Sports betting and day trading are often seen as similar industries. In fact, many financial traders tend to have a thing for sports betting and vice versa.
This fact was seen evidently in 2020 during the global pandemic. At the time, many countries banned sports, making it almost impossible for sports betters to make money. Instead, they turned to the financial market, where some of them became successful.
In this article, we will look at the two industries and identify their key differences.
What is sports betting?
Sports betting is a large, global, and often highly regulated industry that enables people to place bets on all types of sports. For example, if Manchester United and Chelsea are playing, you can place a bet on the team that will win. If the team wins, you will make money. On the other hand, if the team loses, you will lose everything.
Sports betting is a big industry because of the number of sports that are played every day. They include hockey, soccer, and basketball, among others. With technology, betting companies can easily access these markets instantly.
Sports betting professionals use several strategies to predict the likely winner. They look at the historic performance of the two teams and come up with a thesis about the best team that will use.
Sports betting are popular because of the low initial capital that is needed and the potential payouts.
What is trading?
Trading, on the other hand, is the art and science of predicting the future direction of a financial asset. Some of the top assets that are popular among traders are stocks, exchange-traded funds (ETFs), bonds, commodities, cryptocurrencies among others.
Financial traders predict the future direction of an asset by conducting fundamental, price action, and technical analysis.
On fundamental, they look at the news and events of the day. Similarly, on technical, they use indicators like the Relative Strength Index (RSI) and MACD to make these predictions. On price action, they look at the key patterns and predict how an asset price will move.
Similarities between trading and sports betting
Based on the above descriptions, we can identify key similarities between sports betting and day trading.
First, the two are based on probabilities. For example, there is a probability that your preferred team will win or not. Also, there is a probability that the asset you decide to trade will rise or fall.
Second, the two industries are constantly improving mostly because of technology. The trading industry has improved in several ways recently. For example, many trading firms are now offering fractional shares to their traders. This simply means that you don’t need to buy a full Amazon stock at about $3,000. If you have $100, you can buy 0.03 shares of the company.
The trading industry has also welcomed new assets like cryptocurrencies and decentralized finance.
The sports betting industry has improved in many ways. For one, it has embraced virtual sporting events like Formula 1 and soccer. Also, some companies are now allowing betters to exit a loss-making bet before the game is over.
Start with a small amount (today)
Third, another similarity between the two is that over the years, the amount needed to start has reduced substantially. In trading, companies like Robinhood don’t have a minimum balance. Similarly, in sports betting, you can start to place bets with as little as $5.
Other similarities are that companies in the industry have made robust investments in technology to help their customers make better predictions.
Differences between sports betting and trading
While there are many similarities between spread betting and trading, there are also many differences between the two.
First, for trading, many brokers provide leverage that can help you maximize your profits. This is not the case with sports betting (We don’t know about any sports betting companies offers leverage).
Leverage is important because it helps ensure that you will make more money if your trade goes right.
Second, a trader can stop a loss-making trade at any time. For example, if you bought a company’s shares at $25, you can stop it at $24 if you can’t take the loss. However, in sports betting, it is often impossible to exit a bet that you have already placed.
Third, the financial market is usually live 24 hours seven days a week. Stocks are only live from Monday to Friday for a limited amount of hours. Currencies are live for 24 hours a day five days a week while cryptocurrencies are usually live every day.
Sports betting, on the other hand, happens only when there are live matches being played. On some days, there is none.
So, what should you do?
A common question among many people is whether trading is better than sports betting. In reality, as mentioned above, the two strategies usually have their pros and cons.
Some people are good at both while some prefer either of the two. However, in our view, and We are biased because DTTW is a trading firm, We believe that trading offers better rewards to the participants. Also, from a tax perspective, trading is better.
Sports betting is the simple strategy of predicting the team that will win a match. The service is provided by many betting firms around the world. Trading, on the other hand, is the process of predicting the future direction of a financial asset.
External Useful Resources
- The state of play in the US sports betting market – Sport Pro Media