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The concept of sports trading can be linked to the introduction of betting exchanges such as Betfair, which for the first time ever allowed customers to lay selections as well as backing them. This allowed sharp players to trade on the movement of the odds just as they would do in the stock market.
The actual outcome of the sporting event they are betting on is generally irrelevant to traders as they make money by correctly predicting the movement of the odds and backing and laying accordingly. So a sports trader does exactly the same thing as stocks and futures traders who trade the movement in prices in plc's, currencies and commodities etc. The only difference is rather than buying and selling IBM or HSBC sports trader back and lay Manchester United or the England cricket team.
Here is an example:
As you can see, no matter what the outcome our trader will make a profit. On this market our trader actually made over 50 trades mostly on the draw and the position was achieved by backed the draw at high prices and laying at lower prices as the market moved in the way our trader had predicted.
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