The good news of this article is that every one of the risks listed in the previous article has a simple solution to minimize or completely remove the potential loss. The great news is that over the long run, statistically speaking, if you only ever backed one side of every arb you will still come out at a profit. Since arbing specifically uses odds which give a greater than 100% return on investment, either one or both bets have odds which are greater than the statistical chance of that outcome winning. If you are indiscriminant in your betting (50-50 selection of favorite or underdog) then your long term return would average out at whatever your average arbitrage percentage was. Statistically, stuffing every arb is still winning. However, we don’t practice this because like all ‘statistically correct’ gambling systems, a long losing streak will wipe our bank balance out and we won’t be able to place the bets which are meant to win and bring us back into profit.
And so, here are the steps which we need to take in order to avoid the risk associated with betting on arbs.
Bet Like with Like
Learn what rules each bookmaker uses with any sport you are going to bet on. When you have an arb between two bookmakers, make sure both bookmakers use the same rules and there will be no potential loss.
Identify potentially bad odds
Ultimately the call of ‘Palpable or human error’ is up to the bookmaker, and there is nothing gamblers, or arbers, can do to change that. However, we can follow a few simple rules for identifying odds which might be errors. Any arb which is 5% or over should arouse an instant suspicion and cause you to look very closely at the odds involved. The most common form of error is reversed odds, where the odds or handicapping of the favorite and underdog have been swapped. Check for this. Are the odds for either of the bookmakers more than 25% higher than odds offered by other books on the same event? It is likely an error if they are. Lastly, do the two books agree on whether the favorite is obvious or not? An obvious favorite/underdog is indicated by odds under 1.85 and over 2.25 respectively. If one book offers odds of 1.99 and the other odds of 2.55, then one book is saying that the game is close (1.99), while the other is saying that the outcome is obvious (2.55 will ‘clearly’ lose). Only trust arbs where both sets of odds are within the 1.85 and 2.25 range, or both odds are outside of the 1.85 and 2.25 range.
That being said, be wary of odds that are identical… 2.30 vs 2.30. It is likely that one bookmaker, in that instance, has reversed their odds. That is, they have most likely accidentally given the home team the away teams odds and vice versa.
- Take it slow
- Paper Trade
- Trade with small bets
These 3 antidotes are all part and parcel of the same solution to the last three risks. In order to move fast, you have to take it slow in the beginning and learn how to do it properly. In the beginning, you need to start ‘trading’ without actually betting real money. Find the arbs, go through the motions, pretend you are doing it but don’t actually bet anything. This is called ‘Paper trading’. This allows you to learn how the bookmakers work without risking your money, it builds experience. As you gain some experience you will make the right decisions faster and place the correct bet more reliably. With the basics under control you will need to progress past paper trading to real money in order to understand how the bet confirmation process takes place, and so trading with very small amounts is a necessary second step.
Part of “Take It Slow” should be carried all the way through your arbing career. In the opening months you should triple check everything.
- Triple check the arb isn’t an obvious error (as described above).
- Triple check the odds you have are for the correct bets (1×2? +0.5? -0.5? +0.25? over or under? half time or full time?).
- Triple check when the game will be played. Will you be seeing your profits this month?
- Triple check you have the right game in the right league with the right teams.
- Triple check that the odds at the bookmaker are the odds reported by your alert service.
- If they aren’t, triple check any re-calculations you make if it is still an arb.
- Triple check your bets. Have you placed the right amount in order to maximise the arb?
If, after all of that checking, everything is still in order, then you very quickly take one reliable bookmaker to the final confirmation page. Go to the second bookmaker and submit that bet. Wait the 2 seconds to make sure that bet has been accepted. As soon as it has been accepted submit the bet at the first bookmaker.
Easy isn’t it?
OK, so arbitrage trading may seem difficult in the beginning and the truth is it does have a steep learning curve. But any legitimate opportunity to work at home, and make a good profit all the same, will always involve real work. Once you master the few basic principles and continually apply the above triple check steps, you will very quickly improve the speed at which you can place an arb. Your mind will be triple checking everything as you go, and you will flow through the whole process without needing to think about it. But in the beginning… you have to take it slow!