Betfair Exchange Trading for Beginners: The Ultimate Guide for Trading On The Betfair Exchange Part 1
You are probably reading this because you have heard of ‘Betfair Trading’ or ‘Betfair Exchange Trading’ and are wanting to find out what it all entails, maybe you are a matched bettor at the moment and are sick of having accounts gubbed?
You are in the right place to find out everything about the Betfair Exchange and Betfair Trading.
What is the Betfair Exchange?
The Betfair Exchange is the thinking mans place to bet, the betting exchange offers higher prices thank any bookmaker (99% of the time) and this is because you are betting against real people - hence the name Betfair Exchange. No bookmaker is getting rich here, Betfair Exchange takes a small commission for connecting the two sides of the bet.
Where an opportunity comes to use Betfair to trade is because of the way the odds system operates on the exchange, because the odds can increase or decrease in price. As I write this now Betfair Trading Community has helped over 1,000 trade on Betfair - we firmly believe that anybody can learn to become a Betfair trader.
If you are going to put the time and effort in to learn this skill then you can become a good trader, Betfair Trading Community have helped thousands of want to be Betfair traders. Our guide in this post and other guides we have linked into this post will help you become the best sports trader you can be!
When you have reached your goal we are also there to help you with Betfair strategies, trading stats software and just a good group of people.
If you want to become the best trader on the Betfair Exchange you can be… read on.
The Basics of Betfair Trading
Let me take you back to the year 2000 (no this is not a busted song!). It was June and two entrepreneurs called Andrew Black and Edward Wray launched a website called Betfair, this website changed my life.
The whole idea around the Betfair exchange was to create something which mimicked the stock market, except the major difference the items for sale were not companies or gold they were betting odds. This website changed the face of sports betting.
It changed because now anybody could be a punter and a bookmaker. Meaning that odds could be bought and sold or as it is called on the Betfair Exchange backed or layed - the prices, just like the stock market are constantly moving.
This cleared out the bookie over round, which is where bookmakers used to make a huge profit now was gone. The price that is sold on Betfair should reflect their true value of the market, thus offering a better price and value for those betting on them and for us Betfair traders.
I always describe Betfair trading to people ‘It’s like investing in the stock market, the only difference I invest in athletes and sports teams instead of companies.’
That, in a nutshell, is what you can do on the Betfair exchange, you place two bets on the same selection to create a profit. This has enabled professional Betfair traders to make huge sums on the Betfair Exchange and probably why you are reading this post today.
How do you trade on Betfair?
Here I am going to talk you through a real-life example of a trade on the Betfair exchange.
There are 2 stages to a trade on Betfair
- The opening trade
- The closing & Hedging profit
Like the standard bookmaker you can use Betfair to place a bet on the outcome of an event and also you can place a lay bet, simply put:
Back bet - Betting that an event will happen
Lay bet - Betting that an event won’t happen
Let’s take a really simple example.
Liverpool v Manchester United
We could back or lay Liverpool depending on what we think the outcome of this match will be (outcomes: Liverpool win, Draw, Manchester United win).
This is where the Betfair Exchange comes into is own and gets very interesting for us as Betfair traders, because the prices are constantly moving before the game in the build-up and also in play, the price reacts and is not static this gives us Betfair traders an opportunity.
We can both back and lay an event, this is where the two stages of the trade on Betfair come into play.
The Opening Trade
To make a successful green trade, we have to expect the price will move. In this example, we back Liverpool for 1.80 with £100 to win the match.
Looking at the numbers now then, we have
£100 stake on the match, the scenarios are:
Liverpool Win £80 Profit
Draw £100 Loss
Manchester United Win £100 Loss
That is in a betting example but we are trading on Betfair now and have an opportunity to sell this trade, so in the above example lets say its half time and Liverpool are winning 1-0. The odds will have changed as I have explained the prices are moving, we can now execute the second part of the trade ‘The closing/hedging profit’.
The Closing/Hedging Profit
In this example, Liverpool is winning 1-0 (sorry United fans!!) we could now Lay Liverpool to win the game say around 1.2 with £100. This would leave £60 profit if Liverpool were to win the game and £0 profit on the other two outcomes (Draw & Manchester United Win).
You are buying lowing and selling high in trading! But in Betfair trading terms the goal is:
Back higher then lay lower
Lay low then back higher
We can then hedge this profit across all 3 outcomes so we get a guaranteed profit no matter what happens in the game now, you might be thinking it is complicated to work out how much stake to do the second part of the trade! It isn’t, Betfair has now added this into their exchange interface so it will do the maths for you, how good is that? I don’t recommend using Betfair’s cash-out function as they will not give you the best profit and you will be leaving money on the table.
But if you ever need to work this out there is a couple of options available to you:
- Chroma web Arb Calculator
- Use Betfair Trading Software (I will cover this in this post later on)
That covers the basics of trading on the Betfair Exchange, you are now able to open and close a Betfair trade!
Next, we shall move onto the jargon that you will see used…
Betfair Trading Jargon
Now you have the basics of how Betfair trading works we can start to delve into some of the tradings speak you will see being mentioned all over the web, don’t worry by the end of this section you will know what B2L, DOB and all about Ticks…. No, they aren’t what you think!!
Back - Bet on something, so betting for it to happen
Lay - Bet against something, so betting on it not to happen
Market - The place on Betfair where you can bet on an outcome, one event can have multiple markets such as Race winner, To Be Placed, etc.
Tick - This is the difference between available price increments, the value of a tick depends on the size of the odds. At prices lower than 2.00 the value of a tick is 0.01. Above evens is 0.02 and it gradually increases to 0.2 as the odds increase.
B2L - This means you will be backing first with the aim of the lay lower.
L2B - This means you will be laying first intending to back higher.
Pre-match/race - Before the event starts.
In-Play - While the event is in play.
LTD - Lay the draw (bet against a draw)
CS - Correct Score (the current score in a football match)
LCS - Lay Correct Score (lay the current score in a football match)
FHG - First half goal (a goal to be scored in the first half of a match)
FHCS - First half correct score
O0.5, O1.5 or O2.5 etc - O means Over (so over 0.5, 1.5, 2.5 goals etc)
U0.5, U1.5 or U2.5 etc - U means Under (so under 0.5, 1.5, 2.5 goals etc)
HT - Half-Time
FT - Full Time
BTTS - Both teams to score (in a football match)
DOB - Double or Bust 100% profit or 100% loss (often used in horse racing)
Dobbing - Backing a horse and either hedging in running for a 100% profit or letting it run for a 100% loss if it does not half in price.
Scalping - Short term backing or laying for a short period to take smaller price movements in quick succession.
That covers most of the terms that you will initially come across on your Betfair trading journey, if there any that you have seen and thought we have missed then please get in touch, if not let us move onto the next stage of the guide.
Types of Betfair Trade - Explained
The types of trade you can make on the Betfair Exchange fall into 3 main categories and I will explain them all in detail, the 3 types of trade are:
- Swing Trading
- Cross-Market Trading
Scalping is a where you are backing and laying just a few ticks apart in quick succession to tie in small profits. This is a lower risk, lower reward strategy. It is usually done on markets where the price is moving fast and the trades usually last a few seconds rather than minutes.
An example of this is:
Where you back a horse before the race at 1.80 and the price drops to 1.79 to lay, you would get a one tick scalping trade here.
This is the most common type of trading on the Betfair exchange, it still requires the movement of odds but this is usually a greater movement. The risk here is increased but because of this so is the return.
Things move very quickly in this type of trading for example goals, players being broken or even a wicket in cricket. That is what causes the price to move with this kind of trade, information/events/weight of money.
This one can be quite complicated and not what I would recommend for a beginner, put simply this is where you trade in multiple markets and an example of this would be trading on the correct score market on Betfair while also trading on the Unders/Overs market as well.
That section sums top the what types of trade you can do on Betfair, in the next section I will delve into how you can get started.
How to Get Started Trading on the Betfair Exchange
Now you are finally at the good bit, you know about everything you need to know you are now ready to start making some moves on the Betfair Exchange, but what do you need to do first?
Well, the first thing is to head on over to Betfair and create an account, when you have an account you are ready to move onto the next step.
This is where people now get muddled and start thinking they need a lot of money, I am going to talk here about the Betfair bank to start with. My advice is always to start with an amount you are prepared to lose! You don’t need to go crazy when putting money in start with a small amount, my thought here over 10 years of working with traders is ‘If you can’t handle £50 bank then you 100% will not be able to handle £1,000!’
This now becomes the trading bank, it is capital and it is very important, do not treat it lightly! I do not mean to come across negative here but it takes time and most importantly patience to become a good trader on Betfair, there is a real possibility that you will lose a lot of trades while on the path to becoming the Betfair trader you want to be, so don’t go crazy!
Treat this initial bank as an investment in your trading future, get that mindset ready for it, you are after long term success here and make sure that now you use this Betfair Exchange account for only trading if you like to bet do that with a bookmaker - the exchange account is your trading hub.
I will cover trading software later on in this blog post, so don’t worry about having to have a super-duper fast computer with 6 screens, etc… at this stage we want to keep it simple.
‘Trading can be as easy or as complicated as you make it!’
The most important thing here is to pick a sport and market to trade and get the experience of the markets.
I know it can be really tempting to just pick anything and trade but having some thought behind the choice can help and then you can arm yourself with the information you need and lock that vision into a sport, then with the BTC community you can connect with the right traders and follow the right threads attached to that sport with laser-targeted focus to help you get to your goal faster.
There are two main things that I think are the greatest influence on what sport you should pick and they are:
I will go into more detail on both of these throughout the post and explain exactly what you need to understand when picking a sport.
Let’s start with time, I see people commenting on groups, emails etc… wanting to become a full time trader but they don't have the time, time is a very important factor in our lives and I firmly believe to be a success on Betfair you have to have a happy balance, so you need to pick a sport or market which you have the time to trade - most people who are want to be traders cannot trade the horses in the day as they are at work, but they can trade in the evenings. So if this is you then maybe the horses will work for you, but also be aware that other commitments such as partners, family, etc… will also still be there so you need to make sure you balance the trading and life otherwise something will usually give.
The same can be said with other sports such as football, the bulk of the trading on this sport is done at the weekend so there is not much point picking football unless you have the time at the weekend to be able to trade. Tennis is a favorite of mine but the times are always changing, so some days when the Aussie Open is on for example I am up at night in the wee hours.
The next thing to consider is interest, I find it much easier to trade a sport if I like it. It also gives me an advantage for a few reasons really, the first being I know the players or horses, etc… so that helps but also I don't mind spending time doing the research.
If you have the time to pick a sport that you have an interest in why not start there? You have background knowledge on the sport and you will find it easier to learn about the jockeys, teams, players, etc… because you already have a base level knowledge of them you now just need to start to watch the markets and see how you can turn that information you have into profit.
Be aware though you will start to see the sport you love very differently as you’ll be spotting opportunities to trade, you’ll be down the pub and your mates will say I am going both teams to score in this game it's coming in, when you turn round and say you know there's only a 25% chance of that happening, which is 1.25 and the bookies are only giving you 1.5 that's not enough value!
Hopefully that has given you just a couple of pointers on who to pick a sport you are interested in, at BTC we cover pretty much any sport you could think of and have articles and resources, in fact, we are preparing 4 getting started guides on the 4 major trading sports, which are Horse Racing, Tennis, Football & Cricket - to get these guides