Thinking of becoming a professional Betfair trader? There’s a lot of challenges that you’ll inevitably face along the way. It’s tough to consistently earn from Betfair, so it’s best to be prepared to overcome several hurdles.
Here’s my list of the 10 biggest problems Betfair Traders face.
1. Tough Competition
Betfair traders operate within in a very competitive market. It’s a zero sum game — for every winner there’s a loser. And that means that everyone is motivated to suss out their competitors to gain an advantage over them.
One of the biggest challenges is disguising a strategy.
I’ve developed strategies that profited over thousands of bets, and then suddenly stopped working. Did the opportunity simply die off? Perhaps. But I’m certain that some of my attempts were found out by competitors (see an example here).
As a trader you have to stay alert, mix up your bet sizes and the times you bet whenver possible. Staying rigid is a good thing — but don’t let that be your downfall.
2. Market Efficiency
I write about market efficiency a lot on this site. I can’t emphasise enough how accurate, on average, the betting exchange odds are.
If you were to place a whole series of random equal-stake bets right now, then chances are it’ll break even or lose only a small percentage over a large enough sample. It’s fascinating that we humans — the members of the exchange — ‘get it right’.
The exchange is remarkably accurate and therefore difficult to beat. So you need to test your theory/strategy over a large sample of bets. You have to find a way to outsmart the crowd. And if you can’t successfully do that, then you have to approach your trading with methods like Scalping, where you only need a slight movement in the odds to secure a profit.
For more evidence of market efficiency on Betfair, take a look at my analysis of 270 Premier League bets placed on the betting exchange . I broke even with a quite astonishing 0.00% ROI.
3. “Unbeatable” Spreads
Obtaining value from the exchange is tough.
I’ve studied the spreads on Betfair — the gap between the Back and Lay odds. What I’ve found is that, on averge, the ‘fair’ price lies somewhere between the spread. In my experience it tends to be a little closer to the Back odds than the Lay odds. This implies that value odds are closer to the Lay price, at the top of the spread.
Many Betfair traders analyse their results and come to find that their ‘Back’ bets have lost money. The natural inclination is to reason that “Laying those same bets would’ve made a profit”. It sounds perfectly reasonable — but that’s usually naive, due to the spreads. I’ll explain why.
The Lay price is significantly higher than the Back price. Therefore when you take the face-value Lay price you’re giving away more liability than you would if you Layed at a lower price, somewhere inbetween the spread (ideally as close to the Back odds as possible).
Unfortunately, you won’t always get matched at those odds. This is particularly true at higher odds where there’s less demand/activity. As a result you have to raise your Lay liability to a price that’s more attractive, and therefore less value to you. In turn, it means that you might only secure a bet that’s fair value.
It goes the same the other way round, too — if you attempt to Back at the top of the spread in order to maximise value. Often you’ll fail to obtain the odds you want, and will have to settle for a much lower price.
This is one of the huge challenges of Betfair trading. But you’ll have to master odds execution in order to find value and earn a profit.
4. Fast Bots
Many different types of Bots operate on the betting exchange.
Market Making Bots enter the market and set the prices where they want them. They’ll put up early prices in a bid to generate interest and create liquidity in the pool.
Various other Bots set off a chain reactions in the market, with the price shifting heavily in one direction. For instance, some will intentionally distort the weight of money and provoke a price move. Other Bots then blindly respond to thatactivity, temporarily pushing the price further in the same direction.
Then there’s scalping Bots, coming in and lifting the Back and Lay odds, beating others to the punch. This happens so quickly that the average punter isn’t able to respond quickly enough.
You’ll also notice Bots moving in and out of the spreads to beat the current price, like human Betfair Traders would — except faster.
Keeping up with countless Bots is challenging. You have to be aware of their presence and try not to respond to false alarms (yourself or with your own Bot!). Remember that many automated programs are intent on provoking other Betfair traders to act in order to exploit them.
5. Scaling Up
Betting the minimum £2 stakes is a great way to test a strategy and prove a concept. But there comes a time where you’ll want to scale up. This creates problems for Betfair traders.
Firstly, you may no longer get entirely matched on all of your stakes. Invariably you’ll get fully matched on the ‘bad’ bets (where the price moved against you), and left unmatched/partially matched on the odds you really wanted.
To maatters more complex, placing large stakes often sends the weight of money into a frenzy, and makes the market respond in new ways that you hadn’t planned for. Bots and traders are triggered by volumes. If you’ve gone from £2 straight to £200, then you might need to slow down and consider how you can be a little more discreet.
How can you remain undetectable in a transparent marketplace?
One option is to take the current odds and get instantly matched and therefore out of the market, if this works for your strategy. Otherwise you could queue your bets in smaller ‘chunks’ (e.g. 4 x £50) in order to prevent upsetting the market. Build up slowly, and try different approaches to see what works.
It’s important that you realise how commission impacts the profitability of your strategy. Be aware of this before you start trading on Betfair.
Refer to my Mug Betting Experiment where I used the Betfair exchange (Back odds) for all bets. You’ll note that before the exchange commission was applied the profit was +3.77% ROI. With commission applied it was 0.00% ROI. In a game where small margins mean a lot, losing 3.77% was significant.
Account for the commission in all of your calculations or back-tests. You may decide to discard bets which don’t have a big enough margin to cover the expense.
7. Unmatched Bets
This can also be charaterised as the “price moved too fast” or “market went the wrong way”.
If you’re consistently left unmatched then you’re probably shooting too high (or low if you’re Laying) with the price you request. Also consider that you might be betting too much in one hit.
If prices are constantly changing too fast for you, then make sure you’re equipped with the best technology to snap them up before others do. I’ve recommended the best Betfair Tools here, and downloadable Betfair Bots here.
If you’re struggling to correctly predict the direction of the market then the only way to improve is to practice. You can do this in free mode in most Betfair tools to bring your confidence levels up. Monitor your results, then progress onto low stakes and go from there.
You can also improve your chances of correctly predicting the market by learning how to read the Betfair volume charts. There’s a great tutorial on this topic here, written by professional trader Caan Berry.
8. Pre-event Discipline
Most professional Betfair traders will tell you that taking pre-race trades inplay is not advisable.
It’s a totally different beast once an event begins. The variables suddenly change, the pace in the market picks up. Methodology goes outof the window as there’s less ability to keep up with what you’re doing. Everything you’ve worked on up until the start of the event is pretty much obsolete once the race/event begins.
You should aim to secure a profit before the event starts and move onto the next event before it begins. Then repeat the process. To ensure that you do this, select the option to automatically cancel your bets before they go inplay.
To become a successful trader you must avoid becoming attached to any event. Letting your trade run inplay is a bad habit to get into, and you’ll wind up gambling in an attempt to limit your losses, or ‘force’ a profit. Dangerous.
9. Cutting Losses
A scratch trade is where you Lay and Back the selection at the same price. New traders often see scratch trades as a waste of time — but it helps to gets you out of the market before the price suddenly turns against you.
As a trader you’ll sometimes make a scratch trade only to then see the price move the right way. As frustrating as this is, you have to accept that it could’ve just as easily gone the wrong way.
However, human nature means we dwell on what we just missed out on without appreciating what we’ve got. The fact is, it’s still better to miss out on some winners if it means capping losses.
Some bettors have difficulty adapting to the shift in mindset required in order to become a successful Betfair trader.
10. The Premium Charge
The Betfair Premium Charge is a fee that affects Betfair’s most successful traders.
Calculated on a weekly basis, the charge raises the commissions to 20% on any profits. For the most profitable users, the rates are further increased to 40%, 50%, and 60%.
This means that even if you manage to overcome all other challenges in becoming profitable on Betfair, you’ll inevitably have your profits slashed. Unfortunately there are few ways to avoid this charge.
Ready to take on the challenge of becoming a professional sports trader? Here’s the sites I recommend that you create an account with:
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