What Is Insider Trading
Insider Trading is an illegal activity that’s [still] conducted in the stock market by traders.
In short insider trading involves having the “insider scope” or confidential information about a specific company that will impact it’s stock price negatively or positively in the future.
Although knowing the information itself isn’t illegal, making trades and earning money through this information is illegal.
Below is how Investopedia defines insider trading.
There are forms of insider trading that are legal, but it is most commonly used and seen in the illegal form, usually as the result of making a metric sh*t ton of money.
What’s Insider Trading Got To Do With Sports Betting?
As you may already know, we take our sports betting extremely seriously here, making data-driven decisions on almost all plays, similar to how traders make their decision.
Their stock price is our betting lines or line-movement.
Getting the best line is one of the most important parts of being a successful sports bettor. In short, the better price we can get, the more likely we are going to be profitable long term. This is where insider information can come in.
Unlike trading in the stock market though, wins are not guaranteed. But insider trading is also not illegal in sports betting…. Which opens up multiple opportunities if you are fast enough.
What Types Of Insider Trading Are In Sports Betting
As sports still have a high degree of luck or variance, getting the inside scope might still mean you make losing bets. This kind of evens-the-field in a way. So even if you know the opposition’s team went for a massive night out and all got injured, their second team still might actually win…
This is the primary difference between insider trading in the stock market, when you know for sure which direction a stock price will go, whereas in sports betting you might have all the information and still lose a play.
The most common types of “insider trading information” are the following. Remember these are all BEFORE the bookies know this information. If they already know this then the price or line will have already adjusted and is why you see very large drops.
- Smart money coming in.
- Injuries to key players.
- Change in goalies (this alone can move ice hockey lines 30-50 points).
- Coaches interviews (about changing the style of a game – AKA, playing tight vs going all out offense on an over/under bet).
- Sentiment analysis (involves looking into hype via sentiment as well as specific players twitter/social media – If they’ve just had a death for example they aren’t focused on the game…)
There are hundreds of different data points and pieces of information that will help give you the edge in a specific market or event.
This is where having multiple data points pulling into your internal analysis is very important. In the past 14 days we’ve run multiple tests based on sentiment analysis and “smart money” – 2 large variables for the success or failure of a specific bet.
The results were a huge correlation even in a very short time period. This is across multiple sports and multiple leagues. Analysis of 200+ events showed that smart money over a certain degree of confidence resulted in a 58% win rate.
And when smart money was integrated with sentiment (when both correlated to the same outcome) the win rate was 61% (37/60). Of course this isn’t a large enough sample size but the initial results are very promising.
In short, analysing the movement of very specific data points is something we’re constantly getting better at during our handicapping service. If you have any questions about this please feel free to shoot us a message on Twitter.