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Article Contributed by Timothy Rohrer
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Article
How Arbitrage Trading Works
Copyright 2005 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.
About the author:
Tim Rohrer is an established writer and arbitrage trader. Learn
how Tim Rohrer makes thousands of dollars each month as an
arbitrage trader. http://www.profitplusonline.com
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