Trading Part 1.
Betting has changed greatly over the past few years and with the opening of the betting exchanges such as Betfair and Betdaq, along with some clever software created such as Bet Angel and the Geeks Toy, many people are now able to bet on racing and all other sports in a very different way.
Trading is not like a normal bet where you put down your stake, do nothing else and wait for the result. When you are trading, you place a back or lay bet, expecting the price to move in a certain direction and then take a guaranteed profit, closing out the bet, usually before the race has even started.
You may have heard the term ‘green up’ where the trader has completed his trade and spread any profit across all runners, (teams, players or whatever), and will make a profit whoever wins or loses.
If you spot a horse that is being backed, you may back this horse for £4 at 4.5 to win £14.
You then place a lay bet for £4 at 3.45 for a liability of £9.80 and hope that the horse continues to be backed. If it goes as low as 3.45 and your bet is matched, you can do two things.
- If the horse goes on to win, you will win the difference between the two which is £4.20 and if another horse wins you win nothing but also lose nothing.
- Spread the £4.20 between the rest of the field and green up, winning a smaller amount of money but a definite amount whoever wins.
Each price increment is called a ‘tick’ and these get smaller as the price gets lower. For example, between 6.0 and 10.0 each tick is worth 0.2 and once you go below 2.0, each tick is worth just 0.01, so a much smaller profit per tick for the shorter priced horses.
When trading you can as I have said make a guaranteed profit whatever the result as long as the price of the horse goes in or out in the direction you want it to.
We have all seen a horse being backed from say 4/1 into 11/4 and these situations crop up almost everyday in many races. Whilst some horses in a race are being backed in, others will be going out in price so you could lay these and back them at a bigger price in the same way.
Whilst the horse above will be getting shorter from 4’s into 11/4, it doesn’t always drop in price so dramatically on the exchanges. It may stutter a little and even go up again before coming down.
Trading in this manner, means that you need to bet quite large stakes to win a small amount of money and this doesn’t work for everyone. You may see a lot of videos on You Tube of people filming their trades.
They may show a green up price of £40 whatever the result but they may have been placing stakes in the high hundreds or even thousands to get this profit.
Closing A Trade
What you do not have to do however is leave these hundreds or thousands of pounds in the market once the trade has begun, unlike traditional betting as we are used to it.
If the price goes in the other way to what you were expecting or hoping, you can close that trade for a small loss and the majority of your stake will be returned, so whilst I don’t think I could start putting such large amounts of money on a horse, putting £1,000 in the market to start a trade just means that you are dipping your toe in to the water, seeing how the price moves and then deciding whether to continue with the trade or pull out for a small loss.
However if you are laying horses and starting with big stakes then you will need a rather large betting bank to begin with to cover the initial liability on the lay bet that you place.
Playing The Market
A lot of people ‘scalp’ the market which is backing and laying at just one tick each time and if you are able to do this many times you can win lots of small profits, over and over on one horse.
I have heard of people who trade over £40,000 into and out of a market on one race, just trading a tick at a time that will give them a guaranteed profit of £300 to £500 pounds, whichever horse wins the race.
In this instance they have not actually bet £40,000 at once but have turned over this amount during the trade. Quite incredible when you think about it but if you have that sort of money and can guarantee £500 on whatever wins the race and do it for twenty or thirty races every day, then the rewards are certainly worth going for.
Whether or not this style of betting suits you or not, there are a lot of dangers to trading and one of them is learning to close the trade and end your bet for a loss if things don’t go as expected.
On the image below you see a ‘ladder’ for all of the prices on a certain horse. This view is from the Bet Angel software and the ladder gives you a broader view of the prices and money available, rather than just the three back and lay prices you normally see on Betfair.
On this example I have placed a £4 bet on the horse at 5.2. I am expecting the price to shorten here, so decide I am going to exit my trade when the price drops to 4.2.
This means I can win the difference if the horse wins which would be £4 and lose nothing if it loses, or I could ‘green up’ and spread that amount across the rest of the field and if you look on the left it has a column with negative amounts in red and positive amounts in green.
This means that if the price does drop to 4.2 you can click the green up button on the software and get a guaranteed profit whichever horse wins of 95p. If you wait until the price drops to 4.1 you can make £1.07 and so on.
Now for a small £4 outlay, you only need the price to drop effectively one point in real odds terms, 5.2 to 4.2 and you are guaranteed a profit of nearly £1. Do this on twenty races a day and that is nearly £20, double your stake and it could be £40.
However, this is not as easy it sounds because the price may not drop to 4.2, it may not drop at all and start going out as soon as you place your bet.
But this does not mean that you have to lose your full £4 stake as you can still ‘green up’ for a loss as you can see on the ladder above and exit the trade at anytime that you want to.
If the price is going out and hits 5.8 you can take a loss on the bet of 41p and so on, so whilst I mentioned that big traders use very big stakes to play around with, you can get out at any point for a profit or a smaller loss.
The problem with this is that most people find it very hard to exit a trade at a losing position.
When you place a traditional back bet you may use a £4 stake but are expecting to win £20, £40 or more and that will cover a few losing bets at the same stake.
When trading however, you are still placing a £4 stake but are aiming to get out quickly for a small profit of say one pound. If the price starts going the wrong way, you may say you will exit for a 41p loss but you then think the price may go out and come back in again so you wait.
Unfortunately it keeps going out and you are stuck in a position where you know you should quit but don’t want to make a loss when you are only aiming for £1.
The price keeps going out and eventually you quit for a loss of £2.50 after letting the bet go ‘in play’, when as a trader you know you should be closing the bet before the actual race begins.
You may even let it go for the full £4 loss and when you know you are only aiming for £1 each time you are suddenly betting massive odds on each time and have very little risk to reward ratio for your ‘new approach’ to trading.
Discipline is the key to betting in general but even more so when you are trading as the rewards are quite small compared to your stake. I have said that many traders scalp for an absolute minimal profit each trade, but do the same trade over and over to multiply these profits.
If you look at the ladder above you can see that just one tick in your favour would mean an 8p profit if you closed out at 5.1. Increase your stake ten fold to £40 and that could be an 80p profit and you may be able to do a one tick trade five or six times on one horse.
If the price starts going the other way however then you have to decide when to trade out for a loss, so being disciplined is absolute key and probably what turns most would be traders into losers who soon give up this new idea.
Understanding The Market
Knowing how the money is going to move is the key to successful trading and there is far more to understanding where the money is going and how the market is going to move than I can get down on this post.
I am currently dabbling with trading myself and have read up on a lot of information and watched quite a few videos on the subject and for me the jury is still out.
I am quite happy with my normal betting as it is going so I am not sure that trading in this way, especially just for one or two ticks is really for me, however I am looking into a couple of ways of betting and trading in play that may prove rather profitable with some good results so far.
One of these I have mentioned before but another is quite a new one for me and I will explain more on this on my next post.