Never seen Betfair trading explained in simple terms?
The thought of ‘trading’ often scares your average punter. But it’s not just for those with computer science degrees, 6 fingers and pointy heads that still live with their mum.
More and more punters are turning to trading the exchanges, why? Because betting becomes more efficient when you know your edge over the market.
It’s really not that complicated…Let me explain.
Basic Betfair Trading Explanation
The practice of placing two opposing bets against each-other on the same event is known as a trade.
So when you place a bet with a bookmaker, and then cash out, you are effectively trading. Although the bookmaker takes a percentage out of the price top and bottom. This makes things significantly harder to win long-term. But you’ve never seen a poor bookie, right?
So, Betfair trading is pretty much the same, although we plan to enter the betting market with the view of ‘cashing’ or ‘trading’ out before we even place the initial bet. The difference being we only pay commission on our bets.
To do this we need to place a back (bet to win) and lay (bet to lose). More explanation on that in a minute.
In the 14.40 race at Carlisle there was significant data (based on past races) that Revocation would trade at a significantly shorter price than it should start. In fact, of the last 10 runs, this horse had traded lower than 50% of it’s starting price. I placed a trade based on that happening again!
Of course, it happened again… and so I was left with a decent profit before the rave even finished. From memory it was around half way the lay bet was matched.
It’s quite easy to see why trading is an appealing opportunity.
How Does Betfair Trading Work?
Once we find an opportunity where the chance of winning is skewed in our favour we need to place the bets. For the example in the articles header image we can see the betslip below.
For the sake of this explanation we’re going to focus on Revocation, although you can work out how I made an additional £3.09 Urban Hymn too after if you like.
At the start of the race Revocation was priced at 8.06 (average bets on as it was matched in two segments). During the race Revocation’s price hit a low of 2.34 (that’s a huge move).
The plan was never to try and hit the lowest price though, we’re betting based on historic behaviour remember.
£35 x 8.06 = £247 (back bet, to win)
£60 x 4.70 = £222 (lay bet, to lose)
These two bets are against each-other, so if you subtract the back stake from the lay stake;
£60 - £35 = £25 profit
And if you subtract the lay bet liability from the potential winnings;
£247 - £222 = £25 profit
This means; because the price has changed we are now looking at a profit of £25 no matter what else happens in the race. Cool eh?
Now, if you go back and look at the images you’ll see I had a profit of £28.09 no matter what. If you run the same calculation on the other runner you’ll see where the extra £3.09 comes from.
That’s how Betfair trading works… you just need to start doing it race-after-race and building up some Betfair trading strategies of your own.
If you’d prefer a video explanation of Betfair trading see this.
Note: You don’t have to work this out every time as there are software products out there to do it for you.
Betfair Trading FAQ’s
In my experience there’s always a quick flurry of questions when somebody first stumbles upon Betfair trading. Most of the time they all centre around the same things.
Here are 4 of the most frequently asked questions:
How much money can be made?
Everyone’s first question, understandably. Results are a direct result of the amount of effort put in, like anything in life. But when it comes to trading betting exchanges the sky’s the limit. Nobody know’s for sure except Betfair themselves although it’s fair to say there are people making in excess of 7 figures a year from exchange betting. On the other hand, some never make a profit.
How much do I need to start trading Betfair?
It’s advisable to start in training mode via one of the software providers as you won’t lose any money. Depending on the ‘edge’ you gain over the market will define how much you need to scale. It’s quite possible to start with a couple of hundred quid. That’s what I did.
Can I trade all sports on Betfair?
If Betfair exchange offer a market, it’s trade able to one degree or another. There are other exchanges though, Betdaq, Matchbook, Smarkets. It’s best to start off with something you enjoy… it’ll get boring quick otherwise.
How long does it take to become profitable?
How long’s a piece of string? The answer is totally different for everyone. Nothings guaranteed, although some have managed it quite quickly. Personally it took me around 6 months. It was the best investment of time I ever made.
If you have any other Betfair trading questions, feel free to contact me on twitter and facebook.