Cold Trading Explained

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2022-01-12

Cold trading is quite common in the financial world. However, it is also getting more popular in the betting world, especially among punters who do not have much or any sports knowledge. Cold traders mainly operate in markets or events that have high volatility, such as horseracing.

Cold Trading Explained

They do not need to know anything other than the odds regarding the betting event. All factors that might influence the outcome also do not matter. Unlike sports betting, the success of the betting strategy does not necessarily rely on the punter's sports knowledge.

Comparisons Between Trading and Betting

When it comes to trades, investors usually buy or sell shares even if they do not understand the company's internal workings. They mostly make investment decisions based on the occurring trends in the market and estimated projections.

Some traders can make investments based on their perceptions about the company. That is because the profits are made based on the changing values of the stock and not a predetermined goal.

Cold traders in the betting world use the same approach for online sports betting. The bettors place bets and make profits based on how the odds change before and during the event. The punters can earn profits from back bets and lay bets. For back bets, the punter makes a profit if the odds fall. For lay bets, the punter makes profits if the odds rise. Both cases are pretty common.

Cold Trading Periods

A majority of cold traders usually operate between an hour to kick-off and when the event starts. Odds volatility is typically high, making the markets suitable for quick trades within that period. The cold traders usually strive to complete all their activities before the kick-off and transfer their focus to the next event.

That means they make their profits and forget about the event even before the event begins. The gameplay and outcome of the event thus do not affect their profitability in any way.

How to Do Cold Trading

The profits involved in cold trading are usually relatively small. That means that the punters have to make many trades to make a significant amount of profit. Like sports betting, it is possible to do everything in person, but the process can be slow and tedious, with high possibilities of making errors.

Most punters thus usually prefer using betting tools or automated bots. Incorporating technology makes everything easier and maximizes potential profits. The punters have to choose the best trading tools and place bets on the most reliable betting sites to make the most of the betting tools.

Illiquid Markets

Most cold traders prefer betting on activities close to the off. However, some are more flexible and capitalize on illiquid markets. Illiquid markets are usually represented by wide spreads between the lay and back odds.

There is also less competition in such markets, allowing the punters to get better lay or back values than a liquid market would normally allow. However, such requires high input levels, but bots help make it possible.

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