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Stocks and Betting

Stocks and Betting
Paulo Rebelo's chronicle for the magazine Remate ("O Jogo" newspaper supplement) - 28 April 2012

"At a betting exchange I don't have to identify the winning bet, I only have to predict the way that the bet will swing."
by Paulo Rebelo   |   comments 0

The 6th issue of the magazine REMATE was published with the newspaper O JOGO on the 28th of April 2012.

Another Paulo Rebelo chronicle covers the centerfolds of the first Sports Betting magazine in Portugal.

There is a space on the forum (link) for the readers of the magazine, as well as the active contributors of our forum, to place suggestions about themes that you would like Paulo to approach on future magazine articles.

The chronicle:

I began my betting career almost a decade ago. At the time I was a stock exchange trader and sports betting was just starting in Portugal by the, at the time, BetAndWin. I was a fan since the beginning and I managed to make money with simple bets like: "I think that Academica will win against Rio Ave”.

When I first saw Betfair I understood that I could also place simple bets, like anywhere else, but with two major advantages. First, the prize I would win for the same bet was larger and second, I could win money with only the variation of the bet's value without having to wait for the end of the match!

I stood before a sports exchange!

I immediately made the obvious analogy to a stock exchange.

Just as I do not have to know which is the best stock available on a stock market, on a sports exchange I do not have to know which is the winning bet, I only need to know which way will the bet swing, this greatly simplifies the work to be had and boosts our profitability considerably.

When I trade on a stock market I buy a stock because I think it is cheap and I expect to sell it a higher price soon after. It doesn’t matter how much that stock will be worth in 10 years, although I do have an idea. Similarly, when I buy (betting against) a bet I do so because I think that it’s odd is cheap (low odd) and I expect to sell it (betting for an event) at a higher rate (higher odd) on the short term. It doesn’t matter how the match will end, although I do have an idea.

It is the supply and demand of the market that determines the balance of the prices at any given time, the same law defines the price (odd) at which a bet is transactioned at any given time during a match.

Professional Traders have at their disposal very similar tools (softwares) to analyze and predict both markets.

Before I buy a stock I have to perform a fundamental analysis (the value of the company) and a technical analysis (the state of the market). Similarly, before buying a bet I analyze the match to determine which of the teams is playing better (fundamental analysis) and I analyze the market to figure out what it's tendencies are (technical analysis).

A stock is considered a financial active and the stock exchange is a perfect competition market. Similarly, I defend that a bet is a financial active that can be traded on a betting exchange which also functions in perfect competition.

These definitions are not solid yet because we are talking about something that is relatively recent. However, my bet on this theme is that, on a medium term, bets will be considered a financial active (regulated and protected as such) and its study will be elevated to scientific status gaining a spot on university teaching curriculums, for instance.



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