, research, and strategy, and is generally regarded as an investment.
In conclusion, it is important to note that both gambling and trading involve a high degree of risk, and it is possible to lose money in both situations. Therefore, it is essential to approach both with caution, to fully comprehend the risks involved, and to invest only money that can be afforded to be lost.
So, if you want that much to risk money on the betting exchange, you better focus on trading your favourite sport and not on gambling on it.