Swing trading involves looking for a large shift in the odds and capitalising on the change. It’s hard to predict drastic price moves — but Swing Traders that master this skill are able to reap the rewards.
Swing Trading — Looking For A Big Price Move
What’s The Definition of A Swing Trade?
The Wikipedia definition refers to finance:
“Swing trading is a speculative activity in financial markets where a tradable asset is held for between one to several days in an effort to profit from price changes or ‘swings’.”
But like many financial principles, this also applies to betting on the exchange. The only real difference here is that Betfair traders tend to look for swings over a shorter period than traders in the financial markets.
Swing Trading puts into practice the most basic principle of Betfair trading: Back High, Lay Low (or Lay Low, Back High). Swing Traders are looking for a “swing” of odds to happen so that they can secure a guaranteed profit. For example:
If you ever need to work out the stake required to lock an equal profit for a trade, use Betting.com’s Hedging Calculator. Just remember that Betfair commission is applied per market winnings at the end of the event — not on individual bets.
There are many reasons that the odds swing. If you watch the inplay odds during a football match you’ll see fluctuations happening all the time. The largest swings occur after (or just before) a major event during the game — such as goals, red cards and penalties.
I’ll talk more on why swings occur.
Why Do Big Market Moves (Swings) Occur?
There are several general reasons why the odds drastically move. These are: changes in circumstances, bias, and lack of information in the market.
1. Changes in Circumstances
Take horse racing. The unpredictable weather in the UK and Ireland makes for lots of late changes to the “going”. The change in weather will favour some horses more than others. This creates large price shifts, meaning that whilst the odds on some horses will drastically fall, for others the odds will significantly rise.
The skill in swing trading is predicting this move early on so that your trades are well positioned. You can learn more on pre-race market movements from my post: What Causes Pre-Race Market Movements?
Think about Football — a sport with so much bias. I myself am probably a little biased towards Spurs (because they’re the best team, obviously).
You might for example determine — statistically or otherwise — that a football team is either over or underrated based on the odds for an upcoming fixture. If you think they’re underrated, then you could back this team before the game anticipating that the odds will (a) shorten before the match, or (b) the game will play out in such a way that the odds will plummet inplay. Thus, if you predict correctly then you will achieve a swing where you’re able to trade out of your bet at a profit.
I’ve written posts which suggest ways that you might improve your football betting selections without employing a full analysis:
- Best Tips For Premier League Football Betting
- Why Making Accurate Football Betting Predictions Is So Difficult
- Can You Earn From Mug Betting On Every Premier League Fixture?
3. Lack of Information
This is particularly true of illiquid or unformed betting markets. Think of obscure markets/sports like Bandy.
If there are few participants in the market then there’s a much higher chance that the prices are inaccurate. If the odds are too far in one direction then it presents an opportunity to Back or Lay an outcome, predicting that the odds will inevitably shift back in the opposite direction as more money (participants) enter the market at a later point and sharpen the prices. The Wisdom of Crowds Theory applied to the betting exchange sheds more light on this topic.
In summary, the odds are most accurate at the time the event starts. Learn more on this here:
How Long do Swing Traders Stay In the Market?
Swing traders usually prefer to sit for relatively long periods in the market. They take a long-term view and hold their positions — for several hours, overnight or ante post. Swing traders are looking for large price movements, typically employing a stop loss facility to cut their losses if the price moves against them.
For software offering stop-loss features take a look at the Betfair Trading section of this site.
To make a success of swing trading you can’t be too greedy. You have to decide what your exit price is and stick to it. If you continuously hold positions past your exit point, trying to squeeze a bit more profit from your trades, then you run the risk of losing a lot more.
Take a look at my post on The Traits & Mindset Of A Professional Gambler.
It’s Difficult To Consistently Predict “Big” Moves
To regularly make a success of swing trading, you really need to spot something that’s somehow bypassed the general public. This isn’t easy.
Imagine holding your pre-game football bets until inplay. It might have been a good bet at the time you placed it, but then comes a red card, a penalty, a jammy goal, or a bad injury. You can’t accurately predict when those events will happen. Unfortunately it’ll sometimes ruin your chances of achieving the swing you’ve been looking for.
Final Notes On Swing Trading
There is no out-of-the-box solution for finding profitable swing trades. You could however look into the Weight of Money, or start monitoring what factors you believe are influencing the odds. If you spot a pattern then you may be able to capitalise on that.
Just keep in mind that not all trends continue forever — take a look at my Mug Betting activity for evidence of that!