Betfair trading – Sports Trading for Beginners

Betfair trading – Sports Trading for Beginners


I’d like to introduce you to the world
of trading on bed fare but before I can do that
I need to introduce to you the more basic concepts that you see in play on
bit fare when you’re looking at a bit for markets such as we are Here I am go
to the options tab that you have up here and tick the following tick show profit
and loss and also tick display what if figure if you do this you can replicate
exactly what I’m about to do you need to save those settings by the way you can’t
see that because it’s off the end of the screen here if we look at this market
this is a Irish horse race that’s going off in about 20 minutes time I haven’t
picked on this for any particular reason just for demonstration purposes but if
we have a look at this we can see that king rama is the favorite in this
particular race king rama is priced at four point five so if somebody gave us a
tip or we fancied the name king rama or proud to be Irish and we thought it was
perhaps going to win this race then in a conventional betting terms what we would
do is go into the market we would say King Rama
we’ve just clicked on him and we’ve selected this price of ten point six and
then we’d put in how much money we want to bet and you can see here because I’ve
ticked the profit and loss calculations on Betfair it’s offered up the scenario
that would happen if king rama goes on to win you can see here of king rama
wins we win 36 pound if any of the others win then we would lose our stake
of 10 pound and you can see that reflected over here our odds 4.6 our
stake 10 pound our potential profit 36 pounds when we look at the market like
this one of the other options that we have available to us is rather than
saying we’re going to put 10 pound on King Rama because we think it’s going to
win as we can say I don’t think King Rama is going to win and therefore I can
lay King Rama now I can lay them at the current available price which is 4.7 M
or I could lay him at 4.6 in which case what would happen is my order would sit
at 4.6 as a lay order and wait in the market for somebody else
to get that matched you can see what’s happened here is we’ve effectively
inverted what we’ve just done for backing if King Rama goes on to win war
doings were offering up risk to the market we’re offering up 36 pound but if
King Rama doesn’t win then we will obviously win 10 pound now you’d have to
see you’d have to say rather in this particular race there are 13 runners so
we’ve got to try and pick the winner out of this if we’re backing and it’s
obviously going to be easier for laying to find a horse that’s probably likely
going to lose so that’s the concept of backing and laying you’re either
accepting risk in the market if let’s just repeat this for clarity if I back
him I will win 37 pounds that 4.7 represents my stake of 10 pound which
represents one and the 3.7 is the amount of money that I expect to get back for
correctly predicting that King Rama is going to win this event if I’m laying
that I’m effectively doing the opposite I’m just taking the other side of the
book so that is backing and lying when Bev head started everybody went to bed
fair because the pricing was better so everybody went on to bed fair and said
okay you know I’m going to put a tenner on here because I’ve got a much better
price on bed fair than I have elsewhere then when people realized what laying
was they suddenly thought well actually you know it’s much easier to lay Horsley
now let’s go down to this horse here he’s priced at 8.2 and that’s
significantly different from 4.8 and therefore and surely it’s going to be
easier to pick a loser than a winner so people started laying but when the
volume one exchanges started to rise dramatically people started to trade and
the concept of trading is exactly the same concept that you’ll see in any
other market whether it be the stock market your local flower seller when
you’re trading what you’re effectively doing is you’re looking to buy at one
price and sell at another and net the difference between the two and trading
on Betfair works exactly the same way apart from what you’re doing here is
you’re buying and selling effectively the risk on King Rama in order to do
this you need to be able to predict the movement in odds but that’s not a
prerequisite because you can basically just buy and sell very small amounts
apart and make money from there but let me show you the concepts of trading and
how trading makes money on Betfair you saw previously if we backed we would win
if King Rama went on to win and we would lose if anybody else went on to win and
the situation reversed when we decided to lay you can see here everything’s
green on the other horses in the race and off the bottom of the screen here
that you can’t see and read on King Rama so you’re basically saying King Rama is
going to win King Rama is not going to win however there’s no reason on Betfair
why you can’t actually place two orders in the market at the same time let’s see
what happens if we do this I’m going to back King Rama for five so I’m going to
lay him at 5.10 dear we have a problem here you can see if I did that well
that’s very clever it actually probably isn’t because what we’re doing is we’re
backing at one price and were laying in another and if King Rama goes on to win
we will actually lose money that doesn’t make much sense but watch what happens
if we adjust the lay price to underneath the value on the back price Betfair
always stops you from doing this initially so let’s let’s do this the
right way around let’s say I lay at five if I lay at the current back price and
back at the current lay price you watch what happens to your P&L there you go
all of a sudden if you get both of these orders managed you will make a pound on
King Rama so your upside potential is one pound and your downside potential is
well let’s have a look zero so you can see here by laying at a lower price than
that at which you back what you’re actually doing you can see how this
works you can see our liability our potential liability here is forty pound
but our potential profit is 41 there’s a difference of a pound therefore we will
net the difference between the two now of course the risk that you’ve got here
is that one or another of these orders does not match so obviously the skill in
trading is getting yourself to be in the right position to take advantage of any
price movement you can see in the brief time that I’ve been
and chatting about trading here you can see the prices move to four point six
and four point seven so if you placed an order in the market here our lay order
would have been matched but our backorder wouldn’t have been and as a
consequence this is what your P&L would look like you’d have the risk of losing
forty pound on King Rama and so the essence of trading is putting two orders
in the market at the same time but allowing them to go into the market at
slightly different prices where the skill in trading lies is in actually
getting both these orders matched because you can see here if we get both
these orders matched we’ve got no liability on the race we do actually
have the potential for a one-pound risk-free profit on King Rama if he goes
on to win

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