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Sports Trading

Sports Trading on a Betting Exchange

Learn How to Trade on a Betting Exchange (Betfair), Bet smart, and you might just have a new profit stream to enjoy!

Chapters

  1. Introduction
  2. What is a Betting Exchange
  3. How Does a Betting Exchange Work?
  4. Why Use a Betting Exchange?
  5. Market Liquidity
  6. Value Hunting
  7. Bet Matching
  8. An Introduction to Sport Trading
  9. Common Trading Mistakes
  10. Betting Exchange Commissions
  11. Cash Out: Yes or No?
  12. What is the Best Betting Exchange?
  13. To Trade or Not to Trade?
  14. Betting Exchange Software
  15. Betting Exchanges – Glossary of Terms
  16. It’s Time to Start Sport Trading

 

sports trading on betting exchanges
 

Introduction to Sports Trading

Traditional bookmaking has been around for more than a century, with erstwhile punters placing their sports bets – some well-informed, some not so – on a variety of pursuits ever since.

As is often the case, technology has changed the face of the industry forever, and the Internet revolution prompted some very clever minds to create a new way in sports betting. And so some time in the early 2000s Betfair was born; a betting exchange that facilitated peer-to-peer wagering. Now, the humble bettor could take on the role of the bookmaker if they wished, setting their own prices and waiting for their selection to be matched.

For just a small commission, the backer can access better odds that are more fluid in their movements, while the ‘layer’, e.g. the individual matching the bet, can make a profit by opposing their bet.

Today, Betfair remains the predominant betting exchange around the globe, with healthy competition from the likes of BETDAQ, Smarkets and Matchbook, to name a few.

For some punters who prefer traditional methods of placing their bets, a betting exchange is a mystical beast that is both scary and alien, but the good news is that we are here to guide you through the world of betting exchanges and highlight just why they are growing in popularity across the sporting spectrum. Feel free to peruse our articles at your leisure.

Bet smart, and you might just have a new profit stream to enjoy.

 

 


 

 

What is a Betting Exchange?

In its simplest form, a betting exchange is a network that brings together two punters: one (the backer) who wishes to place a specific bet, and another who is happy to ‘lay’ the bet (the layer).

Of course, the internet is the key go between here as it facilitates the two parties coming together, but in reality it is no different to John and Steve down the pub having a fiver on who they think will win the match.

The betting exchange, whether it’s Betfair, Matchbook or any other, is simply the platform through which such a transaction can take place. They take a small commission (ranging from 1% to 5% based on the provider) on winning bets, but other than that their involvement in the process is almost zero. In an age when many bettors are being sick and tired of the profit pinching antics of traditional bookies, it is a system that is gaining in popularity and thus market share.

 

Age of Innovation

Ironically it is betting exchanges that we have to thank for many of the modern day sports betting innovations. As tired old bookmakers had to rethink their ‘offline’ business model to compete with these trendy young upstarts, so the age of in-play betting, cash out and live streaming was born.

Traditional bookmaking has become a particularly crowded and competitive marketplace, with bookies falling over themselves to hand punters free bets, sign up bonuses and various other perks to stay ahead of the competition. One potential USP that has been largely overlooked – offering punters fairer odds without the hefty margin – is yet to really be taken advantage of yet, but there is hope that if betting exchanges continue to grow in popularity then bookmakers will have to lengthen their prices to compete as canny punters look to gain an edge.

 

Popular Exchange Sports

The ability to lay selections has added an extra weapon to a punter’s arsenal, and many are keen to exercise their new-found power. In a two competitor sport, such as tennis, laying a player can offer better value than backing his or her opponent, and this is one key market that has really flourished with betting exchanges help.

Football, particularly in the UK, remains the most ‘liquid’ market, i.e. the one on which the most money is spent, while the ability to lay a runner – rather than try to find a winner in a field of five horses or more – is clearly an attractive proposition.

To add some meat to the bones, more than £1 million in bets were matched on Betfair for the Manchester United vs Southampton fixture in the Premier League 2016/17, and some £500,000 per race, on average, taken at the York Ebor horse racing festival.

 

 


 

 

How Does a Betting Exchange Work?

Betting exchanges really are simple, and it is only the confusing-at-first layout of many of the platforms that discombobulates punters.

An example of a typical betting exchange market looks like this:

football betting exchange market example

football betting exchange market example

 

The backer thinks that Manchester United have got this match sewn up, and so they place their bet as normal on the Red Devils at the 1.53 price prescribed (most exchanges use the European odds format, rather than that we have become accustomed to in the UK). This bet is then recorded on the betting exchange dashboard for the whole world to see.

The layer comes along and thinks ‘hmm, I can’t see United beating Southampton’, and as such they are happy to lay the bet – clicking on the pink 1.54 price. So they act out the role of the bookmaker, and will have to pay out the backer the full amount should Jose Mourinho’s outfit triumph. But should the Saints win, or the match ends in a draw, then the layer wins the backer’s stake, pockets it and walks off into the sunset cackling to himself at another successful trade.

Of course, the other option would be to back Southampton outright at 8.00 or the draw at 4.40, but the lay bet offers a 66% chance of profiting (Saints win or draw).

The next best prices available are those listed in the columns immediately to the left and right of the blue (back) and pink (lay) odds, and if you don’t see a price – and want to chance your arm at getting some extra value – then you can always submit your own odds and hope they get matched prior to kick off.

Now you know how a betting exchange works, the cogs may be whirring in your mind as to how best to profit from this new way of punting. Well, fear not friend, as our in-depth guide will offer you a number of different strategies with which to take advantage.

 

 


 

 

Why Use a Betting Exchange?

If you’ve read the first few parts of this guide then hopefully we have managed to answer this question for you, and you have already set off on your quest to profit from the exchanges.

But for those of you still requiring persuasion, we can only explain it you in terms of cold, hard cash.

 

Commission v Margin

As you may already know, bookmakers aren’t charitable organisations. They aren’t here to simply let you place your bets for the fun of it; oh no, they are making hundreds of millions of pounds each year.

Part of the reason for that is they take a lot of losing bets, and we mean a lot, every day. But they are a canny bunch those bookies, and they haven’t even devised a system to protect themselves even when they suffer a deluge of winning bets to pay out on.

Their margin ensures that the odds they are presenting will not bankrupt the company. Their traders will work out a margin for error and set their price accordingly; it’s what any right-minded business would do, but the upshot for you is that the odds you receive aren’t always reflective of the value of the bet. Quite often they’re not, in fact.

The difference with betting exchanges is that they act on commission only, taking a small percentage of any winning bet. The current commission rates at the time of writing are:

  • Betfair – 5%
  • BETDAQ – 3%
  • Smarkets – 2%
  • Matchbook – 1%

So what is the financial reality for punters in the whole ‘exchange vs bookmaker’ debate? Quite simply, in the vast majority of cases you will receive better odds via the exchange, and the fact that they only take commission on winning bets – and it is a miniscule 5% – means that punters are quids in.

 

Here is an example

Manchester City to win the Premier League: 5.00 (sportsbook), 8.00 (exchange).

We place £10 on City to win, and they go ahead and do the business. Our winnings with the sportsbook equal £50 (£40 profit), while with the exchange we return £80 (£70 profit) and – minus the 5% commission – our net profit is £66.50.

So as you can see, in this example betting with the exchange was a far better idea financially.

 

Liquidity

This is the one common argument that anti-exchange naysayers have: what if nobody out there is willing to match your bet?

It is true that certain, shall we say, obscure events do struggle for liquidity, so if you are looking to get a bet matched for an FA Cup Preliminary Round tie then you may end up disappointed.

But if you want to place a bet on any of European football’s top leagues, across the hundreds of markets that are available, then you will find in the absolute vast majority of cases you will find another punter somewhere on planet earth who is willing to take your selection on – as proven by the seven figure sums taken on most top-flight matches by Betfair every week.

 

Trading Positions

There are a number of different betting strategies that are exclusive to exchanges, and we will cover these in more depth later in this guide.

But to bring you into the know a little know, many of the most successful traders will use a position of power to leverage greater profits. What do we mean by that? Simple: Imagine you have a hunch that an underdog (let’s say Bournemouth) are going to beat a red-hot favourite (Chelsea). In the first instance you would lay the Blues and sit back and wait. Imagine then if Bournemouth are a goal up at half time, and Chelsea’s price has plummeted accordingly. We could then back them to win and create a perfect profit-making arbitrage situation for ourselves; no matter what the outcome of the game.

This is one of the most popular golf trading strategies too. Let’s say we have £5 on John Smith to win The Open at 100.00, which gives us a potential prize pot of £500 (£495 profit). Old Smithy has a fine first couple of rounds, and all of a sudden his odds have tumbled to 10.00 for him to win the competition.

Again, we can create an arb scenario: let’s lay him at odds of 10.00 for £30 which gives a liability of £270 (stake x odds – stake = liability). This means that if he wins we pick up £225 (the £495 minus the lay of liability of £270), and if he doesn’t then we still trouser £25 from the lay (£30 lay bet – £5 stake). Not a bad day’s work.

 

 


 

 

Market Liquidity

Within traditional bookmaking, prices are set by the various bookies’ traders and compilers prior to an event starting. As kick off time approaches, we may see the ‘line’ moving in response to a particular set of circumstances, e.g. if Sergio Aguero fails a late fitness test then we can expect Manchester City’s odds to drift accordingly.

We might term that a ‘forced market move’, e.g. circumstances beyond the bookmakers’ control have created the line movement. Occasionally, a line will move when a lot of money is placed upon a particular selection; you hear about this a lot just prior to clubs announcing a new manager. Odds can tumble in the blink of an eye if a managerial candidate is spotted in a particular town or city, for instance. This kind of market movement is triggered by a crowd effect, which typically occurs when smart punters, keeping an eye on the odds comparison sites, see a ‘sea of blue’ to indicate a price shortening.

How does this movement of the line occur on the betting exchanges then? Well, ultimately this is a peer-to-peer network, and as such the crowd movement phenomenon will be in force. But the principle factor in odds movement on the exchanges is market liquidity.

 

What is Market Liquidity?

Quite simply, this is the pool of money available to punters on either side of the fence (back or lay) which determines whether their bet will be matched or not. The more money that is wagered, the greater availability of back and lay prices and thus a more mature market is created. In low liquidity conditions, you may not be able to put on the bet you want.

Speed is often of the essence in sports betting; particularly if you are wagering just prior to kick off or even in-play. An upshot of high liquidity markets is that your bet will be matched in seconds if not instantly, while in poor market conditions you may be waiting for hours on end to be matched – and at this point the value might have gone.

 

So how do we identify markets of high liquidity?

The Amount Involved: all of the leading betting exchanges will publish the amount of money that has been successfully matched for a particular match or market, and this determines just how liquid those selections are. Clearly, an obscure market with matched bets of £40 is less attractive than a mainstream market of, say, £400,000, but at the end of the day if you only plan on backing/laying one selection – and the price you are looking for is available – then question of liquidity are almost irrelevant.

Mind the Gap: we’ve already written about how odds are displayed on the betting exchanges: the current best price available to you is displayed in the centre of the graphic, and those listed to the left and right are the net best available.

Clearly, a liquid market will show very little gaps between the best available odds and the next in line, while less densely populated markets will show a much greater disparity. Here are two examples:

 

Liquid Betting Market

liquid betting exchange market

liquid betting exchange market

 

Thin Betting Market

thin betting exchange market

thin betting exchange market

 

This example is slightly extreme, but represents the problems of an illiquid market. Look at the ‘back’ prices – both players are simply untouchable, and clearly you won’t be able to place a decent lay bet given the immediately available prices compared to those next in line (990.00 is obviously somebody trying to con their way to a huge payout!). You can see by the total amounts matched, and those waiting to be matched, that there is very little interest in this match from a betting perspective. Sorry lads.

 

Liquid Thinking

Here are three final thoughts on market liquidity that will hopefully guide newcomers to exchange betting in the right direction:

 

Look at the numbers involved

If tens of thousands of pounds are available to back and lay in an English Premier League match, then that’s cool because that’s what we expect. If though you are browsing the ITF tennis tour and see one player available to back at £1000, with a lay total of £10, then ask yourself why such a disparity exists. Inside information could be a factor – perhaps the player in question is carrying an injury? – and so extreme examples like this are best to be avoided.

 

Money comes to money

A market with low liquidity is unlikely to satisfy your punting requirements, e.g. there may not be cash available to match depending on your budget. Poor trading conditions manifest themselves in a number of different ways, but quite simply if you can’t get a bet on at the price you want then steer clear.

 

Value is the key

Don’t accept lower odds just because those are the only ones available to be matched; how do you expect to be profitable in the long term if you aren’t making the kind of money you should be from your selections?

 

 


 

 

Value Hunting

Finding value is a key weapon in the arsenal of punters of all persuasions; whether you favour the sportsbooks or the exchanges. Spotting it is both a literal and metaphorical exercise, but clearly the question to be asked is this:

 

Do the odds offered reflect the likelihood of the outcome occurring?

Imagine if Manchester City have won seven of their last eight matches, and on Saturday they are playing a Stoke City side that has lost seven of their last eight matches. We could infer from those figures that Manchester City have a 7 in 8 chance of beating Stoke (disclaimer: this is NOT how odds compiling works), and so their betting price should be 1/8. Conversely, Stoke have a 1 in 8 chance of beating Man City (just stick with us here), and so their price should be 8/1.

In the most basic terms, does a selection priced at Evens (2.00) have a 1 in 2 chance of occurring?

 

Bookmaker value v Exchange Value

There is no difference between the two ultimately, but there is one crucial difference of course: the price that a bookmaker offers is final, and while you can ‘shop around’ for the best value there is a chance that you won’t find odds that are accurate and fair.

Via the exchange, you can actually name your own price of course, and simply sit back and wait for it to be matched by one of the hundreds of thousands of Betfair/Betdaq/Matchbook/Smarkets users. With so many individuals backing, laying and matching, the chance of you finding value is naturally greatly increased.

Here’s a real world example:

football match betting odds checker

football match betting odds checker

football betting exchange market example

So what do we see? Clearly the exchange prices are better (and thus more value) across the board in this fixture, so unless you have open and active accounts with dozens of bookmakers (to take advantage of the best prices offered by the bookies across all of the fixtures you want to bet on) then clearly the exchange is a rather more efficient way to go about your betting.

Remember, exchanges operate on a commission-only basis – they don’t have profit margins to protect. Finding value is easier with an exchange then….and if you don’t like the prices you see, ask for a better one!

 

 


 

 

Bet Matching

Of course, the beauty of a bookmaker is that if a price is presented then your bet will be taken with no questions asked (unless you fall under the minimum/maximum stake amount that is). But on the exchanges things are slightly different: unless you take the available prices, then you might have to wait around a while for your bet to be matched.

The match happens when a punter just like yourself visits the betting exchange’s website or app and sees your wager, and is happy to back or lay as appropriate. Once they click the button and do the necessary, your bet will be matched.

Here’s a visual representation:

Betfair football match exchange odds

Betfair football match exchange odds

 

So What does it all Mean?

First thing first, let’s take a look at the available prices. You can back Manchester City to win at 1.20 (that’s 1/5 in the UK odds format), or alternatively you could lay Steaua. What that means is that you would win your stake amount should City win or draw, but if they don’t then you would need to pay out your matched bettor at that rate of 20.00. Ouch.

The cash values underneath denote how much money is available to be matched. So you could back Man City at 1.20 for £54,324 if you really wanted to (!). That would be all the availability of that price gone, with 1.19 becoming the next best. The cash value simply shows the maximum sum available to be matched.

So let’s say you wagered £10 on Man City. Your bet would be instantly matched and the cash total deducted by £10. That means that somewhere on planet earth, somebody has laid Pep Guardiola’s side. You are simply matching their bet.

 

What if you don’t see a Price you Like?

There is always the option of trying to squeeze your profits on both back and lay bets by quoting your own price and hoping that it eventually gets matched.

The process is easy. First, add the selection to your betslip (don’t worry; you can alter the price here). We’ve added Man City at 1.20 to our slip.

 

Betfair exchange empty betslip

Betfair exchange empty betslip

 

And now comes the fun part. You can edit the ‘odds’ field as you see fit, to ensure that you have the opportunity to receive the price you want.

Just simply change the amount in the odds box, enter your stake and hey presto!

 

Betfair exchange betslip

Betfair exchange betslip

 

Now don’t forget at this point that your bet won’t be matched as yet: it will join the queue of available prices. But if yours becomes the best price available, or somebody just wants to take you on, then they will see your wager on their dashboard and can click on it to match it.

Naturally, the less variance between your price and the best available will increase your chances of being matched, and markets of high liquidity will also enhance the likelihood of a match.

 

 


 

 

An Introduction to Sport Trading

For many punters, simply taking advantage of the best prices on offer via a betting exchange is enough to excite them and leave the world of bookmakers behind.

But there is a new breed of bettor who realises that there are inherent trading opportunities present within betting exchanges. A kind of stock market attitude of ‘buy low, sell high’ exists, and the foundation of trading on the exchanges is to back at a higher price than that you subsequently lay at.

 

Here’s a basic example to highlight our point:

Premier League winner betting exchange market

Premier League winner betting exchange market

 

Here’s the Premier League Winner 2016/17 market as it stood two weeks into the season in August. Let’s say we fancy Manchester United to win the title, and back them with £20 at 4.00.

 

£20 @4.00 = Return of £80 / £60 Profit

 

So if United to take the title then we would trouser £60.

Let’s fast forward to April as the season draws to a close. Manchester United are now ten points clear with six games to go. Consequently, their price has tumbled to 1.20.

Of course, we can let our original back bet ride, but if we want to consolidate our position then we can now lay United at the 1.20 mark and protect our profit. All we need to work out is how much of our £60 kitty we are willing to sacrifice. Let’s say we go with a £40 lay bet to hedge our position:

 

£40 @1.20 = Liability of £8

 

Let’s reanalyse the figures. If Manchester United do win the league then we take our £60 winnings + our £20 stake, pay out the £8 lay liability and are left with a net profit of £52.

If United don’t win the title, then our original £20 back stake is gone, but we have had that lay success and as such pocket the £40 that we were matched. So here a net profit before commission of £20 is achieved.

 

Basic Trading Strategies

Without going in to complex mathematical equations, the easy way to recognise a trading opportunity is to find a long-price selection that you think is great value and that, given time, will see a considerable shortening of its odds.

Football is perhaps not great for examples of this, so look elsewhere at tennis, golf etc. Brian Stuard was matched at 1000.00 prior to the Zurich Classic (golf), and yet heading into the final holes his best price was 3.00! Imagine the trading potential there….

Of course, football does offer trading opportunities, although the changes in price tend to be less extreme than that highlighted above. Backing an outsider, hoping they go a goal to the good, and then laying them when their price shortens is one option, as is backing the favourite should they go behind early in a match.

Healthy trade conditions can even be sought prior to kick off! Laying Man City at 1.21 to win 24 hours in advance of kick off, and then backing them at 1.40 when the team news is announced and Sergio Aguero has been left on the bench, ensures profit is locked before a ball is even kicked.

 

 


 

 

Common Trading Mistakes

In amongst the hobbyists and punters looking for a better deal, the exchanges also play host to professional gamblers who don’t necessarily know sport better than you, they simply have a great understanding of market dynamics; take these characters on at your peril.

The truth is that those new to trading will be exposed to market conditions that are completely unfamiliar to them, and while nobody will question your intelligence and knowledge of the sport in question, being ‘sharked’, e.g. making an error of judgement or strategy you might expect from a newbie, is a distinct possibility.

The below are just some examples of betting exchanges in motion, and common mistakes that can arise:

 

Movement of the Line – What’s Happening

One error that newcomers to trading make rather often relates to the movement of market prices; it could be a) not reacting quickly enough to take advantage of the best price available/protect your own position, or b) reacting quickly but not understanding the consequences of your actions.

Many traders will have a strategy in mind prior to a match starting, but what happens if the opposition score an early goal against your team? Many naïve traders panic and place cover bets, when smart punters would appreciate that a game of football – any sport for that matter – is never resolved in the first half. Patience is a virtue in sports betting; whether that’s via the sportsbook or exchange. Successful traders think with their business head on, and don’t bring any preconceived notions or cognitive bias into their decision making.

 

Man Down

In-play trading can be manic, confusing and downright unsettling at times, although the rewards are obvious. However, the human element becomes a factor when there is a lot of stimuli to keep track of. Watching the events of the match unfold, while keeping an eye on various markets and prices, can leave one feeling rather discombobulated; not exactly a state of mind for effective trading.

Make sure you make notes regarding all your trades, rather than having to refer back to your history each and every time. Jot down prices, timings and your reasonings behind your trading decision – you will find this an invaluable training tool moving forward in helping you to avoid making the same mistakes time after time.

 

Just Five More Minutes…..

Not knowing when you are on to a good thing….that’s one of the common pitfalls of traders. Wanting to hold on that bit longer to maximise a strong position can be a disastrous decision should the other team go and snatch a goal against the run of play.

Remember, the idea behind trading is to return a profit, not make as much money as you can through bullishness and braggadocio. Because at some point it will undoubtedly lead to your downfall.

 

Watch and Learn

One of the biggest mistakes a trader can make is not watching their selections in action. Have you ever watched a football match or a game of tennis and thought to yourself ‘I’ve got a good feeling that the momentum is about to shift’….that’s trading incarnate! Being one step ahead of the curve will help you to trade the best prices, so making sure you actually watch the match as it unfolds is crucial.

Most bookmakers offer a live streaming service via their online platforms, and even if it isn’t the match action itself they will still produce a fairly detailed statistical breakdown of how it is panning out.

In some instances, you can gain an advantage over the trading fraternity by witnessing a key moment in an event before the market has moved; a marginal, real time gain.

 

 


 

 

Betting Exchange Commissions

What, When, Why and How Much?

We touched upon it earlier in this guide, and to reiterate the way that exchanges are able to offer margin-free betting is by charging a commission on all winning bets. That’s the key here: if you return a net loss on a market – even if some bets win – then you won’t be charged.

The amount of commission charged is easy to calculate: it is simply the amount of net winnings multiplied by the Market Base Rate (MBR). Some betting exchanges offer a discount too, so often the rate of commission paid isn’t necessarily that advertised.

Here’s a look at the main exchanges and their commission rates:

 

Betfair Exchange Commission

The Market Base Rate with Betfair is currently set at 5%, although their Discount Rate service does help to minimise the amount lost in commission.

The Discount Rate is determined by the number of Betfair Points that have been accrued. These are earned in proportion to your betting activities, so the more bets you place = the more Betfair Points earned = the greater the discount.

Here’s a quick example:

You have net winnings in a market of £400.
The Market Base Rate is 5%.
Your current Discount Rate is 40%.
Therefore the commission you pay is £12 (£400 x 5% x (1-40%)).

 

Smartkets Commission

Smarkets take a bit of Betfair’s commission strategy and a bit of Matchbook’s: they charge a flat rate of 2%, but this is only on net profits.

There isn’t much else to say! Clearly you will be paying out double the amount compared to Matchbook, but then it will all come from your profit; if your bets lose then is no additional charge with Smarkets.

 

BETDAQ Commission

BETDAQ utilises a discount rate model to determine commission payments, with a base rate of 5% able to be reduced to 2% if you have earned sufficient loyalty points.

Commission is paid on profit-making wagers only, and this rate can be reduced when loyalty points are earned; for the record, a loyalty point is earned for each £25 staked, and it takes 12000 points to get the commission rate down to 2%. Discounts are available on a descending scale prior to this you’ll be glad to hear!

 

 


 

 

Cash Out: Yes or No?

One of the modern innovations that filtered into the online betting industry at some point during the late 2000s, exchange punters are armed with the potential to cash out their bets as they see fit.

Available solely via the Betfair Exchange platform (although not on all markets), you can make the most of a winning position – or cut your losses from a losing one – by cashing out and taking the amount offered to you by the company.

If things are going well, you are likely to be offered a profit based on your stake amount and the current market price, although typically this is just tantalisingly shy of your full potential winnings; they’re not daft these bookmakers.

Should you cash out or not? That’s really up to your discretion. But if you carry out a few simple steps, you can maximise your chances of making the right decision and hitting Cash Out (or not).

 

Follow the Match

It kind of goes without saying, but if the team you’ve backed are 1-0 up with 20 minutes to play/losing 0-1 at half time don’t just automatically smash the Cash Out button.

Follow the game, either via live stream or through a data provider, to see how things are shaping up. Perhaps your team are completely dominating proceedings; that should help you to decide whether toc ash out or not. Conversely, they may be under the cosh – in which case, tapping out now could be the best tactic.

Having an insight into how the action is unfolding is essential.

 

Money, Money, Money

A number of punters will consider how well their other bets are doing before deciding whether to cash out or not.

Wrong.

It doesn’t matter how well/badly your coupons have done that day, that has no bearing on the likelihood of this particular bet coming in or not. Take each individual case on its merits, and base your Cash Out decision on something other than your bankroll balance.

 

The Late Late Show

Here is a stat that might help to shape your decision:

In the 2015/16 English Premier League season, more goals were scored in the 75th-90th minute bracket than any other.

If your team needs a late goal to bring your bet home – or you need your lads to stave off opposition attacks – let that little titbit be your guide in deciding whether to hit the big green button or not.

 

 


 

 

What is the Best Betting Exchange?

Wow, there’s a one-million-dollar question. It’s impossible to answer unequivocally of course because all punters have their own unique requirements – some want the best odds, some want the highest liquidity levels and some simply go after the lowest commissions. Your own attitude to each will determine which is the best betting exchange for your needs.

Hopefully the quick outlines of the UK’s four main exchanges below will help to make up your mind.

 

Betfair Exchange

Betfair betting exchange Platform

Betfair betting exchange Platform

 

The original betting exchange, Betfair revolutionised the bookmaking industry forever in the year 2000 when they created the first ever peer-to-peer betting network.

‘Witchcraft’ was one cry that went up from traditional bookmakers, ‘it’ll never work’ was another. But the best part of two decades later and the brand is still going strong, with punters backing and laying bets in their thousands each and every day.

 

Liquidity

The best around – no other exchange can match Betfair for liquidity and customer numbers. Due to the nature of the site, punters range from casual bettors to professional traders.

Commission

Betfair’s rate of commission is the highest around; hey, that goes with the territory of being the most visited betting exchange on the planet. Starting at 5%, but decreasing slowly as you earn more ‘points’, this is one area that really lets the company down.

Quality of Odds

Even accounting for the high commission rate, Betfair offers some of the best odds around; and that is simply due to the laws of the market. More people use Betfair than any other exchange, so it stands to reason that odds are competitive as a consequence.

Market Depth

You’ll find near wall-to-wall coverage at Betfair, and while some more niche markets are occasionally hard to get a bet on, the mainstream football leagues from across Europe, horse racing and tennis are comprehensively catered for, as well as a gamut of other sporting concerns.

 

 

BETDAQ

BETDAQ betting exchange platform

BETDAQ betting exchange platform

 

Founded shortly after Betfair at the turn of the new Millennium, BETDAQ was drifting along rather aimlessly for a while and was in danger of being elbowed out of the market by aggressive newcomers Matchbook and Smarkets. But a hook up with Ladbrokes has increased the brand’s exposure and thus liquidity; making it a more attractive proposition to punters now than ever before.

 

Liquidity

For the most part the liquidity at BETDAQ has been rather poor, but integration with Ladbrokes’ sportsbook platform has driven greater demand for the product. As such, customer numbers – and amounts matched – are on the increase.

Commission

The commission structure is rather convoluted; commission is charged at 2% on all matched wagers if you have earned enough loyalty points, and if not then it can be any amount up to 5% if you are completely new to this exchange.

Quality of Odds

On the markets which are highly liquid, you’ll find odds pretty much across the board in UK football and horse racing. For overseas markets, you may find your bet going unmatched at the price you crave, however.

Market Depth

The leading football leagues across Europe are catered for, plus UK & Irish horse racing. The key ATP and WTA tennis events are also well traded, but outside of that it can be a case of slim pickings.

 

 

Matchbook

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Matchbook have carved out an impressive little niche for themselves as a US sports specialist, and consequently their liquidity on these markets is really rather good. Aided by low commission rates, this is a brand that is growing year on year, and who could soon challenge Betfair for their mantle of most used betting exchange.

 

Liquidity

We would classify the liquidity of the main UK sporting concerns – top flight football, tennis – as acceptable. But for American sporting pastimes, and we’re talking NBA, NHL, NFL etc – they are by far and away the most liquid exchange around.

Commission

Matchbook’s commission levels are industry leading: just 1.15% for UK punters on all matched bets. They are known for offering ‘commission free’ promotions too.

Quality of Odds

You’ll get almost 100% coverage on major UK sports, considerably less for lower league football, non Grand Slam tennis etc, but then a genuinely competitive marketplace for American events.

Market Depth

Horse racing is, bizarrely, a fairly new addition to Matchbook’s portfolio, so markets here are limited, but for every other sport you will find pretty much every bet type you could want.

 

 

Smarkets

Smarkets betting exchange website

Smarkets betting exchange website platform

 

Every industry, no matter how competitive, offers opportunities for innovative new players, and Smarkets are trying to tap into that wisdom with their 2% commissions and financial – rather than sporting – background. Launched in 2008, this is a professional portal for traders who take their sports betting very seriously.

 

Liquidity

Growing….that’s the best way to describe Smarkets’ liquidity. They can’t compete with Betfair and Matchbook quite yet, but as is often the case it will only be a matter of time before punters give them a try in greater numbers.

Commission

The reason that their liquidity is expected to grow exponentially in the coming years is down to their generous commission rate of just 2% on winning bets only. Given that they have stated that this will never rise in their business statement, Smarkets cannot be faulted for their customer care.

Quality of Odds

Agreeable pricing is inextricably linked to liquidity, and unfortunately with Smarkets falling behind in this area so too is the availability of value prices or the potential for being matched. That said, you will still easily get a bet on all of the major football and horse racing action.

Market Depth

Again, a work in progress. Smarkets cover major football and leading horse racing meetings, as well as all of the elite-level tennis and golf tournaments. For niche concerns, you may be best served going elsewhere.

 

 


 

 

To Trade or Not to Trade?

Advanced betting is all about the numbers, and that is certainly true for conducting successful trades via the exchanges. Knowing when – and when not – to pull the trigger on a trade can make all the difference to your long term profitability.

You can actually download apps and use online bet calculators that will do much of the donkey work for you, and lest we forget that most exchanges will also help to identify tour trading position when you flick through your ‘open bets’ dashboard.

But being able to calculate a trade in quick time is particularly advantageous, especially when volatile markets are shifting or your selections are live in-play. An appreciation of trade dynamics will help you to make more informed decisions when the heat of battle is on!

 

How to Calculate a Trade

Let’s put an example together to help get the ball rolling. Here’s the prices available for a Chelsea vs Liverpool encounter:

 

betting exchange football match odds market

betting exchange football match odds market

 

Looking at the prices and considering the form of the two teams (at the time of writing anyway), we decide that Liverpool offer the best ‘back’ value given their free-flowing attacking football and an agreeable price of 3.45.

As predicted, the Reds go 1-0 up after half an hour and their price plummets to 1.60. We can place a lay bet on Liverpool here at 1.60 and lock in profit regardless of the final outcome of the match.

Step 1

Betfair football back betting slip

Betfair football back betting slip

 

Step 2

Betfair football lay betting slip

Betfair football lay betting slip

 

So as you can see, if Liverpool go on and win the match then we’ll trouser £37 (£49 back win – £12 lay liability. If they don’t win, then we break even with our £20 lay win.

On reflection, we’ve dropped a bit of a clanger. We could – and should – have tweaked these numbers so that our back profit was lower but in turn we would be guaranteed a profit whether our back or lay was successful.

Instead, all we needed to do to “green up” and return a profit no matter what is to make sure our lay stake is more than the original £20 back bet.

For example:

 

We now place a £30 Lay Bet at 1.6 on Liverpool with a liability of £18.00

 

So….

Let’s examine the numbers again then:

 

If Liverpool win: £49 (back return) – £18 (lay payout) = £31

If Liverpool don’t win: £30 (lay return) – £20 (back stake) = £10

 

Best case scenario = £31 profit, worst case scenario = £10 profit.

With some quick calculations, we have found the perfect trading position that enables us to return a profit no matter what happens in the game. Now you can kick back, relax, enjoy the game and watch the readies roll in!

 


 

 

Betting Exchange Software

There’s an old saying that suggests a ‘bad workman always blames his tools’, and while there may be an element of truth in that if you employ the very best tricks of the trade at your earliest opportunity then the likelihood of failure is lessened dramatically.

That is certainly the case with betting exchanges and trading in particular. Automated software can help punters to make the very best of the trading opportunities out there, and unfortunately we have to admit that technology often trumps the human mind for efficiency and accuracy. The bottom line is that by deploying the right trading software you seriously enhance your chances of long-term profitability.

This can help to identify scalping and swing trading possibilities, and carry out all of the calculations on your behalf. This is the easiest – and most reliable way – of securing arb positions as and when they arise.

There are stacks of different trading programs and software available, so which is the best for your requirements?

 

Bet Angel

The below graphic may look like the work of a mastermind, but once you have become familiar with the layout and what BetAngel can and can’t do, this ingenious bit of software will become second nature.

This is the most widely-used trading platform by professional punters, and its integration with Betfair in particular means it is a must-have weapon in your armoury.

BetAngel was originally devised to assist horse racing traders in their operations, but over the years it has been tweaked to aid punters of other sports too.

The object of the software is to accurately predict price movements and odds fluctuations before they happen, and thanks to its complex algorithm BetAngel can help you to stay ahead of the rest.

Available on a free 14-day trial, there’s never been a better time to trade than right now. There’s even a handy instructional video for those curious to learn more:

 

 

Cymatic

Cymatic have developed a Betfair-exclusive bit of software that facilitates ultra-fast bet placement. What is unique about it is that it has been authorised and certified by Betfair themselves, so whenever they update their site you know that Cymatic’s technologies will evolve nicely too.

The handy grid interface allows for intuitive user-friendliness (if that’s even a word!), and the software can be integrated into Microsoft Excel if that is a program you are more familiar working with.

There’s a raft of other handy features as well, including Tick Offset, which automatically sends a mirrored bet when you have been matched, Fill or Kill; a handy automated way to cancel non-matched bets, and of course Stop Loss, where your position in a market can automatically be ended based on your parameters.

Here’s a handy bite-sized introduction to the software in video form:

 

 

Tricky Bet

Slightly different to the trading platforms above. Tricky Bet is simply a website that plays host to some really useful betting calculators.

You’ll find a lay calculator helps you to calculate your profit (and calculates commission on your behalf), as well as two different ‘Dutching’ models to help you lock in those profits.

Freely available to all without subscription, sign up. Tricky Bet is a website that budding traders must bookmark for future use.

 

 


 

 

Betting Exchanges – Glossary of Terms

Above and beyond those that we have used in this guide, there will be several turns of phrase and words that sound like absolute gobbledegook to you in the world of betting exchanges if you aren’t familiar with them.

These typically relate to trade strategizing, so if this is an area you plan to explore in greater detail then getting to grips with this glossary of terms may well prove fruitful in your quest.

 

Arbitrage Betting / Arbing (Sure Bet)

Arbing, or arbitrage betting as it is often known, places the punter in a position where they are sure to make a profit based on the trades they have made. Think there’s no such thing as a ‘sure bet’? Think again.

As we have discussed elsewhere in this guide to betting exchanges, it is possible to trade your way into a position of complete strength, whereby you are in profit regardless of the situation of the event. This is known as Arbing, and it is a skill that you are well advised to work on going forward.

 

Back-to-Lay

This is a trading strategy that works particularly well in outright markets, where long-priced outsiders can fall quite rapidly in price as they progress through a tournament. The idea is to back them prior to the start and then lay off some of your profit as their price drops – an arbing strategy, as outlined above.

Real world examples include Gael Monfils, who came in from 60/1 to 20/1 after reaching the semi-finals of the US Open tennis; Jimmy Walker, who was as short as 1/2 on the final day of the PGA Championship after opening at 125/1; and, of course, Leicester City as they claimed the Premier League title in 2015/16. They went from 5000/1 to 5/1 in the space of eight months….

If you have a knack for spotting value fancies at long prices, this could well be the strategy for you.

 

Market Entry / Exit

This dictates the price or moment you enter a market and trade out. Your market entry point can be dictated by a number of things. From identifying a value opportunity to seeing a price that you think is ripe for the taking. You may even enter the market on your own terms, and wait for your bet to be matched.

Your exit point can be determined by price, i.e. an arbing opportunity presents itself, or by a factor within the event, such as a red card or a break of serve. This is where you cut your losses and leave a market or accept your profit and move on to the next bet.

 

Stop Loss

Working concurrently with your exit point, a stop loss is the moment where you decide enough is enough and trade out your position. This is effective risk management to find that prime stop loss point, and will help you to manage your bankroll more effectively in the long term.

It is, in essence, cashing out, but with a stop loss figure in mind prior to the event commencing at least you remain in control of the market; rather than hanging on and losing any trading strength you may have had.

 

Scalping

This is trading in such a way that even minute changes in prices are backed/laid in order to create a profitable scenario. This is easily possible in markets of high liquidity, where bets are matched more readily and thus prices ‘turn over’ quickly. Once the market moves, the opposing side of the trade exchange is carried out and a profit – generally a small one – is locked in.

Scalping often happens in football matches before a ball has even been kicked. In the English Premier League for example scalping opportunities exist where one team is sweating on the fitness of a key player. Their price will fluctuate depending on if he passes or fails his fitness test. It is also common in more malleable markets such as Both Teams to Score and Over 2.5 Goals, where a punter is ‘in the game’ for longer and thus price fluctuations are more extreme.

The very best scalpers will use moments within a match, such as a tennis player calling the trainer on to the court, to manipulate their position yet further.

 

Swing Trading

Think of scalping as a quick, easy and short-term approach to making money from betting market movements.

Swing trading is its slightly ‘bigger picture’ sibling; the idea here is to make more substantial gains through longer-term market analysis.

There are so many variables that affect sport that keeping abreast of these – and knowing how they affect matters – can reap rewards for savvy punters. An outright market in golf will move, for example, if the local weather dictates that early tee times will avoid a thunderstorm. Players who are set to go out in the afternoon will lengthen accordingly. Windy conditions at tennis will help to neutralise the advantage that a big server has, while abject weather usually delivers low scoring games of football.

These things are all subjective of course, and it is fair to say that at times swing trading is a test of gut instinct rather than insight, but if you stay ahead of the curve then you can predit price moves before they happen.

 

 


 

 

It’s Time to Start Sport Trading

Armed with all of the tools and insight (hopefully) this guide has proffered, you are now ready to fly the nest and start your trading career via your chosen betting exchange platform.

There will be good times and bad as you get to grips with market conditions and the darn unpredictability of sport (that’s why we love it so!), but with common sense and an innate understanding of your chosen events and markets you should be well primed to profit.

As one final gift to you, here’s a quick cheat sheet to help confirm strategies and pointers for successful trading:

 

Know Your Stuff

We really can’t stress this enough. The more you know about your chosen sport/market, the greater the advantage you will have over the rest of the betting community. Injury news, team selection, head-to-head records, current form, results in specific conditions….these are just five things that you need to know to help stay ahead of the curve.

 

Get to Grips with Market Conditions

Every football game, every tennis match and every horse race is different, and yet the market conditions that permeate across the board – particularly in highly liquid markets – means that we can trade with confidence if certain actions are fulfilled within the event itself.

Time has a funny way of altering market conditions, for instance – maybe a goal hasn’t been scored after an hour, but knowing how many late goals go in each and every week enables you to understand how to use price drifts to your advantage.

Red cards, a player calling for a medical time-out, sudden changes in weather….these are things that will change conditions; particularly in volatile markets. Understanding these movements, and learning to keep a cool head, will serve you well.

 

Take Advantage of Overreactions

A goal going in, a break of serve or a shanked tee shot into the bushes can do funny things in the mind of a punter. It is as if a chemical is released into their brain that makes them place crazy bets at such a time.

Remaining calm and composed here will help you to take advantage of these emotional bettors; and laying traps for them. Perhaps laying a bet that you instinctively know somebody out there will match due to their state of ‘overreaction’ – is an advanced trading tactic but not one without its benefits.

Punters will routinely lay teams/players that ‘do something wrong’, e.g. concede, get reduced to ten men or have their serve broken. But smart cookie know that in some cases, these lay bets are worth matching.

 

Strategize…and Do it Well

We’ve outlined a few trading strategies in this guide. How well you know your sport will determine which you prefer to utilise.

 

Back to Lay

Back-to-Lay is a favourite, as this enables punters to lock in a profit (assuming their selection performs well). Here you are looking for a team/player/horse to back whose price will latterly fall for any number of reasons, and then laying them at the new price to guarantee a return come what may.

This strategy can be used for outright football markets, some football matches (where price volatility makes it worthwhile – there is no point using B2L on an even money favourite), horse races where a runner’s price falls prior to the start line, a golfer who starts a tournament strongly, an outright tennis tournament winner….and so on.

 

Laying the Draw

In sports where all three results are possible laying the draw is another interesting angle. You’ll notice the price for a draw fluctuating based on the action on the pitch. It is no surprise to see that when a favourite scores a goal the price for a draw lengthens significantly. Lay at 4.00, back at 10.00 – that’s guaranteed profit right there.

 

Scalping

Scalping is another option, although this requires a considerable bankroll in order to make price fluctuations.  We’re talking 0.10 changes here – to make the market work for you. Also, if a price doesn’t move as expected then a large loss can be experienced. Scalping requires a keen mind and a steady hand.

 

Whichever strategy you choose to adopt, just remember: doing your homework and knowing everything (or as much as is humanly possible) about your sport(s) will help you to gain a competitive advantage over the field. Good luck!