How Arbitrage Trading Works

 by: Timothy Rohrer

If you are reading this article, you are probably one of the many people who would like make money online working from home. The truth is 99% of these people fail because they simply lack the information that will guide them to success. Sports arbitrage trading is an extremely effective way to make money online given the right information and execution of trades.

Arbitrage trading is not to be confused with gambling whereas gambling involves a risk. Sports arbitrage trading is using the market in such a way that a risk-free-profit can be generated on the outcome of an event. In arbitrage trading we are taking advantage of bookmakers with different opinions on an event to ensure a certain profit.

In the financial markets, this may involve buying a commodity or financial instrument in one market and simutamously selling the same commodity or financial instrument at a higher price on another market to ensure a risk-free-profit. In Sports betting arbitrage we are profiting from bookmakers having different opinions on the outcome of a sporting event.

Arbitrage in the sports market exists because different agencies often post different odds on the outcome of a game. Suppose the Yankees are playing the Red Sox. BookmakerBet365 is giving even money on the game, so a $100 bet placed on either team will earn you $100 if the team you picked wins. Another bookmaker, Bodogs has the Yankees at +200 which means if you place a bet with Bodogs on the Yankees to win you will get $200 if they win, and $100 if they lose. You can guarantee yourself a profit if you make the following bets.

1) Place a $300 bet on the Red Sox with Bet365 at even odds. 2) Place a $200 bet on the Yankees with Bodogs at +200.

If the Red Sox win, Bet365 pays you $300. However, since the Yankees lost, you lost your bet with Bodogs and must pay him $200. Your profit is $100, as that’s the difference between what Bet365 pays you and what you must pay Bodogs.

If the Yankees win, you will also profit $100 since the bet you made with Bodogs was at +200, Bodogs pays you $400 for your $200 bet. Since the Red Sox lost, you must pay Bet365 $300. Again, your profit is $100, represented by the difference of what Bodogs pays you and what you must pay Bet365.

There are a number of gamblers who exploit the differences in odds from bookmaker to bookmaker. It’s not as easy at it seems because it requires extensive research and time consuming number crunching. However, there are software programs available that will find arbitrage trades automatically in real time and do the number crunching for you, making it a very profitable opportunity.

Copyright 2005 Timothy Rohrer

About The Author

Timothy Rohrer is an established writer and arbitrage trader. Learn how Tim Rohrer makes thousands of dollars each month as an arbitrage trader.

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