Financial Bet88 services are businesses. And like any business, they have expenses to cover and investors to please, and so they try to make money. And they make money by effectively charging “fees” on their bets.There is a huge amount of information available about “predicting the markets” – just Google that term or “winning trading strategies” or “make money markets”, etc. And much if not most of this information is total garbage.
Except that they actually do not charge fees (such as $5 a bet) or commissions (such as 2% of the winnings), instead they use a spread or overround (two different ways of looking at the same concept, so we’ll just refer to it as a spread). This spread means that if the fair value of a bet is $x, they sell it at a price of $x + y, where y is their spread. On average and over time, their betting profits should be equal to the spread.
This is why it is critical to only place bets on those bets that have low spreads – eg “good prices”. If the spread is low enough, then you can be profitable in the long run if you make good predictions. If the spread is quite high, then you basically have no chance, no matter how good your predictions.
The challenge is that betting services don’t make it easy to figure out what their spreads are. So you need to understand how they price bets, and then you can understand the spread, and thus how good the price is. There is usually a very easy way to figure out the spread, and we’ll get to that in a minute. But first it is probably helpful if you understand how betting services determine the “fair value” of the bet, which they then add the spread on top of to give you the final price.
Financial bets are a form of option (in fact, they are also called binary options, because the outcome is “binary – you either win or lose, nothing in between). And there is widely accepted way of determining the fair value of an option – its called the Black-Scholes model. This model is widely used in the financial markets and other industries to determine the fair value of an option.
Although the model is pretty complicated, it can be boiled down to: the price increases as time increases and as asset volatility increases (volatility is a measure of how much the asset prices move per unit time). So if one bet is for a one hour period, and if one is for a one day period, the one day bet price will be higher. And if one bet is on a calm market, and one is on a stormy market, the stormy market bet price will be higher.
If we knew of a “foolproof” way to make huge profits in the markets we’d be (insert retire young and rich fantasy of your choice here). But that is not the reality. The reality is that the markets are often very unpredictable, and at most times approximate a “coin flip” where you have a 50% chance of being right. So if you can be right 55% of the time, you are doing a good job. Correct 60% of the time and you are doing a really good job. Correct 70% of the time and you are world-class.
Your objective should be to get you into the 55-60% correct range. If you can do that, and only make low cost bets, you can earn a 3-8% return on investment (ROI). So how to achieve that 55-60% win rate? Well remember that financial bets are done in pairs, such as a “rise/fall” pair or a “hit/miss” pair, etc. And the total probability of each of these occurring needs to add up to 100%, so if the probability of one side occurring is 60%, then the probability of the other side occurring must be 40%.