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Betting exchanges such as Betfair have revolutionised betting due to the way they operate. Exchanges offer in the majority of cases excellent prices at which to
back a runner. Further more if we don't like the odds on offer, we can
always ask for better odds. If we don't fancy the selection at all we can lay it.
In addition to these improved odds
and the ability to bet against things happening, how would you like to
turn a profit on a vast majority of horse races without studying form or
making a judgement? Impossible? Well not now due to the world of
betting exchanges.
Initially I used betting exchanges to arbitrage between bookmakers and other customers of the exchange guaranteeing money.
Traders
As the volume of matched bets on the exchanges grew a new sort of
pattern of activity developed. Rather than attempting to make a
judgement on the underlying race or taking on risk as a bookmaker,
shrewd punters started to trade the movements in the odds, enabling them to make a profit regardless of the result.
Traders, as they are called, look at the odds and
make a judgement on the direction of the movement of the odds and make
money by correctly predicting this movement. The underlying event, the
race, the runners, the course, the going, the form are all generally
irrelevant.
Traders on sports markets operate in a similar way to city
professionals working on conventional financial risk markets. On the
stock and futures market there are huge amounts of people trading the
movement in prices of publicly-traded companies, foreign exchange and
commodities amongst other things.
Nobody tries to work out if for example Vodafone PLC is undervalued
or overvalued; or whether the world demand is increasing for oil or not.
They are just interested in the short-term price movement.
If the price is going to go up then they buy it, if it is going to fall they sell
it. They make money by placing buy and sell orders into the market to
take advantage of these price movements. Traders on betting exchanges do
exactly the same thing.
TRADERS ON SPORTS MARKETS
Traders now account for a large number of bets and volume of trade on
Betfair sports betting markets. For the average punter this means a
full range of odds are available to both back and lay and in sufficient
volumes for the biggest gamblers.
Traders also tend to push the over-round close to zero meaning that
the book is close on perfect with little margin given away to the
bookmaker.
Traders on exchanges make money by correctly predicting which way the
odds on a horse are going to move. Everybody who keeps an eye on the
betting market will know how often you see the price of a horse starting
to drift or come in and how this pattern often persists till the off.
It is due to these movements that traders make money.
If a trader felt a selection's price was too short in the market and
thus was going to drift (get larger) they would lay at the low price and
as it drifts to a higher price, back it. After these two successful
bets a trader has a risk-free bet on that particular runner if it goes
on to win and loses nothing if it doesn't.
This is because the trader has backed and laid at differing odds
(back HIGH, lay LOW), netting the difference between the two bets. In
addition to having a free bet on one runner it is possible to transfer
some of the profit to other runners in the race. The result is you win
regardless of the winner of the race!
Most traders never actually watch the race themselves; they finish the
race before the off and move seamlessly to the next race. This is
because the result is not important to them. They have made their money
and move on.
TOP TRADERS
Top traders using advanced strategies can achieve a situation where
they will win around 90% of the time on each and every race.
Traders often trade more than one horse in a race thus increasing
profits. When you consider there are races every 10-15 minutes or so
every afternoon throughout the year you can instantly see the potential
and why trading is huge business on betting exchanges. Racing is ideal
for trading because with so many runners, the odds will continually move
in the build-up to the race. These odds moves can be substantial or
tiny, but with the popularity of UK racing ensuring the markets remain
efficient with the 'Back' market at close to 100%, one thing you can be
certain of is that the market will not remain static on Betfair.
On-course bookmaker markets may not move at all, but with so many more
increments available to trade on Betfair, this ensures even the least
interesting horse race can be profitable to Betfair traders.
Of course you can trade any sports event, not just horse racing, but
anything you wish. The only prerequisite is that you know and understand
how and why the odds move. To fail to do so would mean facing a
loss-making situation for sure. Each event, and the time at which you
get involved and why, radically changes the way you approach each
market.
Trading Programmes and the API
Rather than just using the traditional Betfair website to bet on a
race, which is designed to be all things to all customers, a lot of
people are using specially designed software to place bets and monitor
positions of markets on the betting exchange.
Using this sort of software allows exchange users to monitor the
market closely and see exactly where money is coming for a horse and
quickly take advantage of that fact. The software will also actively
monitor and manage your open bets for you making the chances of a
successful series of bets much more likely. Some software vendors offer
very comprehensive software but also offer scaled-down versions so you
can get your feet wet or at worst at least see and understand the
concept.
Trading just the movement in odds on a race may seem strange to those
who have done much to understand the form and structure of a race.
However it is this sort of opportunity that presents many people the
chance to finally develop an edge in the market and a level of
consistent winnings that has evaded traditional punters for some time.
Although growing steadily, in comparison to the volume traded by city
hedge funds for example, this type of activity is still virgin
territory as many have yet to understand its full potential. Certainly
if you understand the structure of a race as a traditional punter and
you learn how to trade the results could be very good indeed.
Just looking at price graphs on an exchange can confirm if the odds are coming in or going out.
TRADING ON A RACE
Time for an example. In this particular race I have placed a series of bets on Hidden Jewel.
I correctly forecast that the price would come in. I have no interest
in the horse, its form, the course or state of the going. All I have
monitored here is the way which the money has arrived in the betting
market and how it has flowed from one side of the book to the other,
moving the price on Hidden Jewel.
By backing and laying several times as the price moved, I now have a profit on this horse of £24.55.
My potential loss is zero, I cannot lose on this race, it's a punter's nirvana; all I have is 100% upside. The £24.55 is now spare for me to do with as I wish. As things stand, I will win £24.55 if Hidden Jewel wins and if it does not win I will lose nothing.
If I wanted I could now oppose Hidden Jewel with no
liability. This is because I already have 'free' money at my disposal on
this horse and this would enable me to have a 'green' P&L, i.e. no
losses meaning that whoever wins the race guarantees a profit. The image
below shows what will happen if I lay Hidden Jewel at the price of 2 to balance up my book.
Summary
Betfair Guide Step 1: Getting started
Betfair Guide Step 2: Placing a Bet
Betfair Guide Step 3: Lay Betting
Betfair Guide Step 4: Making use of the settings
Betfair Guide Step 5: Additional features
Betfair Guide Step 6: Trading, Cold Trading and Trading In-Play
Betfair Guide Step 7: Advantages of Exchanges and Sport Trading
Betfair Guide Step 8: Ten common mistakes made by traders
Betfair Guide Step 9: Trading with discipline
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