Article courtesy of http://www.theonlinepunter.co.uk/price%20moves.html
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How the Betfair markets take shape…
A standard horse race market on Betfair can be broken down into four stages.
Stage 1. The evening before racing until around 9.30 am race day
Stage 2. From around 9.30 am until 30 minutes before the off.
Stage 3. The final 30 minutes prior to the start of the race.
Stage 4. The in-play market
Stage 1. The evening before racing until 9.30 am race day.
This is the early stage of the race market. There is very little liquidity in the market at this stage and prices on offer are not competitive indicated by the total book percentage at the top of the back and lay columns. The book percentage should be used as an instant guide as to the competitiveness of the prices on offer. Without going into unnecessary detail at this time about the book % it should be noted that in a competitive market the % at the top of the back and lay columns will be as close to 100% as possible.
An uncompetitive book% typical of an evening before, to early morning race market.
A competitive book% typical of a market from mid morning onwards.
Backing and laying in a stage one market is fraught with danger any serious amount of money put up at odds that are way out of line will be gobbled up by switched on punters and will often leave you with very poor value bets. You have been warned!
Stage 2. From around 9.30 am until fifteen minutes before the off.
From 9.30 onwards the Betfair race markets begin to take a more competitive shape. It is around this time that bookmakers begin to put up early prices on their web sites and in their shops. During this period larger amounts of money begin to enter the market. The odds about fancied/un-fancied horses at this time can be pretty volatile as punters scramble to get their bets matched. By around 11.00am the markets tend to settle again. At this point i will take a look at my selections price action to find out which horses are looking likely to start within my price range. I will cross off my list of selections any horse with odds of 12.00 (11/1) or higer.
Stage 3. The final 30 minutes prior to the start of the race.(on-course market)
This market is also known as the on-course market. Bookmakers on course will put up their opening show and the volume of money entering the Betfair market will begin to increase heavily. Volatility during this stage can be very high and some good laying opportunities can be found!
Stage 4. The in-play market.
Once the race starts the market closes for a few seconds and any unmatched bets are cancelled before re-opening. This is now the in- play market, and the prices about each runner are extremely volatile. Punters are now betting on what they see on the TV as they watch the race develop. This is where a little research about the race can pay off and produce some excellent laying opportunities.
Finding value lays (on-course market)
If you have ever tried trading in pre-race odds on Betfair then you will probably know how difficult a skill it is to master. Having spent some time previously attempting to become successful at trading in odds i can certainly say that those who are successful deserve every penny they make. One thing i did become more aware of during that time was how the Betfair market reacts to odds movement.
Within the market every horse has a percentage chance of winning the race. The odds on offer represent that percentage. On Betfair the market is very competitive and the “book % for a horse race is usually between 100.5% and 103% from mid-morning onwards. If we were to add up every horses odds as percentages it would equal the book %. So to keep it simple we will say that the market on Betfair is framed to 100%. This means that during the period prior to the start of the race the odds for each horse can move up down or sideways but at any point if we were to freeze the Betfair screen and add together the odds as percentages for each runner it would total 100%. In knowing this to be true we can begin to understand how odds move and predict odds movement.
Example.
In a two runner horse race horse A and horse B are both being backed at prices which indicate they have a 50% chance of winning the race.
Horse A =EVENS 50% (2.00)
Horse B=EVENS 50% (2.00)
BOOK% 100
More money now starts to be placed on horse A and its price adjusts.
Horse A = 4/6 60% (1.67)
Because this market is framed to 100% the price for horse B will also have to adjust to compensate for horse A.
Horse B = 6/4 40% (2.50)
So the market in our example race would now look like this,
Horse A = 4/6 60% (1.67)
Horse B= 6/4 40% (2.50)
Book% 100
The above scenario is a simple example but does an excellent job of demonstrating how odds move to maintain a 100% book
Size of movement
A common misconception,
You notice that a runner has been backed on Betfair from 34.00(33/1) into 17.00(16/1). This may seem like a big move but it will only have a small affect in the market!
33/1 (34.00) = 3% chance
into
16/1 (17.00) = 6% chance
So in the above example the odds have actually only moved by 3%. Now lets take a look at a price move at the front of the market,
2/1 (3.00) = 33% chance
Into
Evens (2.00) =50% chance
In this example the market will have to adjust by 17% and will require the odds of other runners in the race to adjust to compensate.
By watching the odds movement during the on-course stage in the betting it is possible to lay your shortlisted horses at some excellent prices. The easiest way to monitor price moves is to concentrate on the favourite. In monitoring the favourites odds you can get a feel for what is happening in the betting and begin to predict price movement. Also its important to remember that most of the big % price moves will come from horses at the front of the market (normally the first 3 or 4 in the betting or horses under 9.00)
The later the better. The best time to place value lay bets is within the final 5 minutes of the betting. Large amounts of money enter the market sometimes causing big moves.
If the odds about the favourite begin to drift (get larger) its very likely that one or sometimes even two of the horses at the front of the market are being backed. I will check to see if my selection is being backed. If it is, then i would take no action as the odds are getting shorter. However, if my selections odds are getting larger in line with the favourites, with only minutes/seconds to go i would lay my selection at the best price i could get. If my selection is the favourite i would also lay at this point.
If the odds about the favourite begin to steam (get smaller) this will have a big effect on the other horses at the front of the market and is generally a good time to lay. I would still check that my selections odds are actually getting larger to compensate for the move. Occasionally another horse at the front of the market will begin to steam with the favourite this causes big drifts to occur about the other fancied runners and present excellent laying opportunities. If my selection is the favourite in this instance i would take no action.
If the odds about the favourite are stable. If there is no real price action i will simply do nothing and wait until the last seconds to place my bets. There can still be movement in the market but i find it a more reliable signal when the favourites odds are shifting.
Important note. If i have watched the betting but have seen no decent laying opportunities then i always lay seconds before the start and do not use the Betfair SP service. The reason for this is that more often than not, i find prices tend to be slightly bigger at SP.
Most of the time i use the above method in maiden races as they tend to have big price movements just before the start of the race. The nature of maiden races with little or no form to go on lend themselves well to rumour and “in the know” betting. Punters tend to overreact to steaming and drifting horses causing the big price moves.
If your are new to Betting Exchanges i recommend that you take the time to watch the market just before the start of a race in order to get used to how the odds move. Practise by noting down prices that you think are good laying opportunities about a horse and then wait to see if those prices are lower than the Betfair SP. Once you can consistently beat the SP around 75 to 80% of the time then start placing real lay bets
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Understanding Odds
I believe the vast majority of people who bet that lose do so because of two factors.
1. They bet too many races – without doing the appropriate stud and home work
2. They fail to understand odds
On Point one I personally can back up to 20-25 bets on a big race day and still come out in front – whilst I know of other people who make their living from investing on the horses who bet every single race ( although there styles are completely different . I also have a good friend ship with a person who will have 1-3 bets per month . I don’t think there is any clear right and wrong in this case as this will ultimately be determined by the research that is put in and of course what ever serious player is interested in – THE BOTTOM LINE.
What is relevant and what will kill of most people off who bet the horses is the fact that very few people a)understand value and b) know how to apply it to your best advantage . Sure most people recognise that if a horse is at $1.70 they naturally assume it is no value and you often here this – however if you ask them what is its true value they have no idea. Just the same way that a horse might be $25.00 and yet it still can be no value. If you constantly take under the odds just as the sun rises each day you can be assured that your future betting will not provide you with winnings in your pockets.
To understand if a horse is any value or not you first need to determine what is value – and for most this is either too hard or simply not worth the bother, and it is these excuses that ensure most people fail to win money when investing on the horses. Most will have watched TVN or heard some bookmakers percentages quoted and im sure it goes over most people’s head’s, however to explain this it simply means in the perfect world what the book makers would make if they laid every horse for $100. So if the bookmakers percentage is 140% then for every $100 bet in theory they would win $40.However bookmakers these days are just glorified punters and the art of bookmaking is largely non existent. Therefore your aim 9 times out of/10 is to ensure you bet when the percentages are at their lowest – as the less the bookmaker wins obviously the more the punter wins. Therefore betting under 110% is best and on the odd occasion I have seen them bet below 100%, meaning if you backed every horse in the race for a even amount you would win regardless . Therefore when you are doing your own markets you should set them for 100%- or even lower at 90%- to ensure you leave yourself some room for error.
Because there is no reference manual on defined approach that determines what is right or wrong you need to have a lot of confidence that your approach and your markets are correct, as once you have your own 90 or 100% markets you can then confidently go and back those horses that provides you with some VALUE selections. The other thing that helps you when doing your markets is to relate what your horses chances are really likely of occurring. For example if you see a horse at $10.00 – most people say – oh that’s good value – however what most people don’t click with, is that the market was can be wrong as well as right .For example– if a person bets this horse they don’t acknolwdge that this horse will lose the race 90 times out of 100 !!!. If the market was incorrect and the horse was paying $6.00 – it still would only win 10 times out of 100 however the bookmakers want you to take under the odds- meaning if the horse won its 10 races – it would return for you $60(based on a $1 bet) for its (10 wins 10 x$6) however you would have bet 90 other times and have outlayed $90 for a big loss of $30. IF on the other hand the horse was paying $20 and again your market had it a $10 chance – you would return $200 (10 wins x $20) and you would have only outlayed $90 for a very attractive profit- as you can see your main market has to be correct and it makes winning a hell of a lot easier
Consider the following prices Horses odds Horse needs to win to for you to break even if you back horses at this price/ out of 100 races $1.50 66 times $2.20 45 times $4 25 times $5 20 times $8 12.5 times $11.00 9 times $20.00 5 times $40.00 2.5 times
The above table highlights if you price a horse at $5 chance you are effectively saying he will only win 20 times and lose 80 times per 100 races. SO you can see if you get it wrong and take under the odds – long term you will be assured to lose .
I quite often get praised for the number of long priced winners that we select that win or run above expectations- and simply I believe it is because my markets are very close , and its quite easy to select a horse that you know is going to a big price when you have priced it in some cases 5 or 6 times shorter. Recently we backed Sara’s Choice at our maximum bet . Whilst she won at $11.00(members got $14.00) I had her at $3.50 fav as her true chances of winning , so as you can see I had her winning 29 times out of 100(100 divide by $3.50) yet the market had her winning 9 times out of 100($11- when you get these sort of situations they won’t win every time but they don’t have to as you have so much in your favour. When you have such discrepancies you need to back your judgement – whatever you do – don’t be scared by the price !!- as the bigger it is the more you win !!
Australians land 199-1 punt on Betfair
The Australian women’s 4x200m freestyle team stunned the Americans and the French. Indeed they stunned themselves and even the most ardent of Betfair punters.
Such was their underdog status that the Aussies were backed at an incredible $200 (199-1) on Betfair in the preliminary rounds of the 4X200m freestyle.
But there were more big money punts landed on the Australians once they hit the pool. $16 (15-1) outsiders before they dived in, the Aussies continued to be backed at high prices despite Stephanie Rice gapping the field in the 1st leg. Bronte Barratt continued to control the race for the Australians in the 2nd leg and still the Aussies were available at a whopping $10.
Not until Kylie Palmer opened up a race-winning lead in the 3rd leg did the Australians wrestle favouritism ($1.80) from the Americans. When Palmer touched and handed over to Mackenzie for the final leg the Aussies were $1.50 on Betfair.
As the American Hoff began to take ground off Mackenzie the Americans were once again backed into favouritism. Despite having a body length or more on the Americans, Australia drifted to $2 (evens). But McKenzie kicked for Australia and put the race beyond doubt with a stirring final lap, forcing punters to back Australia until no further price was offered.
Notes to Editors:
1) Betfair is offering in-play markets on all Olympic swimming races 2) The Americans started the race $1.40 favourites and were backed as low as $1.20 during the race
1.Predicting and trading in different timescales
You must make sure that you match the timescale of your prediction of the price’s direction with the amount of time that you hold your position. For instance, a classic mistake would be if you are trading the favourite’s price three minutes before the race is due to start and you see that the price is being Backed heavily and is going down. You think that this horse has a really good chance of winning the race so you decide to Back also. WRONG!!! If you do that you are basing a short term trading decision on a long term view of the price. The timescale of your prediction of the price, i.e. that the price will go down because the horse will win the race, is different from the intended timescale of your trade, which is to trade out of it with a profit in a minute or less. Unless you’re going to hold the bet until the race has finished then you can’t base trading decisions on where you think the price will be when the race has finished.
2. Not getting out instantly
Short-term traders don’t realize just how short-term you have to be to avoid the losses. To trade without knowing anything about what is going on, you have to assume that any movement against you is going to carry on going against you in the most painful way it can. And this isn’t too drastic of an assumption, as anyone that’s held onto a losing trade only to see it get worse and worse will agree. Without any knowledge to the contrary you have to assume the worst, and the only protection against this is not to be in harm’s way: The less time you’re in a position, the less can go wrong. Take your profits quickly and your scratch trades and losses even quicker. By quickly I mean instantly, profit scratch or loss you should be out, or at least have your counter trade in, within 10 or 20 seconds at the most.
3. Not doing scratch trades
There is a tendency amongst new traders to see the scratch trade as a waste of time. The scratch trade is where you lay and back the horse at the same price. Once someone has done a scratch trade, only to then see the price go two or three ticks the right way they tend to stop doing them. The new trader can’t get it out of his mind that the scratch trade just cost him a profit and stops doing them. However, human nature, some more than others, will always make us dwell on what we just missed out on without appreciating what we’ve got. A scratch trade that gets you out of the market before the price suddenly turns against you is soon forgotten about as the trader quietly congratulates his trading skills and quickly forgets all about it. A missed profit has a different effect on many people than a saved loss of the same size has. The fewer scratch trades you do the more losses you will have, that is a fact, so therefore you need more profits just to get back the extra that you’re losing. It’s far better to not lose and then to not win than it is to lose and then win.
4. Letting losing trades ride as bets
To be a successful trader you must be taking profits and losses of roughly the same size, but having more profits than losses, the scratch trade taking the place of the losses. As soon as you start to let your losses get bigger than your profits you’re creating an uphill battle for yourself because then you have to have lots more profits than losses just to break even. The absolute worst thing you can do is hold on to a bet because you were losing on it and let it ride as the race runs. Doing this is total insanity from a risk reward ratio and is gambling at its worst. If you want to gamble then gamble but at least do it properly. Don’t do a hybrid mix of trading and gambling where you’re doing each one badly. To make small one and two tick profits and then risk your whole bank on the outcome of a horserace because you couldn’t take a small one or two tick loss is stupid. You know that in the long run it’s going to end in tears so why do it? There’s no point in winning nine times and losing once if your loss is 50 times the size of your profit. Anyone with such a complete lack of discipline not only will lose but deserves to lose.
5. Reading form and watching racing
As a short-term scalper the last things you want to do are read form and watch the racing on television. Those that wish to gamble on the outcome of the races should of course do these things but a trader should avoid the formbook and the television. Not only are they distractions from trading but they implant biases in the trader’s mind that detract from his ability to concentrate solely on the numbers and the patterns of movement that they are creating, leading to scenario 1. The scalper shouldn’t read the racing paper or switch on the television and should only log in to Betfair at the most 20 minutes before the first race.
6. Wanting to enjoy the racing
Trading is often described as boring and detracting from the enjoyment of racing. This may be the case but horseracing is of no concern to the scalper so this comment is meaningless. Horseracing has nothing to do with what the scalper is doing. Wanting to enjoy the racing or enjoy your betting is fine but you cannot trade successfully at the same time. You can do one or the other but not both. Trading requires concentration and dedication and if you’re watching horseracing at the same time then you are being unprofessional.
7. Over-thinking their trades
Most traders over-think which way the market is going to go which has two drawbacks: firstly, they don’t do enough trades which cuts down their potential to make money and secondly when they do eventually pull the trigger they have put so much thought and effort into their trade that they fall in love with it. They are unwilling to get out of such a trade with an almost instant scratch trade or an almost instant small loss. It’s as if doing that would be to embarrassing after waiting so long and putting so much time into it. This is why people ride their losses due to their inability to accept so quickly that they were wrong. Instead of entering into a trade with the confidence that you are right, each trade should instead be entered with the assumption that you are wrong with a willingness to react correctly if indeed you are wrong. As much as you may have built up your reasoning for the trade you just did, you must remember that you don’t actually know anything about what is going on and it’s ok to be wrong.
8. Being afraid to purchase specialist trading software
If you want to make money from purely scalping or trading, then it is worth every penny in subscribing to specialist software such as BetTrader PRO. They say necessity is the mother of invention and that’s definitely the case with these products. The Betfair interface has been developed to cater for many different types of customer. If you want to specialise in scalping or scratch trading, then invest in a specialist product. Having live price feeds and one click bet submission at any price, lay or back, gives the trader the absolute flexibility he needs to turn on a sixpence which the Betfair website and most other trading applications don’t allow. It’s the old adage – you need to spend money to make money. Visit http://solutions.betfair.com for further information on trading applications built by Betfair licensed software vendors.
9. Get distracted during races
It’s easy to get distracted by lots of different things when you’re trading but you must ignore everything. Don’t check your emails, don’t be on instant messenger and don’t go on the Betfair forum while the racing is on. To really get in the groove you have to concentrate on every race, moving onto the next race when that one is due to start. That slack period where you have just greened up on a race and then move onto the next race and there is still 10 minutes to go and everything is quite calm shouldn’t be used to do other things. That’s the time where you can sit back for a few minutes while nothing much is happening and relax a bit, but you must still watch the price and be aware of what is happening. Don’t take your eyes from the screen except when nature calls. If you smoke then smoke in front of the computer or not at all, nipping out for a cigarette will cost you thousands of pounds over the course of a year. And don’t completely leave the moment by chatting online to others, don’t even answer the phone or check out other websites. Concentrate dammit! For three and a half hours you are a trader and nothing else, you’ll be surprised how much better you trade when you don’t allow any outside distractions of any kind, letting yourself be absorbed by what you are doing and really seeing the movements and imagining what they might do next.
10.Wanting a profit of predetermined size
Many people decide how much they want to make out of a trade before they enter it and then set their exit price according to that rather than what it looks like they can reasonably get now. Wanting to make two ticks is great but putting your counter-trade in two ticks higher than you just laid at and then sitting back waiting is gambling, not trading. It might go up, but it might go down, if you can’t get out straight away with a profit you should ask for a smaller profit. If you can’t get the smaller profit straight away you should scratch, and if you miss the scratch trade you should take a loss. If instead of all that you remain motionless with your counter-trade still in at the same price waiting for your two tick profit then you are gambling and will have your share of profits but also your share of big losses.
Getting your head around Betfair.
How to trade on an exchange (Scott Ferguson, March 2004)
To the novice punter, a betting exchange can look overwhelming but to the value-conscious punter, they are manna from heaven. Why?
Better prices- because the bookmaker is taken out of the equation, you are not subject to their 5, 10, 20 or even 50% margins. No overheads to support, no employees to pay, you are betting directly against other punters and their opinions.
As a result, you end up with prices that average 20% better than bookies. This is especially true on markets with more selections – racing, football premierships, golf tournaments etc, where bookies traditionally make their ‘bread and butter’.
Winners don’t get banned or cut back- many online bookies will limit your stakes or close your account if you “dare” to beat them. It doesn’t matter to an exchange, they only bring punters together, not take the risk themselves!
Betting in-play- with so many sports shown live on TV these days, why not bet in-play? Unsure about the team line-ups, what the tactics will be, or the state of the pitch? Then try watching the game for a while before placing a bet.
The ability to trade- ever backed a golfer at big odds who’s then in contention coming into the final round, but you’d prefer to bet some of it back and walk away with a guaranteed profit? Now you can lay selections as well, so you could choose to recover your stake to leave you with a ‘bet to nothing’ (a bet where you break even on your worst outcome), or hedge your position to give you a profit no matter what the outcome.
The ability to oppose a selection- ever thought Roger Federer was way too short to win an Event, but couldn’t decide who was going to win the tournament? Problem solved – by laying Federer, you would effectively be backing the field to beat him. So much easier to cheer the whole field!
In a series of columns, we will look at some of these options in depth. Firstly, we will start with the basics of trading with an exchange.
Once you’ve signed up with Betfair, the first thing you should do is ‘test’ the system, via the play for fun site (www.playbetfair.com). Sign up and place a few bets with play money – notice how your potential profit and risk is always shown on screen. It is very easy as a new player to make the mistake of backing instead of laying and vice-versa. Now take a look at placing an offer on the screen, in the form of an unmatched bet. To do this, you will need to start using real money, but there’s no need to bet more than the minimum wager ($6) until you’re confident.
Find a market with little or no liquidity so you can have your own fun. It might be a horse race at an obscure venue tomorrow, or a Swedish bandy match or similar. Post some offers to back and lay selections. Note how an unmatched ‘back’ offer appears on the ‘lay’ side of the market screen (for someone else to match your bet), and how the reverse applies when you place a ‘lay’ offer. For every fixed-odds bet that is struck, with an exchange or a bookmaker, there has to be both a backer and a layer.
Now vary the price and see how it changes on the screen. This is very important for when you are betting in-play or just before a race starts, when prices are quite volatile. Note that there are ‘safety’ screens before placing a bet, so you can be sure of what you are doing. Once you are confident you know what you are doing, you can bypass those screens by unticking the ‘verify bets’ box on the My Bets tab.
Everyone, whether a professional punter or complete novice, will make a mistake with backing and laying at some point. Get it out of your system when you’re playing for fun and not with your hard earned!
How to trade a Low volume market.
How to trade a low volume market (Scott Ferguson, June 2004)
The beauty of Betfair is that there is such a wide variety of markets. Horse races can have more than 20 runners, whereas a sport like tennis comes down to just two options in the match odds. Some markets will trade millions, others just a few thousand. Profits can be made of all of them, but you have to treat different markets accordingly.
Being a head-to-head market, bookmakers’ margins on tennis are relatively tight (average of 108%), but that doesn’t mean you can’t find value on an exchange – it comes down to judgment and timing.
Let’s look at judgment. How exactly are you making your selections? Do you do plenty of research before working out a set of prices (or percentages) in your head, or do you use someone else’s prices as a guide? There is no single way to profiting on an exchange – there are many different ways to trade. Some people like the constant action, others like to pick and choose where they play. Either way, you need to have confidence in the prices you are using as a basis for your trading.
Let’s use a hypothetical match between Andy Roddick and Tim Henman on a hardcourt surface. You look at their respective lead-up form, noting what sort of players they have lost to or struggled against. Is each player in top form? Is this their favourite surface? Do they have a good record at this event previously? Are they fully fit? What is their head-to-head record?
Do not look at any other prices until you have formed your market. This is important because any outside opinion will influence your prices – you want them to be as ‘raw’ as possible.
After going over all the statistics, you come up with a market of Roddick 1.67, Henman 2.50 at 100%. Now you can look around at the bookmakers’ opinions – you note that in the Caribbean where the US-focused bookmakers are, Roddick is marked shorter, whereas in England, Henman is shorter – bookies catering for the parochialism of their client base. Overall though, your market is pretty close, the average is 1.57 (4/7) for Roddick, 2.30 (13/10) for Henman, and this is reflected in the opening market on the exchange.
Now comes the fun part. Everyone can read the ‘back’ prices on an exchange and compare them to their bookie, but can they look at the ‘lay’ side as well? Say that you wish to bet on Roddick at any price better than your assessment. You have two options – ask for a price on Roddick well above the market (which will probably stay unmatched), or you can offer to lay Henman at what looks to be a good price, but in effect is only offering you the price you want on Roddick.
How does that work? In a two-horse race, backing one runner effectively offers your layer (or bookie) the reverse price on the other runner. Think of it in fractions. If you have a standard bet with a mate on a football match, you usually will bet at even money or 1/1 – £5 of yours against £5 of his. But we all know not all contests are even. If you want to bet your selection at 4/5 (1.80), then the person laying the bet is receiving odds of 5/4 (2.25) on your selection NOT winning. This could either be 5/4 on the other player in a tennis match, the whole field in a horse race, or the other team and the draw in a soccer match.
Back to Roddick v Henman. You want to back Roddick at 1.70, but the best price on offer is 1.62. Henman’s price is currently 2.34. Try offering 2.40 for the Englishman – if matched, this would deliver you a price of 1.714 on Roddick. If this isn’t clear, think in fractions and reciprocal values – lay Henman at 7/5 = back Roddick at 5/7. Remember that early on, liquidity in these markets can be quite weak, however by laying in a 108% market, rather than 100.2% at the close, you can snap up some extra value. If you are confident in your ratings, you can go up before any other prices are available and post a wider margin, and see if you can pick up some easy money from punters too impatient to wait for the market to form.
If the largest bet size on the screen is only £50, putting up an offer of £500 will most likely scare punters away. Be prepared to take small bites to achieve your overall goal. Timing and patience are crucial. You will have to factor commission rates into your projected profits, plus the potential need to vary your prices to get all of your bets matched.
Make use of the settings option – above every Betfair market is a link called ‘options’. Click on this, and then…
Include settled bets in P&L figures – important for long-term markets, eg tennis tournament or Champions League winner where selections are eliminated along the way. Show P&L figures net of commission. Show ‘What If?’ figure (As if unplaced bets were matched). The last option will save you time and money when trading – it does all the calculations for you when trying to hedge and trade.
If you manage to lay Henman at 2.40, giving you a price of 1.714 for Roddick, you can then improve your price by laying some back. Laying £100 at 2.40 gives you a risk of £140, a profit of £100. If you laid Roddick for £50 at 1.64, your position would then become Roddick wins +£68, Henman loses £90 – a net price of 1.755 for Roddick, and a price almost impossible to find anywhere else!
Trading on an exchange gives you more options. You can trade in and out of positions, put up offers on both sides according to your ratings, or just follow the money trail and go with the flow.
Why laying a selection is better than Backing.
Why laying a selection is often a better choice than backing it (Scott Ferguson, June 2004)
Ever looked at a bookmaker and thought that looked like an easy way to riches? Well, it’s not quite that easy, but it certainly does have its advantages.
A licensed bookie has to offer a price on every betting option – every horse in a race, every player in a tournament and nearly every match on the football/tennis schedule. They can’t hide the selection they like, or the match they don’t want to get involved in.
As a layer on an exchange, you have the choice to bet when and where you want to. You can lay one horse in a race or all of them. You can lay to lose £5 or £5000. You can price all 64 matches in the opening round of a Grand Slam or just the one you like the most – it’s your decision.
Bookmakers can suffer if they try to spread themselves too thin – i.e. by offering too many matches or events and not being able to do proper research so they are highly confident of their prices.
When bookies do get it right though, the punter by placing a bet offers the bookie a great price on the alternative option. Let’s use the example of the men’s match, Karol Kucera v James Blake, in the 2004 Hopman Cup final. Using a sample of 12 betting firms listed on TipEx, the top price available on Kucera to win at 3.46. The Betfair price never even got above 3.10. However Blake traded as low as 1.31 up to a high of 1.41, closing at 1.40. By laying Blake early at 1.33 (1/3), the price you are effectively backing Kucera at is 4.0 (3/1). Even if you were slow off the mark, you could have laid 1.36 (4/11) or even 1.40 (2/5), and still returned a better price than any bookmaker on the sample (before taking commission into account).
As mentioned below, you could even improve your price by laying short then backing at a higher price.
The beauty of laying favourites comes down to the lower level of risk involved. Favourites are traditionally backed strongly – hence the name. Any time there are reasons why the favourite is a risk – poor form, coming into an event fresh from a break, injury concerns etc – then it may be worth opposing them. Laying a 1.20 shot for £100 has a big upside (£100) and a relatively small downside (£20). Only one in six selections at that price has to get beaten for you to break even. Any more than that, and you are in profit.Often there are factors which force the price of the favourite down to well below its true price. Media attention and popularity are the main ones here. Some players or teams are good enough to win anyway despite the weight of attention – eg Manchester United, the most popular football team in the world, are always shorter than they should be. Others, on occasion, struggle under the weight of the support like Tim Henman. In England, Henman comes up shorter than he deserves for every match of every tournament. In futures betting, his price is never anywhere near the all-up match-by-match price of his path required for victory.
Lleyton Hewitt in 2003 was an interesting player to price up. It was clear by June that something was wrong with him – two changes in coach within six months, the lawsuit with the ATP, and poor form. Bookmakers and punters were divided as to whether his 2003 season would see a return to his best or slide further into a slump.
Using Centrebet prices for every ATP match Hewitt played in the four months between Hamburg and the US Open, laying ‘Rusty’ for a stake (not risk) of £100 at the final price in every match (23 in total), you would have recorded a profit of £318. In only three matches was his price any higher than 1.35 – low risk, high reward. Betfair prices recorded on odds comparison sites for these matches are affected by live trading on several of these matches, and thus cannot be used. It can be safely assumed that the prices traded on the favourite spanned both sides of the bookmaker price and closed slightly higher on nearly all occasions.If you look at the trading history of a market on an exchange, particularly one with a clear favourite, you will always find that the ‘jolly’ accounts for the vast majority of the bets matched. So if you are keen to cheer on the outsider, try the laying the favourite instead for better value.
A heads up on in play betting.
Look One Step Ahead for a Live Trade (Scott Ferguson, November 2004)
The benefits of an exchange are best displayed in a live sporting event. The chances of a team ebb and flow during play enabling traders to constantly revise and improve their position.
Let’s look at the example of the final test between India and Australia recently.
Needing just 107 in the fourth innings to win the match, Australia traded at 1.05 when the target was set, India are matched at 20. Being only day three, the draw is out of the equation. Australia lost a wicket immediately (0-1) and drifted to 1.10. Wickets continue to tumble, and at 58-6, India become favourites at 1.86. Another wicket, 62-7, and India are now strong favs at 1.22 – their lowest price in the match.
Mini-revival, Australia reach 77-7 and regain favouritism at 1.89. A wicket reverses the betting dramatically, India now 1.30 at 77-8. The tail wags, at 90-8, both teams are trading at evens (2.0). The ninth wicket fails, India back into 1.50. Australia all out for 93, the final price available for India was 1.30.
Now preaching after the event is not something to be proud of, but imagine the position you could have put yourself in if you believed Australia’s record in dead rubber tests and chasing small totals was worth a risk. Laying Australia at 1.05 wouldn’t exactly kill you. For the potential profit of £100, you risk a whole £5 – the price of a couple of pints! Think about it – what is the downside of such a lay? Langer & Hayden defy the trend of the match and get to 50/0, Australia trades at 1.02 and you can’t get out of it.
At virtually any point in the innings after the first over, you had a healthy position to trade from. Would you then back Australia at 1.5 or 2.0 or higher? Plenty of options and no need to jump in all at once. Sell the bet back piece by piece – first covering the potential loss so you then have a ‘bet to nothing’, then chip away to even up your result on both sides, or however you want to cheer the result – you are in control of your position. That’s the beauty of an exchange.
If only it was so easy – not every game will go exactly as you plan. Watch a few games and make some notes, rather than investing cash. If you have any statistics to help you out (number of draws on a certain cricket pitch, most popular time for goals to be scored in soccer etc), all the better.
Go into the match with a strategy. Do you think one team will win? How confident are you? Do you wish to ride them all the way, hedge for an even profit all-round, or somewhere in-between? Are you prepared to risk a little bit for a chance of a big payoff?
One popular system is backing the draw first in football matches that you expect to be rather dull and lifeless, particularly in the first half. The average draw price of a relatively even English Premiership match is 3.4. If the game is still scoreless at half-time, that price will drop to 2.6-2.7. But beware the late goal, stats show that the last 15 minutes of each half are the highest scoring segments of the match, even after you allow for the addition of injury-time.
Scratch it out first on a piece of paper:
Back the draw at 3.4, for £50
Team A = -£50
Draw = +£120
Team B = -£50
After 35 minutes, lay the draw at 2.80 for £30
Team A = -£20
Draw = +£66
Team B = -£20
(note – effective position is now £20 on the Draw at 4.3)
At half-time, if the score is still 0-0, lay the draw again, 2.66 for £30
Team A = +£10
Draw = +£16.2
Team B = +£10
Team A scores after 60 mins, prices now Team A 1.50, Draw 3.6,
Team B 17.0. Lay Team A for £20
Team A = £0
Draw = +£36.2
Team B = +£30
In this position, you don’t mind if the home team hangs on, but you’d prefer an equaliser from the visitors. Team A continue to shorten as the clock ticks, but Team B are pushing everyone forward…
75mins – Team A 1.28, Draw 5.0, Team B 30.0
Do you ride this out or lay the favourite again?
80mins, the visitors get desperate and bring on fresh legs. Team A1.20, Draw 6.0, Team B 50.0
Risk a tenner by laying the leading team for a backers stake of £50.
Team A = -£10
Draw = +£86.2
Team B = +£80
85mins, the visitors equalise! Team A 11.0, Draw 1.20, Team B 11.0. Lay the draw for £100.
Team A = +£90
Draw = +£66.2
Team B = +£180
90 minutes – somebody scores, but do you really care with a book like that???
Alternatively, you might wish to lay the odds-on favourite if you don’t think they will score in the first half-hour. There are many different strategies, many different variables, the only way to work out what’s best for you is test them out.
Important tips for live trading
Go into the game with a strategy.
Keep thinking a few minutes ahead – what will happen if ….? With live trading, you are focusing on what happens next, not necessarily the end result.
Always be prepared to risk a short-priced favourite for the sake of a couple of beers.
Practice on paper or for small stakes first
