For years I have been obsessed with trying to make money trading on Betfair. And like any overly optimistic sucker, I have spent an enormous amount of time and money researching and looking into different systems.
The closest I ever got to making it work was when I entered a trading on Betfair competition sponsored by the trading software Bet Trader. Everyone started with the same amount of money, and the person who made the most during a one month period would win. 200 hours and over 10,000 trades later I won.
Which is great! I had found a way to consistently and safely make money out of betting on horse racing. And I’m now sipping champagne from my yacht…
Except I was never able to scale up my strategies enough to make it worth the time and stress. Despite spending a lot more time and investing in a lot of technology, I eventually gave up and returned to the much easier matched betting. I am going to tell you exactly what I did and what happened with the hope that you’ll be able to improve on (or at least laugh at) my successes and failures.
What Is Trading On Betfair?
Betfair is a betting exchange. A marketplace where punters go to buy and sell bets on sporting events. There is no bookie, when you trade on Betfair you are betting against another human being.
This means that Betfair becomes just another marketplace. When there is no house, phrases like ‘the house always wins’ and ‘house edge’ don’t make sense.
Just like on the financial markets where a trader will ‘buy’ at a low price and then aim to ‘sell’ it at a high price, when trading on Betfair you attempt to ‘lay’ low and ‘back’ high. Locking in a profit before the event has even occurred.
If people can make money trading on the highly regulated financial markets against professional traders with millions invested in the best tech, surely it should be much easier to make money trading on Betfair against regular punters?
In the below screenshot you can see a pretty typical Betfair marketplace where I am ‘laying’ (taking the bookie side of) a bet on Malaga. If I can later ‘back’ Malaga at higher odds, I will lock in a profit.
The Gambling Times Trading Competition
The competition was posted on one of my favourite forums. The Gambling Times, which has since unfortunately closed down. I interviewed the founder in this post.
There are a total of five top cash prizes for the five traders who make the most profit during the month. The top trader will also win a one year subscription to BetTrader worth £150!:
- 1st prize: £50+1yr sub to BetTrader
- 2nd prize: £40
- 3rd prize: £30
- 4th prize: £20
- 5th prize: £10
Traders will have until 4th August 2009 to submit their final profit and loss totals – your final overall total for the whole month..
I, along with 47 other people, signed up. I thought that if I could make it work with £50, I could scale up and get very rich very quickly.
My Tactic – Scalping The Horse Racing Markets
I created a new Betfair account, deposited £50, and after a lot of research, I decided to use a tactic called ‘scalping’.
I would watch the highly volatile horse racing markets, where the odds move all the time, and try to place hundreds of small trades, making a few pence each time, but also not risking very much on each bet.
All that information relates to just one single horse race. Exactly. It looks so incredibly complicated because the software is throwing all the information it can at you.
Which I like. It gives me an edge. Everyone else just has the information from that first Betfair screenshot. Simple, no indicator of market depth, or historical performance and with a torturous 3-second delay on market data.
I used Bet Trader, which is £9.99 a month.
Scalping is basically just guessing what is going to happen in the next few seconds. To make those guesses educated, I would look for indicators, clues, on which way the price would move. Here are some of my indicators:
- Weight of money. If there is a lot of money waiting to be matched on one side, but hardly any on the other, it could imply there is more of a desire for one side of the bet and prices will soon move.
- Momentum. If prices start moving and I notice quickly, they often keep moving as punters try and jump on a good thing.
- Gaps in the market. If there is space between the back and lay I can sometimes place both sides of the bet in the gap (this is called market making in the financial markets).
- Watching out for big orders. Sometimes large bettors will ease their money into the market to try and stop the market moving. If I notice a lot of money starting to appear on one side, it could imply that there is a lot more to come, which will move the market.
- Price movement on the other horses. The way that the market works, is that if one horse becomes more likely to win, another must become less likely. But the market can be slow to keep up. By watched what other horses were doing I could predict price changes on the one I was betting on.
If I got it wrong I would trade out immediately (well that was the plan).
How I Got On
I started off just betting £2 a go. It is the minimum that Betfair allow, and would limit my losses. But the downside is that scraping one tick a time would also earn almost nothing.
I was betting on horse racing in the 30 minutes before the race started. Following my scalping strategy, I would place 50-100 bets per race. And hopefully keep locking in more and more profit.
The hardest part I found was trying to condition myself to enjoy taking small losses (with the logic that it means I didn’t take a big loss). Which is easier said than done. I kept holding on and hoping the odds would move again giving me a profit, sometimes it did, sometimes it just got worse.
Eventually, I set myself a few rules: If I have an open position and there is one positive signal then I try and exit one tick out. If there are more than one positive signal I wait and see what happens. If there are no or negative signals then I exit at the current price.
I also decided to stop trading around the 4 minutes to the off. I found that I wasn’t fast enough to keep track of my open positions and notice the signals on one horse, let alone all the other horses in the market. My motto became: don’t be greedy.
By week three I was in profit. But only just, £19.26 up. The bet size was too low and even though I was earning money most races, it was hardly anything. I was occasionally still seeing the red mist descend but was now confident that I could make money with a larger bet size. I decided that I was finally ready to start scaling up for the final ten days.
I rose my bet-size gradually. £3, then £4, then £5, then £10.
Here are the profit and loss statements for each race in my final week (click the image to enlarge).
60 races traded on and only three lost money, and the total losses on those came to just £1.22. Considering each race involved 50-100 different trades, by this point I was pretty confident in my abilities.
Winning & Final Thoughts
My final balance was £135.11. With a total of 204 markets traded on (all horse racing). I averaged 42p a race, although that shows marked improvement. In my first three days of trading, I averaged just under 4p a race. On the last day of trading on Betfair, I averaged just over 72p a race.
Of the 48 people who started the competition, only nine ended up in profit. That was less than I expected, a lot of people bust out and lost their £50. (I am Grandthrax in the screenshot below).
Of those nine who ended in profit, not a single one was able to turn their success into a career in trading on Betfair.
After the challenge, I initially just tried scaling up my bet-size. But my one-tick scalping tactics didn’t work so well with £200 bets. The larger bet sizes spooked the market too much. Then I tried writing computer programs to place the small size scalping bets automatically on lots of different markets. But it turns out I wasn’t a good enough programmer to make it work.
Over the years I kept returning to trading on Betfair. Each time with a new idea and trying to make it work. And that’s the reason I am writing this: I am still fascinated with trying to make money trading on Betfair. And would love to hear from anyone who has made it work?
I think the logic is sound that it should be possible to make money. I believe I have shown that it can be done, even if only on a small scale.
What Next – Trying To Automate My Trading On Betfair
But I haven’t given up. Now I am going back to those original strategies and trying again. During the competition, I made consistent money doing something that didn’t require much brainpower but took a lot of time, and subsequently earned less than minimum wage. But if I can automate those strategies then I should be able to make some automated money.
I have signed up to a service called BF Bot Manager. It costs £29.95 a month with a 7-day free trial (or £9.99 if you pay a year upfront) and is a very powerful (and geeky) bit of software that allows me to set automated rules for my trading on Betfair. You basically give it a series of true/false conditions so it can decide when to place a bet.
Here is me playing around adding some new rules for my horse racing trading bot:
This is still very much a work in progress and it is taking me a while to get my head around it all. BF Bot Manager has a lot of functionality, but translating my thoughts into something a computer can understand is much harder than you’d think. I will keep you informed with how I get on. Well… unless it goes great. If I come up with a strategy that prints money there is no way I am telling you what it is.
Further Reading – Other Ways To Make Money From Betting
Trading on Betfair isn’t the only way to earn a living from betting. Here are a couple of ways I have experience with: