I haven’t written much about trading, and that is because it is not my personal favourite form of betting. But we want to make sure that we have all aspects of betting covered and trading is very much a preferred method of betting for a lot of people due to the limited risk involved in using it. I still receive a lot of questions asking if I can explain exactly how trading works, today I want to clear this up and make it as easy to understand as possible. In future articles we will look at different strategies and methods to profitably trade. For the purposes of this article I will assume that you know what a back and lay bet are and how to place them on Betfair.
Sports trading is the process of using Betfair to make a profit no matter whether a horse wins or loses. It sounds great, and it is, but like everything else it is a skill that you need to learn and practice to become good at. To make a profitable trade we either need to back high then lay low, or lay low then back high.
How does this work?
Above you can see an example race. Let’s take a look at what happens if we trade on Jonnie Skull. If we Back him for odds of 5.2 then…
As you can see we would make a profit of £42, which is £39.94 after Betfair’s commission. If the odds moved and we could lay this runner for odds of 4 for another £10 then our lay bet is only going to be risking £30.00.
As you can see above by backing high and then laying low we have secured a risk free profit for ourselves. If Jonnie Skull wins then we make a profit, if any other runner wins then we don’t lose anything.
It doesn’t matter if you back first or lay first, but the odds on the lay bet MUST be lower than the odds on the back bet for you to make a profit.
The key to making this work is to accurately judge whether the odds are going to steam or drift. If they steam then you want to back first because they will then become shorter and we can lay at lower odds. If they are going to drift then we want to lay first because they will then get bigger and we can back at higher odds.
There are also a variety of different types of trading but the most popular are scalping and swing trading. Scalping is where we perform trades similar to the one given in this post a large amount of times, only making very small profits on small odds movements but doing it repeatedly on the same horse until we have built up a nice profit. Swing trading is where we look for horses we think are going to have big movements in the odds and open the trade earlier in the day and close it closer to the race. A single trade but for bigger profits.
As you would expect, there are many strategies for both of these techniques but they all share one thing in common. You need to practice them! In future articles we will be looking at some of the different strategies you can use.
We can take this one stage further and find actually green up. You may have heard this phrase before, what it means is that we take our risk free profit and spread it across all runners in the race. So we win less, but we are guaranteed to win something whichever horse wins the race. You can read about how to do this here.