Betting Exchanges

Betting exchanges are a interesting new phenomenon in risk markets which has turned the conventional bookmaking and gambling business on its head. Betting exchanges are gaining credibility and influence all the time and with each month that passes seemingly another country legalises the complete, and it would seem that it is only a matter of time before the large exchanges are completely legalised and recognized worldwide.

Another great attribute of a betting exchange is that if you don’t like a price you can post a price of your own on the and then see if anyone one else is ready to ‘match’ you and thereby take your bet on. Put very simply, betting exchanges are a safe place where members of the betting public can exchange bets with each other incognito, at odds that they specify themselves. It seems that as betting exchanges are the way of the future, many companies have jumped on the band-wagon and have started new betting exchanges.

The Odds

Odds offered by betting exchanges on average are about 20% better than those offered by traditional bookmakers. When you compare odds at betting exchanges to odds at bookmakers, you should take the commission into account as you don’t pay commission at the bookmakers. There will still be occasions when a normal bookmaker will offer more attractive odds than those that are available on the exchanges. The odds you offer obviously need to be sensible in order to be matched, but if you are not satisfied with the current price being requested by other punters you can simply leave an ‘order’ in the exchange at your odds and hope that somebody eventually takes your offer. The attractiveness of using exchanges is there is no bookmaker, which means there is no edge built into the prices, which often results in significantly better value prices. Pro-gamblers work on thin margins, there are some that enjoy greater margins but they are the few, generally speaking most pro’s work to small margins and so a 20% increase in odds despite the commission which can be as high as 5% is a huge boon.

Betfair – No.1 Player

Betfair is the dominant player in the betting exchange market, with an estimated +85% market share by value. Betfair’s exchange boasts a high degree of liquidity, across an extensive range of sports betting markets, alongside a professional customer service operation and a fully incorporated phone and internet betting facility. Unlike an established bookie, Betfair has no vested interest in the outcome of an event and therefore their interests are 100% in line with those who oversee sport.

In-running (betting while a sport is being played) is one of the features that really makes betting exchanges like Betfair come alive. The phenomenal success enjoyed by Betfair and others in the last 18 months is testament to the appeal of the product to the betting population.

Sports Betting

Sports betting is concerned with predicting sports results, while using the conclusion of a particular sporting event to make a bet. Horse racing and soccer are the largest volume markets but tennis, cricket and other popular sports also supply a significant amount as well. As sports bettors become more informed gamblers, an increasing number of players will move to the betting exchanges. For sports betting there are over fifty different sports on the exchanges covering events from 122 different countries.

Trading On The Betting Exchanges

Trading is like any other profession, it takes time to learn and there are hurdles to overcome. And as financial exchanges have proven to be efficient mechanisms for trading shares, options, and other kinds of securities, so have the betting exchanges proven successful in the world of online gambling. The numbers of people betting from home utilising the talents of the internet, continues to grow at breakneck pace and one of the largest areas of growth in Britain is online trading, both in sports and other markets. Exchanges are particularly good for dealing with in-running events, where using trading techniques similar to those used in financial trading, or by spread bettors, you can secure in a guaranteed profit before the conclusion of an event.



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Whether your market is stocks and shares, horse racing, greyhounds or football, as traders we all share a subset of personality traits that enable us to be successful.

The unfortunate reality is that not everyone has the personality make-up required to be successful in this career.

Financial trading of any kind demands a certain type of personality and attitude that fulfill the following criteria.

A trader must be:

* Able to accept substantial losses without self loathing and judgment.

* Humble enough to accept the futility of attempting to fight market trends.

* Aggressive and assertive in making decisions and predictions and sticking to them.

* Able to understand, accept and follow strict rule and pattern based systems without self doubt or question.

* Able to accept, log and learn from mistakes in a logical manner.

* Able to take a long term, logical, assertive and decisive approach to their trade.

Obviously, personality traits are not easy to change.

The fundamentals of trading can to some extent be learned, and the rules can be followed, but the basic features of ones personality are either there or they are not.

The other important feature of trading that is often missing from what can only be described as “very poor” trading systems and manuals is the concept of trading profits.

What do we mean when we refer to turnover, capital and percent profit?

Percent profit on turnover is very different from percent turnover on capital.

The daily profit that you take from trading can be defined by the amount of money you win by making trades that move in the direction you predict, minus the money you lose by making trades that move against the direction you predict, minus the sales commission that you pay to the betting exchange operators, or the stockbroker who is acting on your behalf.

Part of the beauty of the Betfair Betting Exchange is that your capital can be recycled through the market several times a day so it can be seen that a ten percent profit on turnover can be infinitely bigger than a ten percent profit on capital.

The ideal scenario for a trader is being able to visualize instantly when a trade is about to go against them and work to a “stop loss” system that gets you out of a trade at a certain point once it has moved against you to the preset amount.

This can in part compensate for the very human tendency to wait and hope that the market turns around and somehow miraculously comes to your way of thinking.

Put another way, it removes mistakes made by human stubbornness where the evidence is decidedly clear that a trader has made an error.

I have talked in previous articles about volatility and the extremities that can be reached in horse races.

Starting prices can be defined as early morning steamers, yet a simple comment coming from the stable in the afternoon, a heavy downpour at lunchtime, a late change of jockey or one of a myriad of other factors can leave them pre race drifters.

Once the horses arrive in Tattersalls and start warming up, “going down”, this is when on course professionals and commentators get a really good look at them, and the serious trading begins.

It is essential to your trading that you accept that the market will move against you on occasions. Once this happens, it is essential that you get out of the trade at the preset stop loss.

Once your trading takes a pattern whereby you are leaving trades open in the market purely speculatively to see if the market will switch to your advantage then this is pure gambling and just as dangerous as any back to win or lay to lose strategy.

* What is the market spread?

* Why is it so important to setting a stop loss?

The best way to explain this is to return to a traditional equity scenario.

In stock market parlance, we are talking about the separation between the higher buy price and the lower sell price.

In order to make a successful trade the sell price has to move to such a degree that it is higher than the price at which you bought the stock before you can possibly make any profit at all.

This separation between buy and sell prices in the stock market is the Market Spread.

Similarly, Betfair operates around this separation between buy and sell prices.

The lay price, the price to lose, on Betfair is always higher than the back price, the price to win, so we can see that to develop a successful trade the back price has to move to a significant enough degree, that it is higher than the lay price you paid.

Or the reverse scenario has to occur. The lay price must fall to such an extent that it is below the back price that you paid in order that your trade can make a profit.

Due to higher liquidity, many traders preference is to back horses where the odds appear to be artificially high and hope that the market notices, and the SP for this horse begins to shorten or “steam” in.

As the SP steams in, it pulls the lay price down as the market is effectively saying the horse has an increased chance of winning, once the lay price is below the original price at which we backed this horse, we can lay it off to a guaranteed profit.

During your initial trading ventures you will become more experienced at spotting market trends and probability patterns in certain types of racing scenarios.

Once you start spotting trends at an early point in the sequence, then you are ready to act more quickly and more decisively and at this point your trading profits will increase rapidly.

This ability to successfully identify market indicators when combined with BetAngel Supercharting can set the premise for a very successful trading career.

As you become more experienced at spotting trends you will spot patterns earlier and act on them more quickly and more decisively.

One of the best features of Betfair that is often overlooked, is that you are NOT battling against the traditional bookmaker and their manufactured overround (profit margin).

You are battling against other punters.

Some will be more experienced than you and will take your money, others will be less experienced and you will be taking theirs.

Either way it’s free market capitalism in all its glory and sometimes sheer horror!

In part 2 we examine some detailed statistics relating to Betfair that are very salient.

We also discover more about the mystical ten percent who are living the high life on Betfair.



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