What Is A Betting Exchange?
Betting Exchange operateS as a medium between punters, matching those willing to lay bets with those more traditional punters who want to back a winner.
Betting Exchange Explained
Table Of Contents
- What Is A Betting Exchange?
- How Do Betting Exchanges Work?
- Advantages of Betting Exchange Explained
- Disadvantages Of Betting Exchange Explained
- How Do Betting Exchanges Differ From Traditional Bookmakers
- How To Find Value Bets On A Betting Exchang
- What Is A Matched Bet
- What Is Back Betting And How Does It Work
- What Is Lay Betting And How Does It Work?
- What Are Commission Charges?
- Betting Exchange Commission Calculator
- What Is Betfair Cash Out?
- Which Betting Exchange Is Right For You?
- Common Errors New Traders Make
- How To Calculate A Trade On A Betting Exchange
- How To Trade For A Sure Profit
- How To Calculate A Free Bet
- Best Betting Exchange Trading Strategies
- What Is Scalping?
- What is Swing trading?
- The Best Trading Software
- Best Football Trading Strategies
- Best Horse Racing Trading Strategies
- Best Tennis Trading Strategies
What Is A Betting Exchange?
It's no secret the advent of betting exchanges not only challenged traditional bookmakers, but ultimately forced many to change the way they had operated, in some cases for decades. While some of the giants of the betting industry simply sought to impose an outdated 'offline' business model to the new online world, it was the betting exchanges that truly understood the potential and possibilities of internet based sports betting.
It's safe to say that without betting exchanges, we may have never seen in-play betting, more competitive betting odds, trading features such as cash out as well as the steady expansion of betting markets.
A Threat To Traditional Bookmakers
While the popularity of betting exchanges soared, the fundamental dynamic of the betting exchange saw numerous challenges, drawing heavy criticism, not surprisingly from those with a vested interested in the traditional bookmaker model. In its early days, William Hill's Ralph Topping once referred to Betfair as 'a massive secret society where illegal gambling is taking place' while Ladbrokes' Sean Boyce voiced concerns specifically relating to the competitive pressure that Betfair was placing on odds offered by traditional bookmakers.
With an increasing volume of money being bet via the exchanges rather than betting shops, a trend that upset traditional funding models in the UK racing industry, key industry players believed that Betfair and other betting exchanges threatened the financial future of the racing industry in the UK, not to mention the perceived threats to the integrity of the sport, with many calling for exchanges to be prohibited altogether. The ability to 'lay' a horse, essentially betting against it to win, was considered particularly problematic with industry insiders concerned that public confidence in racing would be undermined.
What Can You Bet On At A Betting Exchange?
With the growth in popularity of betting exchanges, the number and diversity of markets on offer has also grown. Betting exchanges now offer a similar breadth and depth of markets available as those offered by the industry's leading bookmakers.
However while markets may be available, market liquidity cannot always be guaranteed. Betfair, Matchbook and Betdaq have varying levels of liquidity on major European football leagues, with high liquidity available on leagues such as the Premier League and Champions League matches, particularly those featuring popular clubs and televised contests.
Liquidity available on UK horse racing is likewise fair, although it tends to rise quickly as racetime approaches. You may find it difficult to have your back or lay bet matched in early morning trading.
If you're preference is betting or trading on US sports, then Matchbook is likely to be your preference. While their menu of markets may be limited in comparison to an exchange such as Betfair, Matchbook offers superior liquidity of US sports such as the NFL, NBA, NHL and MLB.
How Do Betting Exchanges Work?
If you're only familiar with traditional bookmakers, then the betting exchange format can seem a little confusing at first. But once you appreciate the difference, the myriad of opportunities to both bet and trade become increasingly apparent. By becoming a savvy 'trader', you will find betting exchanges to be a great source potential profits, offering the shrewd and imaginative punter to lock in profits, in many cases before the final result is even known.
While a traditional bookmaker offers you the chance to place a bet with the bookmaker, betting exchanges offer punters the ability to bet against other punters, with the exchange essentially acting as a facilitator or mediator between the two.
Understanding Betting Exchange Basics
Confusing? It shouldn't be. Think about it this way. You're sitting with a friend watching a football match on a Saturday afternoon. You say that you think the Arsenal vs Manchester United match will end with at least 3 goals scored that afternoon. Your friend disagrees and says he expects it to be low scoring and he'll give you even-money odds that there will be 2 goals at most in the match.
You like the sound of that bet and you both agree to wager £20.
If the match ends with 3 or more goals, you win the bet and claim the £20 from your friend. If the match ends with 2 goals or less, you lose and pay up the £20 to your friend. Sound familiar? Sure, we've all done this many times among friends. Well, this is essentially how betting exchanges work, matching punters with opposing views on a given result who via the exchange make an agreement on both the stake and odds.
A Basic Example: Manchester City To Win The Champions League
What regular exchange users especially appreciate is that a betting exchange gives you the opportunity to both 'back' and to 'lay' a result. What's the difference?
Well the difference is key and is what makes betting via a betting exchange the dynamic experience that it can be.
When you 'back' a result, you are betting on a particular outcome to happen. You think Manchester City will win the Champions League this year? You back them at the odds on offer at the exchange, just like you would with a typical bookmaker.
But what if you think Manchester City won't win the Champions League this season?
The beauty of the betting exchange is that it gives you the opportunity to 'lay', to bet against an outcome, in this case, Manchester City winning the Champions League. You can do the same with any betting market available on the exchange. In laying Manchester City, you are essentially taking the role of the bookmaker, offering odds on Manchester City to win the Champions League, hoping that another punter on the exchange will like Manchester City's chances at the odds you are offering, agreeing to the wager and backing them.
We will delve into this in more detail later in our guide, but for now it's important to appreciate the difference between backing and laying an outcome and the dynamic potential this affords the shrewd punter, particularly when we come to consider in-play betting. The ability to both back and lay is the primary appeal of the betting exchange model, the flexibility for customers to act as either punter or bookmaker. You can think of it like a stock exchange, with traders buying (backing) and selling (laying) shares on sporting event outcomes.
Advantages Of Betting Exchange Explained
Rather than playing against a bookmaker, the punter is playing against another punter with an opposing view, and no locked in margin of profit on any event. If he has a good opinion he can profit.
The punter is unlimited in the size he can place bets in, rather than with traditional bookmakers where the winning accounts are usually quickly heavily restricted.
Funds within exchanges are secure and guaranteed.
Lock in a profit/trading
By laying back his original bet, a punter can secure a "no-risk" profit regardless of the outcome, provided the market has moved in his favour. i.e if you have £100 on Liverpool at Evens pre-match and they score first and are 1-0 up, you can lay £100 back at 1.33. This means that even if Liverpool win you still win £67 but if they do not you lose nothing.
The exchanges have revolutionised in-running betting. i.e prices are available throughout any match and again without any "in built" margin. The bookmakers as a result now offer constantly updated prices on bigger events, although their prices are usually a few points underneath the Betfair price.
Disadvantages Of Betting Exchange Explained
Commission and Premium Charges.
New customers winning bets are subject to a 5% charge and this is quite substantial over time and can make long term profitability very hard to achieve, while the most successful Betfair clients have in recent times been subjected to a form of "super-tax" of up to 70%.
Becoming an "action-junkie".
The race by race mentality that the exchanges encourage means many punters find it impossible to keep their discipline and end up playing in every race or live event. It can become like an addictive fruit machine particularly to the novice punter.
Lack of liquidity.
Much of the smaller, untelevised sports tend to be in very small size and is mainly "seeded" by robots or the exchanges themselves. It has become virtually impossible to get a bet of any size matched on certain events unless it is very close to the "off time". Horse racing for example in midweek is virtually non existent in terms of bets matched in the mornings and the decline is continuing month on month.
The Perfect Market.
Pre-exchanges, the more astute punters had opinions about prices that they could profit from. Now with Betfair providing a perfect tissue to the entire betting industry it is very hard to find many errors in the market that used to be commonplace. Betfair is basically a perfect meeting of all the brains within the betting industry, and it is often difficult to find any edge in the prices, particularly in football for example where all the form/teams etc are well known and in the public domain.
Although it is possible to self regulate i.e limit maximum amounts of deposits per day/month, many punters find themselves playing far bigger than they have ever done before, particularly with those who are not used to laying or losing large sums. There is little doubt that the "free" Betfair market has proved a tempting honey pot that many have found a very expensive adventure.
How Do Betting Exchanges Differ From Traditional Bookmakers?
As discussed in our introduction, a betting exchange is not a traditional bookmaker, but rather a bet matching mediator, providing punters with the means to bet between themselves, peer-to-peer. When you place a bet on an exchange you are betting against another exchange user, with the exchange acting almost as a stock exchange, with users buying (backing) and selling (laying) odds on particular outcomes. Exchanges users make 'orders', requesting odds they are willing to take or give and the amount they are willing to risk.
How Do Betting Exchanges Make Money?
If exchanges simply act as a mediator between exchange users, you might be wondering how exchanges make their money. Traditional bookmakers offer odds on sporting events and customers place bets. If those bets are winners, the bookmaker pays out, if those bets are losers, the bookmaker claims the customer's stake. Simple.
But if betting exchanges act primarily to facilitate bets between exchange users, what's in it for them? The key difference between a traditional bookmaker and an exchange in this respect, is that while a traditional bookmaker makes money the more you lose, an exchange makes money the more you bet. They do not care who wins and who loses the bet, but just that the bet took place.
Why? Because exchanges charge a commission on all matched bets between exchange users. This is basically the price of having your bet matched with another exchange user, the cost of the service the exchange offers to match you with other punters.
The amount of and the manner in which commissions are charged depend upon both the betting exchange you are using as well as the market you are trading on. For example, some exchanges offer reduced commission charges on major European football leagues while others offer reduced commissions on particular betting markets such Asian handicaps as a way of encouraging more customers to trade on these markets, in an attempt to enhance the vitality of these markets on their exchange.
The ability to bet against a result
This ability to both 'back' and 'lay' an outcome gives exchange users the ability to secure an outcome no matter how the event may end. This is what exchange veterans refer to as 'trading a market' and is particularly popular for in-play events. Many exchange users no longer consider themselves a 'punter' or indeed a 'bettor', but rather go by the name 'trader'.
Exchange traders essentially trade positions much like a broker would the stock exchange, assessing the market as the event is live in-play. We will look at examples of market trading in close detail later in our guide, but for now it's simply important to recognise the dynamic nature of the betting exchange and that while traditional bookmakers now offer in-play wagering as well as 'cash out' features, it's on the exchanges that the true traders wield their craft and find the greatest flexibility and value.
Greater interest in betting activity
Further, when you bet at a traditional bookmaker, they want you to lose. Acting as a facilitator, a betting exchange is impartial, they don't care who wins.
Rather than making money from your losing wagers, betting exchanges make their money from the level of betting activity on which they take a commission.
No limit betting....in theory
While bet limits vary from bookmaker to bookmaker and market to market, in theory there are no betting limits on an exchange. We say in theory because the amount you can bet is 'limited' to the liquidity of a particular market. What is market liquidity?
This is a phrase you'll often hear betting exchange veterans use. What does it mean? It simply means the amount of money that is being traded among exchange users on a given betting market.
On an exchange such as Betfair, markets can see trading in the millions of pounds, particularly on popular markets such as Premier League or Champions League football, major racing events or internationally popular events such as the NFL Super Bowl. These markets are said to have a high liquidity.
Another limitation is of course the odds that are being offered by other exchange users. While a market may have a high liquidity, you may not be able to bet the volume you may wish at odds you desire.
Better odds.....again, in theory
Odds are also typically better than what you will find at a traditional bookmaker. But while this is a popular claim of betting exchanges, in reality it can be a little deceiving.
Firstly, as just mentioned, liquidity plays a role. Sure, a regular bookmaker may only be offering odds of 2.20 for Chelsea to win a weekend match up with Liverpool and the best odds available at Betfair may be odds of 2.30, but can you get down the size of stake that you desire at the odds of 2.30? It's certainly possible on a high liquidity market such as a key Premier League match, but on more obscure leagues or sports, where liquidity is low, you may struggle to get on your desired stake.
Secondly, and most importantly, the claims of 'better odds' needs to also be taken in light of the commission rates you will pay. Yes, odds of 2.30 for Chelsea to win are certainly better than a bookmaker odds of 2.20, but once you take into account the commission you will pay to the exchange, the odds may turn out to be very similar and in some cases, even inferior.
This is crucial to keep in mind. Many exchanges offer varying rates of commission, depending upon the league, tournament and market. Matchbook for example offer 0% commission on select football markets while other exchanges take between 2% to 5% of all winning bets.
Why you may prefer a traditional bookie
While it may seem that betting exchanges offer a superior product and service in comparison to traditional bookmakers, there are areas where casual punters may prefer the later.
Firstly, it should be noted that the exchange format does not allow for the same breadth and regularity of promotions and free bet offers. If you enjoy taking advantage of weekend promotional offers for the Premier League for example, then betting exchanges may not be for you.
Secondly, it should be noted that while some betting exchanges have provided for the ability for users to offer or request multi bets, it's rare that such multi bets will be matched. So if you're keen for a multi bet on the weekend's football, you may prefer a traditional bookmaker such as William Hill.
Lastly, while the dynamic and transparent nature of the betting exchange is exciting to some, to other punters it is confusing and overly sophisticated. Again, if you're happy having a casual punt on the weekend, then a traditional bookmaker is perhaps more to your liking.
It is true to say that in-play betting was born on the betting exchanges. Prior to Betfair offering in-play markets on such events as horse racing, tennis and of course, football, punters could only bet pre-event and were locked in once the event began. If an early goal was scored or a key player fell injured, there was nothing a punter could do to limit their liability. The rise of the exchanges saw the rise in popularity of in-play betting, with virtually every traditional bookmaker now offering a live betting feature.
As previously mentioned, the dynamic nature of the betting exchange allows punters greater flexibility. Long gone are the days where you could only back a certain outcome. With betting exchanges, punters now have the potential to 'lay' outcomes as well, essentially placing the punter in the role of bookmaker, with the exchange acting as a facilitator between exchange users.
This has given rise to a new breed of punter, the trader, who focuses solely on trading markets either pre-match or in-play, much as a stockbroker would the stock exchange. We will take a closer look at how traders lock in profits later in our guide.
It's important to note that while betting exchanges offer a similar breadth of markets to traditional bookmakers, the ability to play on those markets is often limited to the liquidity available. This shouldn't be a concern however if you are primarily looking to bet on major football matches such as the Premier League or Champions League, with the liquidity of these markets typically among the highest available.
If you're a casual punter looking to bet on more obscure leagues and sports, you may find playing on an exchange to be a frustrating and time consuming experience. More obscure leagues and tournaments often have low liquidity and while the liquidity of such events typically improves as the event start time comes closer, the need to wait and watch any unmatched bets can feel far from rewarding.
How To Find Value Bets On A Betting Exchange
Whether you're trying to identify value at a traditional bookmaker or on a betting exchange, the same principles apply. Betting value is found whenever you believe the likelihood of an outcome occurring is greater than the likelihood of that outcome occurring reflected by given betting odds. For example, odds of 2.0 (even-money) reflect a 50% chance of that outcome occurring. If you believe the likelihood of that outcome is 60%, then the odds of 2.0 on offer represent a value opportunity. You can read more about value betting here at the bettingexpert Academy. If you are unfamiliar with the concept of value betting, we strongly recommend you read it before venturing into the world of betting exchanges.
Some punters will argue a firm no, at least in the sense that they believe value is no more easily found on an exchange than it is with a traditional bookmaker. These cynics would argue that while the manner in which an exchange user can identify value may differ from that of a user of a traditional bookmaker i.e in-play trading as opposed to a focus on pre-match betting, the chances of actually identifying value are largely the same.
In this sense that the markets on an exchange are said to be very 'efficient'. In other words, the odds on offer are typically a very accurate reflection of the likelihood of each outcome occurring.
Because the odds offered on an exchange are set by thousands if not tens of thousands of users, each with their own opinion, placing and accepting wagers from other users, whereas bookmakers will largely set the odds based on who they think will win a given football match for example, adjusting their prices according to wagers accepted.
As such it is argued that the odds on an exchange, particularly in a mature high liquidity market with thousands of bets matched (as well as the input of a number of the sharpest traders) such as a Premier League match will more accurately reflect the true likelihood of each outcome. In this way these markets are said to be more efficient and more difficult to beat long term, with many bookmakers now keeping a close eye on odds movements on popular betting exchanges such as Betfair and Matchbook. To put it simply, exchange odds are said to be set by a 'balance of opinion' and in this way, create what some consider to be a 'perfect price.'
While other exchange users may agree that the formulation of exchange odds may differ from that of a more conventional bookmaker, they would not agree that value cannot be found. These savvy traders would contend that exchange markets, particularly in-play markets offer great opportunities for those willing to do their homework and learn from hard earned experience.
While many punters may be able to come up with a fairly accurate assessment of the chances for Tottenham defeating West Brom in a given Premier League match, how many punters could truly assess the likelihood of Tottenham winning the match if they go up 1-0 after 20 minutes of play? In these circumstances, what then are the chances of a draw? What are the chances West Brom come back to win? What are the chances that the match will end with Over 2.5 goals scored?
This is where many traders will argue value can be found, particularly with a focus on particular markets or leagues. Through experience of trading these markets, these sharp minds not only have an accurate sense of how the match may play out, a considered opinion on who will score next for example, but similarly and perhaps more importantly, through years of experience they have a firm sense of how the market will react. In many cases, traders are only playing the markets, 'playing prices' as it were. They know ahead of time that an early goal to Tottenham will see the market overreact, with Tottenham's odds slashed while despite going down 1 goal, and however unlikely it may seem, West Brom's chances of winning the match are greater than the odds then on offer reflect. This is the essence of trading on the betting exchanges, and it is where many a sharp and experienced mind can find value opportunities.
The keys to finding betting value on the exchanges are the same as they have always been, but with perhaps a greater stress on specialisation. If you want to successfully and confidently trade the markets on betting exchanges, it is important to specialise. Many traders will focus only particular leagues and/or markets.
For example, some traders will only work on Premier League goal total markets. These traders will only play on Premier League matches and be solely concerned with the number of goals scored. With years of experience they become confident that they know how a market will react to a goal at any stage of the match and are happy to sit and wait for these opportunities to present themselves, all the while developing sophisticated trading strategies that allow them to enhance value while limiting their liability. Other traders will only play on English horse racing, while others will focus on 20/20 cricket or WTA tennis.
Again, the key to finding value on betting exchanges is the same as it has always been. Focus on particular leagues and markets, learn, adapt and learn again.
What Is A Matched Bet?
So let's get down to the nuts and bolts. Firstly, what is a matched bet? To put it simply, a matched bet is when you and another user agree to terms of a wager, both in odds and stake. Each bet on an exchange requires both a backer and a layer. As we've discussed previously, this is just like a bet you may make between friends while watching a football match. You believe the match will end over 2.5 goals. Your friend believes it will end under 2.5 goals scored. You agree to terms, a bet is made.
How does this work on a betting exchange?
There are a number of ways a bet can be matched on an exchange. But firstly, let's look at a typical betting exchange market interface.
Above we can see the Win-Draw-Win odds for an upcoming Premier League match between Tottenham and Chelsea. So what exactly are we looking at here?
Well, the blue 'Back' windows are the best odds currently being offered by users for that particular outcome as well as the total stake available. In this example we can see that the best odds currently being offered for Tottenham to win are 2.57 with a total of €512 available to stake. Likewise we can see the best odds offered for a Chelsea win are 2.92 with €91 available to stake at that price, while the best odds for a draw are 3.46 with a total of €5,626 available to stake. Additionally we can see the next best odds on offer for each, 2.56 for Tottenham, 2.90 for Chelsea and 3.44 for the draw.
The red 'Lay' windows display the odds that other users are asking for. So for example, we can see that there is €186 worth of stakes currently asking for odds of 2.66 for Tottenham to win, €229 currently asking for odds of 2.99 for Chelsea to win and lastly, €2,008 asking for odds of 3.56 for the draw.
So what then is a matched bet? Well this depends on whether you are laying or backing.
What Is Back Betting And How Does It Work?
There are two ways to back. Firstly, you can simply accept odds already being offered. In this example, if you like the odds of 2.57 for Tottenham to win, you can back them at that price up to a total of €512. This is just as you would with a typical bookmaker.
Here we are willing to back Tottenham to win at odds of 2.57 with a stake of €50. Once you confirm your stake, your bet has been matched. If Tottenham win the match, you will claim €78.50 from your opposing exchange user. If Tottenham fail to win (Chelsea win or the match is a draw) you lose your €50 stake just as you would with a typical pre-match bet with a bookmaker.
But what if you want to back Tottenham but would prefer higher odds? You can then request the odds you desire and hope another punter is happy to take you on at those odds. This is essentially what the red 'Lay' windows are displaying. In this example, there is €186 asking for odds of 2.66 for Tottenham to win. You could request the same odds, longer odds or shorter odds. It's up to you and how you've assessed Tottenham's chances of winning.
Once you've put in your request, in the above example, a €50 stake at odds of 2.66, it's then a matter of waiting for another exchange user to 'lay' those odds, where they will essentially be playing the role of bookmaker and offering you those odds. Once another user is willing to lay those odds, your bet has been matched. Should Tottenham win, you win the bet and claim the €83 from your opposing user. Should they fail to win (either Chelsea win or the match is a draw), the opposing user will take your stake, again just as a typical bookmaker would.
What Is Lay Betting And How Does It Work?
Similarly there are two ways to lay. Firstly, you can simply lay at the odds already being requested. In this example, we can see that there is €229 asking for odds of 2.99 for a Chelsea win. If you think Chelsea's chances of winning are less than reflected by those odds, you can lay them, acting a the bookmaker for the punter/s seeking those odds. Let's say you want to lay €50 at those odds. You simply click the 2.99 window, then enter the stake you are willing to lay, this case €50.
Here you can see both the stake you are laying and your liability. What does this mean? It simply means that should Chelsea win, you will pay out €99.50 to opposing users. Clicking the confirm tick, you lay bet has then been matched. Should Chelsea fail to win (Tottenham win or the match is a draw), you will claim the opposing users €50, just as a traditional bookmaker would.
Alternatively you can request odds that you are willing to lay. This is essentially what the blue back windows represent. These are odds that exchange users are willing to lay. In this example we can see that there are €5,626 willing to lay the draw at 3.46. They are waiting other exchange users who are willing to back the draw at those odds. If you want to lay the draw at those odds you can put in an order and wait for it to be matched. You can also place an order to lay odds that are shorter than 3.46, as we can see this example, with €2,813 willing to lay the draw at 3.44.
Again, we select the odds we are willing to offer and the stake we are willing to accept. Once we click the confirm tick, our lay bet has been submitted. We will then need to wait to see if this offer is matched. If it is matched, then if the match ends in a draw, we will pay out a total of €122. However if either Tottenham or Chelsea win the match, we will claim the opposing punter's stake of €50, again, just as a typical bookmaker would.
What Are Commission Charges?
As discussed earlier in our guide, betting exchanges make their money by charging a 'commission' on matched bets. While traditional bookmakers make money the more you lose, exchanges make money the more you bet or trade.
The way commissions work varies from exchange to exchange and from market to market.
What Are Betfair's Commission Charges?
Betfair charges a commission on your net winnings on a given betting market. If you make a loss on that market, you are not charged commission. How do Betfair calculate the commission you will pay? They do this by multiplying your net winnings by what they refer to as the 'Market Base Rate' minus your 'Discount Rate.' The more you bet with Betfair, the more Betfair Points you will earn and the higher your Discount Rate will be.
So let's say the Market Base Rate is 5% and your Discount Rate is 20%. How much commission will you pay on your net winnings of £500? It is calculated like this:
Commission = Net Winnings x Market Base Rate x (100%-Discount Rate)
Commission = £500 x 5% x (100%-20%)
Commission = £500 x 5% x 80%
Commission = £20.
Further, you will earn 200 Betfair Points on this transaction (£20 x 10).
It's important to note that the manner in which you may accrue Betfair Points varies from jurisdiction to jurisdiction. Likewise, be aware that your Betfair Points will reduce by a percentage each week. This is known as the Weekly Decay. Your Betfair Points will remain steady should you continue to bet or trade at the same level week in week out.
What Are Betfair Premium Charges?
In 2008 Betfair introduced a controversial measure known as their 'Premium Charge'. This was introduced and imposed on bettors and traders that Betfair deemed had not being paying 'fair' commission in relation to the size of their winnings. This has been a continual topic of derision particularly among those who have established long and successful careers as Betfair traders. Betfair claim that the Premium Charges only applies to a fraction of a percentage of its users, with even a high percentage of long term winners exempt.
How will Betfair's Premium Charges impact you? You will be impacted if your account is in profit, your total charges generated are less than 20% of your total winnings and you have bet in over 250 markets since you opened your account. It should also be noted that any win that constitutes at least 50% of your overall winnings will be exempt from charges and that each customer will have a £1,000 'allowance' against Premium Charges.
If you meet the above criteria, each week Betfair will charge you the lesser of either the difference between 20% of your previous week's profits and total charges generated through that week or the difference between 20% of gross profits and the total charges generated since you opened your Betfair account.
So what does this all mean? Let's consider an example. Let's say that since you opened your Betfair account you have grossed £5,000 in profits and have bet or traded in 600 markets. Firstly, nice work. Secondly, you have paid £450 in commission charges. Let's say that this week you grossed £500 in profits and paid £80 in commission charges. Your Premium Charge will be calculated as:
Premium Charge = (Gross Profits for that week x 20%) - That week's charges
Premium Charge = (£500 x 20%) - £80
Premium Charge = £100 - £80
Premium Charge = £20.
It should be noted, that if you are an especially successful Betfair bettor or trader, you will be subject an even higher Premium Charge. If you are in profit of at least £250,000 since opening your account, commission charges are less than 40% of gross profits and you have bet in more than 1,000 markets, the higher rates will apply. If your total commission charges are greater than 10% of profits, you will pay a 40% Premium Charge. If your total commission charges are between 5% and 10%, you will pay a 50% Premium Charge. If your total commission charges are less than 5%, you will pay the maximum 60% Premium Charge. Betfair claim that these rates apply to only a small fraction 0.1% of all Betfair bettors and traders.
It's safe to say that while Betfair's Premium Charge only applies to the very elite level of Betfair customers, its introduction has been a public relations disaster, with many rightly recognising its introduction as a money grab as Betfair transforms from the revolutionary product it once was, to a financial institution like any other, determined to squeeze as much profit out of its product and customers as possible.
What Are Matchbook Commission Charges?
How do other exchanges charge commissions? In comparison to Betfair, Matchbook charges only 2% commission on each bet placed. If you win your bet, the commission is charged on your profit. If you lose your bet, the commission is charged on the lesser of either your bet stake or the potential profit of the bet.
Let's say you backed Manchester United to win a Premier Legaue match, £100 at odds of 2.50. If Manchester United win the bet, you will pay 2% on your winnings, which in this case would be 2% of £150, a total of £3.00.
But what if you lose your bet? In this example you would pay 2% of £100 as your stake of £100 is the lesser of your stake and your potential profit of £150. So if Manchester United failed to get the victory, you would pay £2 in commission. If however you stake was £200, your commission of 2% would be charged on your potential winnings of £150, a total of £3.00.
Also note that Matchbook have regular low commission market promotions, with sometimes 0% charged on selected markets.
What Are Betdaq Commission Charges?
Betdaq charges commissions on all winning bets. However the charge structure depends upon how your bet was matched. For all winnings bets that were the result of offers you made on the Betdaq exchange, you will be charged 2%. For all winning bets that were the result of you matching another offer, you will be charged the regular commission rate of 5%. This commission structure is an attempt by Betdaq to encourage customers to initiate betting activity.
So let's say you request odds of 3.00 for Tottenham to win a Premier League match. Once your offer is matched, you will pay 2% on your winnings should Tottenham win the match. If however you chose to take the odds of 2.98 that were already on offer from another Betdaq customer, should Tottenham win you will pay the regular commission rate of 5%.
What Are Smarkets Commission Charges?
Smarkets meanwhile charge a flat 2% commission rate on net marketing winnings. They also claim that this charge will never be increased.
Betting Exchange Commission Calculator
Not sure the true value of the odds being offered to you on an exchange? Not a problem. Simply use the bettingexpert Commission Calculator to assess the true value of betting exchange odds. It's easy to use. Just enter the stake you want to bet, the odds you are being offered and the commission rate for the market you are betting in, lastly your discount rate if it applies to your chosen betting exchange.
Click the Calculate button and the bettingexpert Commission Calculator will tell you the true value of the odds being offered to you and your net profit if you take those odds.
What Is Betfair Cash Out?
With the concept of trading in-play a difficult one for many novice betting exchange users to grasp, Betfair have streamlined the trading process with the introduction of Cash Out.
So what is Betfair Cash Out? The Cash Out feature is available on select Betfair exchange markets as well as Betfair Sportsbook and is designed to help casual punters execute trades in-play with minimal calculation required. As Betfair say, they do the math for you, giving you the chance to trade out of your current in-play bet and take a profit or minimise your loss based on both your original bet stake, the odds of that bet and the current in-play odds. In essence Cash Out simulates the trading process and provides you the opportunity to execute trades at the click of a button.
Betfair Cash Out is not available on every market. To discover which markets Cash Out is available on, simply look for the Cash Out symbol.
Which Betting Exchange Is Right For You?
Betfair are the original, the largest and some would argue the best betting exchange operating today. Having launched the exchange in 2000, Betfair began the betting exchange revolution, offering punters the ability to both back and lay a result, not to mention the popularisation of live in-play betting. While Betfair has its critics, namely those who oppose the Premium Charge placed on successful traders, it is still highly regarded within the betting industry, among industry pundits and punters alike.
Markets: Betfair offers customers a deep menu of markets, easily the deepest menu available in comparison to competing betting exchanges. If you're looking to bet and trade on football and horse racing, you'll be especially pleased with what Betfair has to offer.
Odds: Near 100% odds on most high liquidity markets. If you're looking to bet and trade on popular football leagues or UK horse racing, you'll find great odds available at Betfair. It's important however to take into account the commission you will pay on each market. .
Liquidity: Great liquidity on high profile football leagues such as the Premier League and Champions League as well as daily UK horse racing
Commissions: Complex commission structure involving both a Discount Rate to encourage active betting and trading as well as Premium Charges varying from 20% to 60% for highly profitable Betfair customers. Most punters and traders will only need to deal with Betfairs base commission rate. This is typical 5% on markets where you are showing a profit. .
Matchbook are an emerging giant in the betting exchange industry, challenging both Betfair and Betdaq. Matchbook has a great reputation among punters and traders, providing regular low commission markets as well as better liquidity on US sports betting markets, an area where both Betfair and Betdaq have struggled throughout the years. If you're looking for a betting exchange that provides markets for popular leagues and tournaments at low commissions with great liquidity, then you should certainly add Matchbook to your betting exchange portfolio.
Markets: Matchbook of a limited but expanding menu of markets. If you're keen on the major leagues of European football, then Matchbook as what you're looking for. If you're interested in trading and betting on major US sports leagues and tournaments such as the NFL and NBA, then you'll be well satisfied with what Matchbook has to offer. If you're looking to bet on horse racing, unfortunately you cannot bet or trade horse racing at Matchbook.
Odds: Matchbook offer near 100% odds on most high liquidity markets such as major European football leagues as well popular US sports like the NFL and the NBA. No matter what odds you are offered, be sure to take into account the amount of commission you will pay on that particular market, bet or trade.
Liquidity: Great liquidity on high profile football leagues such as the Premier League and Champions League as well as major US sports such as the NFL and NBA.
Commissions: Commissions charged on all matched bets at 2%. Matchbook also offer regular low commission offers on popular markets such as the Champions League and other high profile European football tournaments and leagues.
Since launching in 2000, Betdaq have been a persistent player in the betting exchange industry. While Betdaq hasn't developed the profile of other betting exchanges such as Betfair and Matchbook, Betdaq still provides both punters and traders with the opportunity to trade markets particularly major European football leagues and UK horse racing.
Markets: Betdaq offers customers a broad range of markets to bet on. If you're interested in betting or trading on popular European football leagues and tournaments, Betdaq offers markets on each. Likewise for UK horse racing, Betdaq provides punters and traders with a daily menu of racing markets.
Odds: Near 100% odds on most high liquidity markets, though not the best in the betting exchange industry.
Liquidity: While Betdaq's liquidity is inferior to that offered by Betfair and Matchbook, the liquidity at Betdaq is improving. Even with limited liquidity on offer, Betdaq can provide punters and traders with an additional outlet to take odds on and trade through.
Commissions: Commissions charged at 2% on all matched offers with the normal rate of 5% charged on all accepted offers.
Smarkets is an emerging player in the betting exchange industry. While betting exchanges such as Betfair and Matchbook have developed a high profile among both punters and traders, Smarkets is well worth your consideration, providing customers with an additional outlet to both bet and trade through. Launching in 2008 Smarkets was created by a team of financial professionals and software developers looking to take their knowledge of financial markets and adapt it to the world of sports betting and trading, .
Markets: Smarkets currently offer a limited menu of betting markets, but the good news is that their range of available markets is expanding. You can currently bet and trade on major football leagues and tournaments, horse racing as well tennis, basketball and much more.
Odds: Near 100% odds on most high liquidity markets.
Liquidity: While Smarkets offers inferior liquidity in comparison to both Betfair and Matchbook, their liquidity is improving. Regardless of their liquidity on offer, it's worth taking a look at Smarkets as it's well worth having as many outlets to trade and bet through..
Commissions: Commissions charged at 2% on all winnings. Not only that but Smarkets also make the claim that this rate will never rise.
How To Make Money Trading On Betting Exchanges
While many punters use a betting exchange solely for pre-match betting, the overwhelming appeal for many users, especially professionals, is the ability to 'trade' markets. As the popularity of betting exchanges grew throughout the 2000's, so too did a new breed of bettor, the exchange trader.
Over the last decade in particular, the number of professional traders working markets on the exchanges has risen dramatically, with many leaving the world of pre-match betting, focusing only on trading.
Again, let's think of a betting exchange as being similar to the stock market. Betting exchange traders in this sense are much the same as traders on the stock exchange, buying and selling shares. In the case of the betting exchange, traders are buying and selling positions on a particular outcome, and the same principles remain true, buy low and sell high.
To put it simply, trading is backing (betting on) a result at a higher price and then laying (betting against) the same result at a lower price. This is known in the industry as 'green booking'.
An Example: Man City to win the League
So let's look at an example. Above we can see the odds to win the Premier League. So how can we trade this market? As we noted earlier, we are trying to buy low and sell high on a position.
How do we do this?
Let's say we have looked at the upcoming fixture list and we believe that Man City are going to go on a winning streak. Such a winning streak will surely see their odds to win the Premier League drop. So we will back them now at the odds on offer now, 2.20 for €100.
So we have backed Man City to win the Premier League for €100 at odds of 2.20. Should Man City win the league, we will claim €120 profit.
But in this instance, we are not looking to bet, we are trading. In fact, we don't really care if Man City win the league or not. What we are simply hoping for is that at some stage during the remainder of the season, Man City's odds to win the league will fall below the odds that we took them at, 2.20. When this happens, we can then lay (bet against) Man City to win the league, and in so doing, ensure that whatever happens, whether Man City win the league or not, we will make a profit.
Let's say that for argument sake Man City do go on the winning streak we hoped for and in 8 week's time their odds to win the league are now 1.50. It's time to trade out of our position. We have bought high (backing Man City at odds of 2.20) and we will now sell low (laying Man City at 1.50). We do this by laying Man City to win the league at the odds of 1.50. In doing this we can either cover the liability of our original bet, €100 and in doing so essentially make our bet on Man City to win the league a free bet. If they win the league we make a profit, if they don't, no harm done, we break even.
On the other hand, we can balance our liability, ensuring that we make a reduced profit no matter what the result. If Man City wins the league, we profit. If they don't, we still profit. These are the fundamentals of trading on a betting exchange and it should be clear why so many former punters have over time become full time professional exchange traders.
Another Example: Liverpool vs Arsenal
Let's look at another example. This time a Premier League match in-play. This is where many traders make their living.
Above we can see the pre-match odds for a Premier League match between Liverpool and Arsenal. So how will we trade this market? Again, we should only enter the market if we have a sense of how the match will play out, or how the market may react. Let's say we believe that Liverpool are likely to score an early goal. In this instance we will back Liverpool at the pre-match odds of 2.98 for €100.
Match time arrives and the waiting game begins. Let's assume then that Liverpool do score an early goal in the 10th minute. Such an event will see their odds to win the match drop dramatically. So again, it's time to trade out of our position by laying Liverpool to win the match. Again, we can cover our original liability completely to ensure that if Liverpool wins, we make a profit but if they fail to win, we break even. Or we can balance our liability, to ensure that no matter what happens in the remainder of the match, we make a profit. Again, the appeal of trading on an exchange should be self evident.
The flexibility of trading on betting exchanges
Part of that appeal is the opportunity to get out of a position no matter what happens. Let's say in our example, that Liverpool does not score an early goal. And let's say for argument sake, Swansea scores the first goal of the match just after halftime. If this were to happen, Liverpool's odds to win the match would drift dramatically and as such we would be unable at that time, to trade out for a profit.
So what to do then? One option is to hold tight and hope the match turns in Liverpool's favour. On the other hand, we can look to limit our liability, or in other words, take a loss but limit the damage done.
Again, it depends upon how you believe the match will play out. Moreover, it should again be clear how the flexibility of trading on a betting exchange provides you with numerous ways to ensure a profit or at the very least, manage your losses when things go against you.
Common Errors New Traders Make
As appealing as it may be, new users should trade on exchange markets with much caution. Some of the sharpest betting minds trade these markets, traders with years of experience, with a superior understanding of the ebb and flow of not only the contest but the markets themselves. If you are new to trading, it's easy to fall into errors of both judgement and strategy.
Failing To React
One common error new traders make is failing to react when the market moves suddenly. If you anticipate an early goal for a particular team, and the opposing team score instead, match odds will shift suddenly against you and you need to react accordingly.
The same is true when things go in your favour. If the team you expect to score early does just that, you need to take your profit immediately and reassess your position afterward. This is why experienced traders succeed. They know the move to make in an instant and are rarely caught out when the market moves suddenly.
Having A Selective Memory
Another common error, and one that both traders and bettors make is to have a selective memory. But with the hectic nature of in-play trading, this can be an even greater concern. In this way it's crucial to make notes as you go, recording what trade you made and price points.
Why? Because if you don't do this, you will only tend to remember those 'big moments'.
Sure, trading out of a losing position and taking a loss isn't enjoyable. But if you fail to make a note of it, you will likely only remember those times where you traded out for a loss only to have events then turn in your favour. You will recall that frustration readily but forget the numerous times that trading out of a losing position and limiting your liability saved you plenty. So make notes as you trade.
A third error new traders make is to maintain a 'gambling' mentality. It's important to remember, to always remember, you are trading a market, not gambling. When you have an opportunity to take a profit or to minimise a loss, you need to react. A reason too many novice traders fail is because they hold on to a position too long.
Even when things go in your favour, make the trade and take your profit. Don't stand still and hope that things will continue to go in your favour so you can claim a greater profit. This is trading. This is not gambling.
Depending On Delayed 'Live' Broadcasts
A fourth error, and an inexcusable one is to trade in-play markets using delayed vision or an online score tracker. Many bookmakers now offer 'live streaming' of numerous sporting events. While this is a great way to watch the sport you love, especially more obscure leagues and tournaments not covered by television networks, using this vision to trade in-play markets is a huge mistake.
Why? Because the vision is typically delayed by a number of seconds. If you're going to trade a market in-play, be sure you are viewing the event live or as near to live as is generally available to the vast majority of those also trading the market.
Setting Meaningless Profit Targets
A final error novice traders make, and again one that many new to pre-match betting make, is to set arbitrary profit targets. This is a foolish trap to fall into. The only profit target that you should set is that ultimately, you want to make one.
But setting profit targets for a given trade, a given match, or even a given short term time span such as a day, week or even a month, is a recipe for disaster.
Again, take profits as they come. Sure, it would be great to make a profit each day of trading and yes, this is your goal. But setting profit targets will only place you under needless pressure, and when trading in-play, will only leave you prone to further errors of judgement.
How To Calculate A Trade On A Betting Exchange
Being able to calculate a trade on Betfair or another betting exchange yourself is relatively unnecessary these days. Any number of trading apps, software and betting exchange trade calculators will calculate a trade for you, while betting exchanges themselves will tell you how much you stand to profit should your trade be matched.
It's still a good idea however to become familiar with the maths and know how to calculate a trade yourself. While technology may more often than not do the work for you, having an intuitive sense for trade dynamics and understanding how to calculate a trade will only assist you in your minute to minute, moment to moment decision making when trading on Betfair or another betting exchange such as Matchbook or Betdaq.
So let's look at a basic betting exchange trade then. Below we can see the pre-match 1X2 market for an upcoming Premier League match between Southampton and Chelsea.
So let's say that we believe the value in this match is with Southampton, both in terms of who will win and how the match will develop over the 90 minutes. So we will back Southampton to win at odds of 3.22 for €100
Late in the 1st half Southampton score the opening goal of the match. Holding a 1-0 lead heading into the half-time break, Southampton are now at odds of 1.60 to win the match. Now we can trade on our pre-match position and lock in a sure profit or cover our pre-match liability.
How To Trade For A Sure Profit
Let's say we want to trade on the betting exchange for a sure profit. This could mean balancing our profit equally across all 3 outcomes, so that no matter what the result of the match, we make the same profit. Or it could mean making a profit on one particular outcome, covering our pre-match liability.
Guaranteed Profit Trade Calculation Let's consider how we may balance our profit across all outcomes. At this stage we have a pre-match bet on Southampton to win at odds of 3.22 for €100 to make a profit of €222. We are in a favourable position now as Southampton hold a 1-0 lead and their odds on the betting exchange have been slashed to 1.60. We will now 'lay' Southampton to win (I.e bet against Southampton winning) at these odds.
How much should we lay Southampton at in order to secure an equal profit across all three outcomes?
The calculation is simply:
Lay Liability = Original expected return - (Original expected return / Current lay odds)
So in our example the calculation would be:
Lay Liability = €322 - ( €322 / 1.60)
Lay Liability = €120.75
So if we want to trade for a sure and equal profit across all three possible outcomes, the liability on our Southampton lay bet should be €120.75 for a return of €322, a profit of €201.25.
So what can happen then? Let's consider the potential scenarios.
|TOTAL (minus commission 5%)||€96.19|
As we can see, once we have made this trade, no matter how the match ends, we have locked in a guaranteed sure profit of €96.19 after standard betting exchange commission has been deducted. We can then either sit back and take the profit or continue to trade on the match.
Locking in a sure profit regardless of the result is known in the business as 'greening up', or making a 'green book'. No matter what happens from that point on, if no further trades are made, you are certain of a given profit.
How To Calculate A Free Bet
Let's say that instead of weighing our profit equally across all three outcomes, we want to trade for a sure profit on just one particular outcome, in doing so covering our pre-match liability, essentially giving us a free bet.
In our example, Southampton have a 1-0 lead. Let's suppose we want to leave all our profit on Southampton going on to win the match.
How much should we lay Southampton at in order to place all the profit on Southampton and cover our pre-match liability?
The calculation is simply:
Lay Liability = (Original bet stake * Current lay odds) – Original bet stake
So in our example the calculation would be:
Lay Liability = ( €100 * 1.60) - €100
Lay Liability = €60
So in this case the liability on our Southampton lay bet should be €60 for a return of €160, a profit of €100, therefore covering our pre-match stake.
So what can happen then? Let's consider the potential scenarios.
|TOTAL (minus commission 5%|
|TOTAL (minus commission 5%)||€160||€160||€0|
So if Southampton wins, we make a profit of €153.90. If Chelsea wins or the match is a draw, we break even.
But what if we would rather place all our profit on Southampton not winning the match, so that all our profit is placed on a draw or a Chelsea victory? Firstly, you may be wondering why you would want to do this. After all Southampton lead 1-0 and are now at odds of 1.60, playing at home and now favourites to go on and win the match. Well, you may wish to oppose this position simply because, in your opinion, the odds for Southampton to win may now be far too short and the value is in opposing them.
How much should we lay Southampton at in order to place all the profit on Southampton not winning the match and cover our pre-match liability?
The calculation is simply:
Lay Liability = Original Potential Profit
It can't be much more simpler than that. So in this case the liability on our Southampton lay bet should be €222 for a return of €592, a profit of €370, covering our pre-match stake.
So what can happen then? Let's consider the potential scenarios.
|Total - 5%||€256.5|
So in this example, we will break even if Southampton win the match, while if the match ends as either a draw or a Chelsea win, we will make a profit of €256.50 after 5% commission has been deducted.
Best Betting Exchange Trading Strategies
Since trading on betting exchanges began with the launch of Betfair, there have been numerous trading strategies developed. Some have stood the test of time while others have come and gone. What are the best strategies for trading on Betfair or another betting exchange such as Matchbook or Betdaq? Here we consider the basics for successful trading on betting exchanges.
Firstly, what are the steps to making a successful trade?
Market Entry Point
Your market entry point is essentially your initial bet. This may be pre-match or it may be in-play. It is essentially the moment where you feel, given your trading strategy, a value opportunity is available. You place your bet and wait for the market to develop and hopefully the opportunity to execute a profitable trade.
Market Exit Point
Your exit point may be triggered by a number of different events. In a football match, it may be the next goal. In tennis it may be a break of serve. Or it could even be as simple as a certain price point, where the odds have moved enough to execute a successful trade. Whatever you exit point is, it is fundamental to successful trading to have a clear exit point in mind before entering the market.
Losses are a part of trading just as they are a part of traditional betting. They will happen. So risk management is crucial. A stop loss is a point where you determine it is best to get out of the market and out of your initial bet position, taking a slight loss as a result, rather than hanging on and hoping things will turn in your favour. A stop loss is basically the amount you are willing to risk in order to execute your exit point trade.
What is arbing?
Arbitrage betting is essentially what trading on betting exchanges is all about. You take a position on a certain outcome, say the winner of an upcoming football match. And when odds move in your favour, you trade out of your position so as to make a guaranteed profit regardless of the final result. For example, you back a club to win an upcoming football match. If that team scores first, their odds will drop significantly, setting up an arbitrage betting opportunity, where no matter how the match may conclude, you are guaranteed a sure profit.
What is back to lay trading?
Again, this is a core dynamic of successful trading on a betting exchange. Back an outcome at a given price, then lay the same outcome at a shorter price. Or alternatively, lay an outcome at a given price and back that outcome at a higher price. Doing so you are guaranteed to make a profit no matter how the event concludes.
What Is Scalping?
Scalping on Betfair or another betting exchange is essentially short-term trading, merely looking for the market to move only slightly in a favourable direction, typically backing and laying between the back and lay price in high liquidity betting exchange markets. As soon as the price moves in a favourable direction, a trade is made and, an albeit small, profit is locked in.
How to scalp
Let's look at a basic example, an upcoming Premier League match between Tottenham and Swansea. In this example we will be 'scalping' the Over/Under 2.5 goals market.
Experience suggests that there may well be a downward pressure on the Over 2.5 goals market as kickoff approaches. This sort of experience and knowledge is something that separates traders such as scalpers from other bettors. It is often the case that scalpers do not know much about the event they are trading on. What they do know and have a firm understanding of, is how markets operate, how markets move and what causes them to fluctuate regardless of the event.
With a sudden drop in odds, we can trade out of our original position (our initial bet) no matter what the result. This is the essence of scalping. It's about surfing price movements and slicing profits as they come, no matter how small. Continually doing this at every opportunity, can amount to making serious money.
Things to keep in mind when scalping
One of the obvious dangers of scalping is the potential for odds to move against you. This will happen. Trading is just another form of betting. The aim is to make more winning trades than losing trades. Through experience and a little technical assistance, skilled scalpers can generate substantial profits.
Another important consideration is what is known as an 'exit strategy'. Risk management is incredibly important when scalping on Betfair or any betting exchange. As your gains are only slight, one losing trade can undermine much of your effort and eliminate your profits. When the market moves against you, be prepared to pull the pin on your position and get out while you can take a slight loss rather than hang on and hope for the best. You should not be interested in gambling. When scalping, you're trading. And like all forms of betting, trading requires discipline.
What Is Swing Trading?
Swing trading is essentially the same as scalping, except that with swing trading you are looking for larger price movements in the market. While scalping requires quick short-term low risk trades, the art of swing trading is in being able to anticipate larger price movements. This is of course easier said than done, and likewise, contains a greater element of risk.
How to swing trade
There are a number of different ways to approach swing trading. But whichever way you choose to approach this strategy, what is key is in understanding what will cause a market to move suddenly and significantly in a given direction.
So what can cause a market to react suddenly? One thing is new information. For example an upcoming football match. The star striker for one of the competing teams has been dealing with an ongoing injury. He is still expected to play in the club's the match. A shrewd swing trader will do his research and essentially place a bet on the fact that he expects this player to miss the upcoming match. When the news is official that the player will miss, the odds on the opposition shorten significantly, and the opportunity to trade out of the initial back bet is available.
A sudden change in the event setting can also have a significant influence on prices. For example, a bright sunny morning, a perfect day for football at Old Trafford. Then twenty minutes before kickoff, a sudden down pour of rain. A frisky swing trader will move quickly to back the Under 2.5 goals market before the rest of those involved in the market have time to adjust to how the rain may influence the match. Once they do, and the market has significantly shortened for a low scoring match, the swing trader is now in a position to trade out and make a sizeable profit.
The key to success when swing trading on Betfair or another exchange, is firstly in understanding what will have a serious impact on the prices in particular betting markets, and secondly, being quick enough to act on them before the market catches up.
Best Betting Exchange Trading Software
While trading on a betting exchange like Betfair without the assistance of betting exchange trading software, to be able to earn a genuine full time wage as a professional trader, you must employ the help of trading software. Why use betting exchange trading software? The answer is simple. Efficiency. Generating serious profits from scalping or swing trading requires intuitive software that will help trade in and out of positions with just a few clicks of your mouse. Attempting to do this without the assistance of trading software is folly and will most likely see you complete losing trades far more often than winning trades. But what software is the best for you?
Probably the most popular Betfair trading software available with recommendations from some of the most successful Betfair traders in the business. While it may appear complex to the uninitiated, after spending just a few days working with this software, you'll understand why it so highly regarded. Not only does it work very efficiently, with rapid execution of trades but more importantly, it is an incredibly stable platform.
Originally created to trade horse racing in the early days of Betfair, you can now trade virtually any Betfair market via Bet Angel. If you're keen to trade on Betfair football markets, you'll appreciate Bet Angel's Soccer Mystic feature, giving you the ability to fairly accurately predict price changes if certain events occurs, such as goals or even a lack of goals, depending on what suits your football trading strategy. If you're keen to trade on tennis, you'll enjoy Bet Angel's Tennis Trader feature, providing you with the ability to project odds movements for live tennis trading.
Bet Angel comes with a fantastic array of features and tools, many of which only the elite Betfair traders make use of. It's a great product and we thoroughly recommend it to anybody seriously considering a life as a professional Betfair trader. If you're curious, just check out Bet Angel's Youtube page, with dozens of videos posted to help you make the most of this superb software.
Bet Angel is available for at a subscription fee and comes in two packages, either Bet Angel Trader or Bet Angel Professional with both available on a 14 day free trial.
Another popular choice among Betfair traders is Geeks Toy. With rapid response time enabling you to make split second trades, back, lay and cancelling bets at the click of a mouse, Geeks Toy also has a very stable platform providing confidence in your Betfair trading.
First developed in 2009, Geeks Toy is now the recommended Betfair trading software for many successful professional exchange traders. It comes with a great range of features, including the capacity for multi market trading, the ability to set automated loss limits, cancel orders, estimated queue position, easy to follow market view with market ladders and odds movements, live streaming of Betfair racing as well as a range of other features to enable you to streamline your Betfair and exchange trading. Unfortunately however, unlike Bet Angel, Geeks Toy does not have MS Excel connectivity nor does it feature a soccer trading tool such as Bet Angel's Soccer Mystic.
If you're new to trading on a betting exchange, you'll appreciate Geeks Toy practise mode, giving you 10,000 in pretend currency in order for you to sharpen your trading skills on live betting exchange markets.
Geeks Toy was at one time free for all users, but is now available on a subscription basis and a 14 day free trial.
Advanced Cymatic Trader
Advanced Cymatic Trader (or ACT) is another great option if you want to enhance your betting exchange trading and improve your profit and loss balance. With a great range of features allowing you to streamline your trading on Betfair or other betting exchange, Advanced Cymatic Trader will take your trading to a professional level.
With the Advanced Cymatic Trader you can trade just as you would on the Betfair interface but with a great range of automated features. You can trade via a traditional exchange interface performing manual trades if you choose or you can automatically place orders, execute trades in a given market as well as perform detailed market analysis helping you to find and maintain a range of profitable trading strategies or angles. Through the ladder interface you can monitor just how much money has been matched at individual price points as well as keep track of your place in the queue when looking for your bet to be matched.
Advanced Cymatic Trader is available on a subscription fee basis with a 14 day trial available for download.
The art of trading on Betfair football markets has gone through much evolution over the years since trading began. But what are some of the popular football trading strategies that have stood the test of time?
1. Know Your Squads
One way to place yourself in a favourable position when Betfair trading football matches, is to be very familiar with the squads of the clubs and leagues you are trading on. Understanding how a particular lineup or how the presence / absence of a particular player will influence a particular team's (or opposition's) playing style is a huge advantage in trading on betting exchanges. Sure, the missing mostly unrecognised right-back for a lowly performing Premier League club may not bring headlines, but understanding what his absence will mean as well as what his potential replacement brings to the table, will give you a huge advantage in trading betting exchange football markets.
2. Match Dynamics
In most instances, the prices for in-play football markets are quite stubborn for the majority of the opening half, unless of course, there are goals scored. However in games where there is a stalemate, either 0-0 or 1-1, the market tends to move quite slowly. In fact in such matches, it's not until the 2nd half where the market and prices will begin to speed up. Understanding the pace of the market and how the match is being played is key to successful football trading on betting exchanges.
Betfair traders often refer to what is known as 'time decay'. What is time decay? Time decay is essentially the influence that time passing has on the betting market. For example, how will the odds differ from the price they are now, to what they will be in 15 minutes from now, if no further goals are scored during that time?
Likewise, understanding how each of the competing teams is likely to set up as the game progresses is vitally important. For example, a poor performing Premier League club fighting to stay up may be more likely to try and shut the game down in the 2nd half if holding a lead or even working for a draw. On the flip side, if they find themselves trailing, they may open things up and be looking to score. Understanding how a team will approach a given portion of the match is key to successful football trading on Betfair or any betting exchange.
3. Market Overreactions
In week to week betting, we often see overreactions in how clubs are perceived in terms of performance following a particularly impressive victory or on the other hand, a particularly poor result. This happens often, especially early in the season when opinions are more fluid.
The same can be said of in-play football markets. When a goal is scored, the market can often overreact as it seeks to settle at the 'right price'. For example, let's say Southampton score the opening goal against Chelsea. After a few moments of hectic trading, the price for a Southampton victory settles at 1.80. But before it settled, odds were matched at anywhere between 1.75 and 1.85. Having a keen understanding of market dynamics and how goals should influence odds can help you successfully trade the moments following a major match event such as a goal being scored. Knowing not only what the price should be, but more importantly knowing what price the market is likely to settle at, can help you scalp traders who are in mad hurry to either get out of a bad trade or those who are urgently seeking to take advantage of a favourable position following the goal.
4. Lay The Draw
If there is one Betfair football trading strategy that has stood the test of time, then it has to certainly be the 'lay the draw' strategy. If you have even slightest familiarity with Betfair football trading strategies, you will have no doubt heard about it, its strengths and of course, its weaknesses.
One of the reasons the Lay the Draw strategy has been so popular is that it assumes a goal will be scored in a given match. This is essentially how a sure profit is taken. You lay the Draw i. e you are betting that the game will not end as a draw. But what you are essentially doing is betting that at some stage in the match, a goal will be scored. And when that goal is scored, the odds for the Draw will drift and you will find yourself then being able to back the draw and lock in a guaranteed profit.
This all sounds good in theory. But there are many more football matches that do not see a goal scored than you may suspect. Depending upon the league, the rate of scoreless matches can be anywhere between 11% as it has been for Ligue Un the last ten years, or at the other end of the spectrum, just over 5% of matches in the Eredivisie over the same time span. What is key in laying the draw, is in selecting matches where you suspect a goal is mostly likely to be scored. A good guide for this is to review the odds for the Over/Under 2.5 goals market. If the odds are short for the Over, the bookmakers suspect that the match may see a number of goals scored.
One thing to keep in mind however, is that even if there is an early goal in a match, the odds for the draw may not move much at all, particularly if the team that scored the first goal of the match was a significant underdog heading into the content. If a club such as this score early, the market may still well assume that the heavily favoured club is likely to score an equaliser and likely to do it sooner rather than later. So you may have to hold on for some time before the drawn match odds drift enough to make the trade worthwhile.
Another approach is in recognising that goals late in matches are more frequent than many suspect. This can make laying the draw deep in the 2nd half of a scoreless match a great strategy. The odds for the draw at this point will be rather short and if a goal is scored, there will be a huge swing in the odds, giving you the opportunity to trade out for significant profit. It must be said however, that this strategy has a very low strike rate. With this in mind, discipline is crucial.
One of the great things about trading horse racing on Betfair or another betting exchange, is the number of opportunities to trade throughout the day, with races starting near on every five minutes. So what are some of the popular Betfair horse racing strategies?
1. Scalping horse racing odds
To many, scalping may appear a long drawn out strategy, that while providing numerous winning trades, can be devastating to your profit and loss when a losing trade is suffered. This is true and scalping does take a great deal of discipline and commitment. But if continually executed, a scalping strategy for horse racing markets can generate consistent and significant profits.
Scalping on horse racing involves continually backing a runner at a given price then laying that same runner at a lower price, typically one tick below the odds your backed it at. For example, a horse may be at odds of 2.50. You back the horse at these odds, then when the market shortens to 2.40, you lay the same runner so as to lock in a guaranteed profit.
Scalping is typically done between two price points, with the trader continually backing and laying as the price bounces back and forward.
Swing trading on horse racing Swing trading works on essentially the same principles as scalping except that you are looking to gain from far greater price movements. This can take great discipline and risk management is fundamental to your success as you cannot expect to see the same winning trade strike rate as you will scalping slight price movements.
One way to identify horses that may see large swings in prices is to research horses that have seen high profile racing tipsters and horse racing tips sites selecting them as one of their best bets of the day. Given their broad endorsement in the racing press and also by racing experts on social media, these horses are more likely to diminish in price as the day proceeds. Getting on them early before the 'buzz' about them circulates, can provide you with a great opportunity to trade for a certain profit on the race.
Swing trading involves great understanding of how horse racing markets operate, knowing what is likely to cause such prices movements and how the betting on other runners in the race will influence the price of the horse you are trading on. Much of what will make you a successful swing trader is not only a firm grasp of risk management and a disciplined mind, but simply experience trading horse racing markets. Coming to understand what will influence price movements is often bred from experience of trading within familiar markets
2. Back to Lay horse racing strategy
Probably one of the oldest and most popular trading strategies for horse racing on Betfair and other exchanges, is the Back to Lay strategy. How does the Back to Lay strategy work? It's fairly simple. The Back to Lay strategy simply involves backing a horse pre-race at certain odds and then laying that same horse at shorter odds at a given stage during the race. In this sense, you are looking for a horse that you think will get a great start or be in a commanding position at some stage during the race and as a result, will see their odds to win the race slashed, giving you the opportunity to trade out of your initial pre-race bet and make a guaranteed profit.
While the Back to Lay strategy has been a popular one, it is becoming more and more difficult to execute successfully. Why? Due to the popularity of in-race trading, the expectations for how a runner may run during the race is now often factored into the pre-race odds, meaning the value of any Back to Lay approach is significantly diminished.
Conversely there are also opportunities to execute a Lay to Back trade. What is a Lay to Back trade? It should be fairly obvious. A Lay to Back trade is where you lay a runner a given price and then look to back that runner at greater odds at some stage during the race, so as to guarantee a profit. Typically this involves laying a horse pre-race you expect to start the race at a slow pace. Once the race starts, if the horse does indeed start out slow, its odds will drift giving you the opportunity to back it at the greater odds than those at which you had originally layed.
While Back to Lay (and Lay to Back) value is becoming more and more difficult to identify, with diligent research on how particular horses and jockeys preter to race, a knowledge of UK race tracks and a keen understanding of horse racing betting markets on Betfair, you can still find opportunities to successfully execute Back to Lay trading.
The pure amount of tennis played week in week out through the tennis season provides traders with a number of great opportunities to profit from tennis trading on Betfair and other betting exchanges. So what are some of the most popular betting exchange trading strategies for tennis?
1. Know Your Players
Key to any successful tennis trading strategy is in knowing your players. This can be quite a daunting task when it comes to both men's and women's tennis. But diligent research can prove to be very profitable. Knowing how players respond in certain circumstances, how they deal with adversity, how they perform in different tournaments and on differing surfaces, as well as basic match stats such as serve and return percentages can place you in a very strong position to trade on tennis in-play betting markets.
Watching as much tennis as possible and keeping notes on every player in the top 200 in both men's and women's tennis is crucial to long term success as a tennis trader. It's hard work, but think of it this way – how many of those people trading in-play tennis markets have an understanding of how a player ranked 90th in the world will respond down two sets on clay in a warm up tournament for the French Open? Very few. Knowledge is power and when it comes to trading on tennis in-play, knowledge means profits.
2. Match Dynamics & Market Overreactions
While knowing your players is crucial, just as crucial to successful tennis trading on Betfair or any betting exchange, is in understanding match dynamics and anticipating market overreactions. There are a number of moments where a market may overreact during a tennis match.
Often, particularly in 3 set contests, we can see the odds for the winner of the first set shorten dramatically. This can be especially true if the winner of the first set closes out the set in commanding style, for example winning the set by a score of 6-1. The market may overreact at this point and this can be especially true if the two players were more or less at even money in pre-match betting or in your own estimation are of equal ability.
The peculiar thing about tennis is that while a player may win the opening set easily, it still only means they are leading the match 1-0 heading into the second set. With a commanding opening set performance, the market may overreact and believe that pre-match odds were inaccurate and that the winner of the first set is a far superior player, or at the very least in superior form. Laying players at short odds following an impressive first set win can prove to be a profitable strategy as more often than not, their opposition will work their way back into the match through the second set, providing you with the opportunity to trade out of our lay bet for a guaranteed profit.
Another event that can cause a market to overreact is a break of serve. This is particularly true late in a set when the opportunities for the opponent to break back before the set concludes are fewer. Look to lay players who break serve late in a set as the market will often overreact and almost assume that the player will go on to hold serve and take the set. This can prove to be profitable especially in women's tennis where there are far more breaks of serve and the potential for a player to respond with a break of their own is greater. In general, the market will react more when a player drops their serve than when they hold it. Keep this in mind at all times while trading tennis on Betfair or any other betting exchange.
It can also be profitable to lay players as they seek to close out matches. The market will often overreact and feel the chances of the opposition are next to nothing. This can be particularly profitable when a player up say 2 sets to 0 is looking to close out a men's Grand Slam contest. Their odds can be significantly shorter than what the true probabilities of them winning the match are at that point. If their opposition can grind out a win in that set, then you will be able to trade out of your lay bet for a significant profit.