Basics of Cold Trading on betting exchanges and knowing when to trade the markets

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Basics of Cold Trading on betting exchanges and knowing when to trade the markets

What is cold trading? How do professionals use cold trading to their advantage? Can you profitably make the professional leap from punter to trader?



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Updated on 14 June 2019
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It stands to reason that you know everything you can know about a sport, right? It makes sense, you need to be an expert in everything that you decide to take seriously. After all, if you don’t know the first thing about a betting market, how do you expect to be successful and profitable without first understanding the sport and the intricacies of the different elements of the sport.


If you’re trading football, wouldn’t it make sense to understand the (ever changing) offside rule or understand what constitutes an indirect or a direct free kick? Shouldn’t you need to understand the different rules, formations, attack and defensive skills of the different opponents?


If all that’s true, why would you consider cold trading as a serious money-making endeavour?

Why would cold trading betting exchanges make any sense?

It can’t be the only way to profitably make money through betting, as many professional (or at least proficient) traders spend more time evaluating the effect of smart money on betting market movements rather than who is playing up from for the match favourite.


Many may not even know the names of the managers or even understand who the ‘best’ player within the team is, as ‘Cold Traders’ are sometimes more concerned with market movements and therefore, the behaviour of the many punters and traders when they start making their selections.


These so-called ‘Cold Traders’ are usually the most serious and effective players of uncertain markets, especially when trading money related fields, such as financial markets and sports betting markets.

Does risking money with no background knowledge make sense

Yes. It’s a viable betting option for many skilled traders and scalp traders, who understand the true nature of betting and human betting nature rather than the specifics of the different teams. Or some cold traders have a great instinct and can determine the most viable trade given several trading options.


You may have some experience of a betting market, but you may just have more knowledge of a specific team or understand the rise and fall of odds before and during a match. There are many approaches to cold trading and one approach does not have to be the same approach, as another trader. The only requirement, is that you're not a trading newbie or Betfair beginner.


What is a ‘Cold Trader’?

A cold trader decides to purchase an event. The trader decides that this event will be worth more after the purchase than when they decided to part with their money. This can be done with or without specialist knowledge, match data, teams or even the entire sport!


There may be many ‘reasons’ behind the trade, but cold traders are often lone rangers, who decide to place a bet with the hope, wish or intuition their bets will be worth more after the event.


There may be several reasons behind a cold trade, but the trader is making a buy or a sell decision on each bet.


A buy decision would be a back bet, whereas a sell decision is a lay bet. The cold trader is then waiting for the odds to change; backing needs the odds to drop and laying needs the odds to increase. Both movements will provide a cold trader with profits.



When are the best moments to cold trade?

There are several different options for making a cold trade, but there are a few different areas, which can provide options for bettors who would like to try this trading approach on betting exchanges.


The common cold trading options are:

1.    Using the kick-off or start of the event to determine when to trade

2.    Only trading when there are enough matched bets

3.    Using the market movements to time your trading


1.    Using the kick-off or start of the event to determine when to trade

Deciding to trade near ‘the off’ or start of an event, such as the kick-off or the horse races leaving the gate will provide the cold trader with hope they can find more value at or close to the start time.


The betting market for an event tends to move close to kick-off, as punters, traders and other exchange users back and lay selections. This may provoke significant odds changes and market variations, which provides lots of scope for traders, especially cold traders to make profits.


When odds dramatically move, it’s possible to secure and lock in favourable odds or make an immediate ‘buying’ or ‘selling’ decision on the betting exchange.

2.    Only trading when there are enough matched bets

As with the earlier example, it’s hard to time the market at the exact moment of a significant odds change and it’s usually the cold traders and professional punters that are deciding when to make their backing or laying decisions on the lead up to the even taking place.


Therefore, the movement of odds is largely driven by the number of bets placed within the exchange, which is in turn is related to the amount of money that is matched within a betting exchange during the lead up to the start of the event.


This usually signifies a group of betting exchange users, who are approaching betting with a more structured methodology and they’re likely to place their back bets and lay bets using specially designed tools, which can monitor and anticipate market movements and suggest bets to place or automatically place the bets on the behalf of the traders looking to make profits from the changes and imperfections within the markets.


Betting and trading are disciplined actviities and you don’t want to make common betting mistakes, when the professionals are focussed on value and profits.


If you want to compete with the big betting/trading boys and girls, you need to ensure you have the same level of discipline and expertise.

3.    Using the market movements to determine when to trade

Taking the first two approaches into account will undoubtedly lead to the third approach, which is based on market movements to suggest when to trade.


At first glances, this may seem identical to what has come before, but it’s not the same thing.


You need to ensure you have more than discipline, but you also understand the nature of betting markets to recognise when there are likely to be changes within the betting for a specific event.


It could be the underlying market conditions, or it could be the fact the market is moving, but you will need to have a tool, soccer prediction model or another method to track, record and anticipate market movements over time.


The anticipation of market movements will put you one step ahead of many cold traders that are relying on technology to provide them with their information.


If you can truly understand the nature of the uncertain markets and understand why a specific market could move will mean you can anticipate changes before the rest of the exchange users (or their tools) make their judgements.


If everyone is trying to do the same thing, there has to be a way for you to stand out from the crowd and this is not always the easiest thing to accomplish, if you’re not doing anything inherently different to the rest of the market.


There’s an old saying, which has been changed, quoted and changed a million times over, but it goes something like…


If you do what you’ve always done, you will get what you’ve always got!


Fundamentally, that’s where the most successful traders stand head and shoulders above their newbie and average competition.

When all is said and done, how should you approach cold trading?

In a competitive market, there must be something that makes you different to your competition and that difference could realistically be your method of choosing potential trading selections, which may be unique when compared to others within the same market.


There are only a few approaches to profit from betting; value betting, matched betting, trading or arbitrage.


You must ensure you’re choosing a profitable approach and you know the ins and the outs, as the most successful traders within each of the markets are highly profitable and they will not like competition attempting to reduce their profits. They’re likely to protect their income, so you need to ensure you have a plan and skills to compete within the same endeavour.


Good luck!



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