Many people think that trading is like gambling. Traders in fact can be considered as expert poker players because every day they have to deal with what may or may not happen in the market in which they are trading.
Stock market, currencies, economy are like game of chance and as such they are subject to the whims of fate. Fate, in trading, is represented by what happens in the world, from all those events that change the trend of a stock or a commodity etc…Any unpredicted occurrence such as a war, a natural disaster or meeting of one of the world’s major central banks can drive the market either up or down.
There is a type of trading where you can take advantage of any market movement, whether the odds go up or fall. It is precisely ‘Trading the Odds’ and the trader is like a bettor.
The trader must predict whether the price of a particular asset will increase or not and, by investing a certain sum of money to place his bet, he can make a profit without actually buying that type of asset. The advantage of this system is that you can earn money whether the odds are rising or falling.
The odds quoted are arbitrary, and not based on any actuarial data; they are also based on knowledge of probability. An example of odds can be: 2 to 1 Inflation Will Soon Kick In; 2 to 1 China Will Overtake the U.S. as the World’s Leading Economy.
Since there are numerous and special programs available on the web, markets to bet on are different:
- 1) Stock market indices
- 2) Currencies
- 3) Commodities such as oil, metals…
- 4) Single market share
- 5) Interest rates and bond
Odds trading is different from buying securities. In both cases the goal is to gain, but buying shares involves also participating actively in the life of the company or the payment of taxes and charges. Opt on odds trading is easier, you do it from the website of the bookmaker and it is not needed that your bank account is enabled for the deposit of securities. So, trading the odds you can:
1) Trading in the stock market, currencies and indices without having to buy their goods, but focusing solely on their performance.
2) Benefit from a higher income than traditional trading because unlike traditional trading, there are no taxes on profits.
3) Earn money betting on the increase or decrease of the price of an asset.
To trading the odds in the best way, it is important to: understand fundamental news, understand volatily and understand trends.
There are a lot of fundamental news during day-trading but the most important are the ones regarding: Central Banks meetings where take place the decision to raise or not interest rates; Non Farm Payroll; Interest sensitive reports. Understanding volatility can help traders to determine their time frames and to predict possible break out points. To understand trends traders will have a look of a chart, here it is everything he needs.
Trading is not a game of being right more often than wrong, but all about being profitable. So, Trading is a game of odds not certainties.