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Profit on a football match before it even starts

How would you like to win hundreds or even thousands of pounds by betting on a football match even before the match has started and regardless of who goes on to win?

This betting strategy is not your traditional type of betting, it’s a Betfair trading strategy that allows you to profit even before a ball has been kicked in a football match, regardless of who goes on to win that actual match!

Betfair football trading – Team news

This Betfair trading strategy is trading team news, there are many advantages to trading team news. Because it’s pre-off it’s easy to manage your risk as you can frame your upside and downside. In short you don’t have a freak goal bombing your potential profit.

I’ve got some lovely examples for you here from matches that had taken place over the last year or so. This blog will talk you through these examples so that you can understand exactly what your objective is, how you would go about it and how each of these examples is slightly different.

When in the year is the best opportunity to profit?

The time of year has an important impact on this particular strategy as we have this crazy period towards the end of the year in the domestic football season in the UK. Really this period starts picking up around mid-December due after teams begin playing in the European Champions League in early December. As we head towards the Christmas period, we get a very congested period of football matches where teams may be playing quite a large number of matches quite frequently.

Now, the problem we’ve got with that it that as teams get paid an awful lot to compete in the Premier League. So even if you’ve just qualified to play in the Premier League and have been promoted from a lower division, you’re probably going to get about £130 million worth of revenue.

The top teams obviously get more because they get more TV coverage and prize money, but it’s worth a huge amount of money.

What generally tends to happen around this time of year is when there’s a large number of fixtures close together the managers don’t want all of that same players out all of the time. So if the fixture list offers that opportunity or sometimes even if it doesn’t, they will rotate the squad to avoid injuries.

But even then, some managers don’t have the squads to be able to rotate much, so they put players out who can get injured and therefore it has an immediate impact on a fixture that’s about to happen. If odds go up a long way in advance it is possible that those odds are then going to shift and change according to what team is likely to be put out and what injuries within the squad at that particular moment in time.

Case Study 1: Liverpool v Everton – catching it early…

So our journey begins at the beginning of December when Liverpool were announced to play Everton in the FA Cup third round.

When that was announced, the market was put up on the Betfair betting exchange and I had a quick look at the market. When I saw that it was priced at 1.45 I immediately thought, well, this has to be worth a lay at 1.45.

So when you’re laying, you’re betting against something happening. By laying Liverpool at 1.45 I thought this was an excellent opportunity.

Had I gone mad? Of course, Liverpool are going to win against Everton at home! Liverpool had great form at that moment compared to Everton’s form

What I am really saying here was that this is a great trading position for me. By laying Liverpool at 1.45 it means as we get nearer to that particular date, 1.45 to beat Everton is most likely the price that you’d expect, maybe even be a little bit shorter in terms of the odds that were available.

I thought a lot was going to change by the time we actually got to the match, which was going to be played at the beginning of January in roughly about a month’s time.

Here is a bit of a long term trade here, but there were opportunities to profit from this all the way through to the start of the match.

So what we’ll do is we’ll park that for the moment and we will talk about other things that happened in between.

Case Study 2: West Ham v Leicester – watch who is playing…

The premier league 2020 this December also looks to be busy this year

As we go into that busy Christmas period, it gets pretty chaotic. There’s so many matches going on, so many different fixtures so its easy to understand that squads are going to be stretched. It’s going to be tough to really get things right at this particular moment in time. You have to think about whether you want a full strength team against somebody that’s at the bottom of the league, or do you save a few players back so they can play in a couple of days time in another more important match?

So lets look at a match played between West Ham and Leicester. When this market opened, Leicester were odds of 2 to beat West Ham. West Ham weren’t playing to their top form and Leicester was playing very well, meaning both teams were at opposite ends of the Premier League table.

Now, the interesting thing that happened here was the manager of Leicester, Brendan Rodgers, basically decided that he was going to rest some players. His view was that he would be able to beat this West Ham team even if they took out some of the key players within the Leicester team.

So when it actually came to the match itself, he did rest some players and in fact, he rested nine!

Now this was a bit of a surprise to the market. Even I didn’t figure out that he was going to rest!

Swapping out 9 of 11 players is a very significant change that you would expect to see. So as a consequence, the price absolutely rocked out at odds of 2. The market was saying that list had a 50% chance of winning, but because they had removed or changed over nine of their players, the odds absolutely shot out to reflect what the new probability of winning would be.

On in this particular occasion, the odds went out to roughly 3 like shown in the graphic below.

Basically the odds had shifted 17%, meaning the market was marking down Leicester’s chance by about 70%, given the wide number of team changes. That was a very big, significant move that happened over a very short period of time. Everybody was expecting a few changes – just not nine players, so the market had to respond as and in consequence of that.

So what money could you have made from this?

So if you’d laid Leicester at 2.00 with £100 and then backed them at 3.00 with £100 you’d roughly make £100 profit. Meaning you would have made back your entire stake on that particular trade.

Here you can see that there is a lot of potential there.

Case Study 3: Liverpool v Wolverhampton – Hectic Christmas fixtures can change the market

But if we look again over this particular period of time, bringing Liverpool back into the mix, Liverpool were scheduled to play wolves and a problem that wolves had is that they had just played Manchester City and they had won. So they’d gifted Liverpool a further lead in the title championship and then, lo and behold, they were actually playing Liverpool themselves away a few days later.

source: [x]

If you follow the press and you’re into football, listening and reading everything that comes up, you don’t have to sit there every day going through every single article. Instead you’ll pick up on stuff as it happens.

The Wolves manager was basically saying how ridiculous the whole schedule was and that it was almost inevitable that he was going to have to rest some players for the Liverpool match.

So with laser focus, I basically sat there with Bet Angel fired up and my finger over the lay button to see exactly what team wolves would actually put out.

As soon as I got information on the team, which I would often get from Twitter (side note: Twitter is generally the first place news like this appears) then I just hit the button again.

Now the Wolves put out a much weaker side than was expected and the price just popped up. So we’ve gone from this initial trade of Leicester playing West Ham and that huge move that we saw within the market there, to a much shorter time trade here.

I was basically waiting specifically for exactly what team would be put out. So when I knew that, I just went into the market and put a reasonable sum of money and performed that trade.

In fact, once hearing this information and my memory serves me correctly, I backed Liverpool and I laid wolves. I backed Liverpool because I was expecting the price of wolves to go out and therefore the price of Liverpool to come in. So it was just a quick opportunity to basically go into the market and grab a few ticks. So this trade was only, perhaps about seven ticks should on the ladder below.

You can see the move on the West Ham and Leicester match was absolutely massive. We’re looking at fundamentally the same thing from a slightly different angle.

The bigger the change in team sheet, the bigger the move that you’re going to get. Even small ones, can present opportunities, but you can have to use a bit more money.

You’ll see, on this particular occasion, I used a fair amount of money, but this is somewhat deceptive.

When you’re actively trading, you may not use all of that money in one go:

You may…

1. put one trade in and take it out and put another one in and take it out

or

2. just put it all in one go

So when you see large amounts in matched bets, it doesn’t necessarily mean that it’s just one trade. This is a fact you should always bear in mind as you can trade in a whole number of different ways.

Fundamentally, what we’re doing here back in Liverpool at a higher price, then laying them at a lower price and that would be a profit for us!

Now Liverpool did go on to win that match, although rather controversially, a VAR stepped in and basically disallowed a wolves equaliser, which would have made a bit of difference to the championship race.

Anyhow, we have two examples that show a very long term trade and an example showing a very short term trade.

Case Study 1: Liverpool v Everton – returning closer to kick off to more profit

Now if we return to the Liverpool v Everton match, as I mentioned at the start, we were looking at odds of about 1.45 when the fixture was announced which we looked back all the way in early December. When we started there wasn’t a huge amount of money within the market, but as the market developed and matured, then other people began to cotton on to the fact that we could be in a situation where the team was going to be a fair bit weaker than we would imagine.

So we saw a little bit of a drift from 1.45 out to 1.70. Then when we actually get to the day of the match, the price had drifted a little bit further to 2.25.

Showing the change of the price

The interesting thing about this was that it was impacted by two team sheets. This is why I’ve illustrated this, because it’s over a much longer time period, but also the actual trade itself had some sort of variation within it on the actual day itself.

Typically, you would wait until the team sheet is announced, which is about an hour beforehand, then it’s a case of who’s the fastest on the bottom to be able to get the trade in. Sometimes if the team is radically different, the market will take a little bit of time to discount the information. But if the team is a little bit different, then you have to be quick and jump in to take advantage of it at that particular moment in time.

Therefore, on the day of the actual match itself, we got to 2.25 and the interesting thing happened in this particular market…

You see the under 23 team were playing on the that same day and there were rumours swirling around that Liverpool wasn’t going to put out their full team at all – they were just going to stick out a bunch of youngsters.

The Liverpool under 23 team on that day

So the interesting thing about this particular trade is that on this day when the under 23 team was known the market certainly reacted to that. You see through a process of elimination, if they’re not playing in the under 23 team, then they’re probably going to be in the first team.

Now this was one of those rare situations where you actually get something like a double bubble. We were able to get in a low price very early on, the price started to adjust to the realistic expectation of a team that was likely to put out.

See, with all of the news coming from the Liverpool camp that they were going to rest a lot of players alongside knowing that we had the under 23 team playing on the same day, you sort of get a look in to what the team sheet could be. If they’re not in the under twenty three, then may have made it in to the first team!

Upon that news being announced, the price shot out and then eventually the full team sheet comes out where people can confirm what they know. This makes the prices peak even more, moving out towards 4. Remarkably looking back at this trade to where we started, the market opened at 1.45 where it was generally trading around that price before gradually drifting out.

But imagine if you laid Liverpool at 1.50, going slightly above where the market opened, and then you traded out at 4, you would have made about £1600 fully hedged across the entire market.

So the £1000 would have turned into over £1600 through the course of that entire trade!

See the interesting thing is, whenever you look at this and I’m giving you the best case scenario here, if you had spotted it early, got in early and you had a £1K to use, that would be your best return.

However, all the way through this you can see there were various points where there were opportunities to make money. Even when the team she was announced, the market just surged away. You could have probably even backed it at 4 and waited for the market to settle back down because that even looked a little bit over the top. If you were trading at live you would have seen the market run away very quickly and there seemed to be a whiff of panic within the market which then gradually settled down.

Whichever way you traded it, there were just opportunities all over this market! Whether you got in at the beginning, got in on the under 23 news, got in on the drift that was occurring as people began to realise what the situation was or on the actual release of the team sheet, you could have done a lot of damage there.

So how often do these kind of opportunities arrive?

Liverpool were the Premier League Champion ‘s for 2019/2020

These opportunities do come around quite frequently and they tend to come about when there are a lot of injuries or when there’s a fixture congestion of some sort. You may also catch them during cup competitions, when teams are less likely to field their stronger side. There are opportunities like this plastered all over the market!

The way that we exploit them is ahead of any particular team news that will put a position in the market, most of the examples I’ve given you here are laying it at a certain price and then backing it at a higher price.

You can even get Bet Angel to monitor the markets for you as well, and that will tell you what type of activity is going on there. For example, when you look at some of these markets and the price starts to move, that will necessarily drag a lot of money through the market and Bet Angel can spot that and alert you even if you’re not looking at that particular market.

Check out the forum linked here for more information on how Bet Angel can help alert you: https://www.betangel.com/forum/viewtopic.php?t=16754

These are fairly simple trades to understand and to gather how they were created. Even though it is very simple to understand, what you’re looking for it is ultimately very profitable. There’s no better feeling to have made a profit (and hopefully a substantial one!) before the match has even kicked off.

That’s one of the absolute beauties of trading on Betfair which is something that you just can’t do with a traditional bookmaker. You’re just stuck with whatever price you get, but by using this particular method and keeping an eye on how the markets work, you’re presented with some absolutely fantastic opportunities.

I hope this is helpful as we begin to enter the busy football period in the UK and let me know below if you have achieved any great trade pre-match in the past!

The post Profit on a football match before it even starts appeared first on Betfair trading blog | Expert advice from Professional Betfair trade.

Betfair account closed, suspended or restricted?

When you open a Betfair betting exchange account, one of the great advantages of betting on the Betfair exchange is that they won’t close your account if you are a winner. I’m a long term winner over a large number of years and can confirm that this is a perfectly acceptable outcome on a betting exchange. Phew!

But there are reasons why your account may be legitimately restricted. Unfortunately, most of the Betfair help desk staff won’t understand these issues or discuss them properly on the live chat. So I thought it was worth documenting them for anybody affected.

If you find yourself locked out of your Betfair account, have a read of this blog post, but also visit our forum where you can get help from people who can immediately advise you. If you are worried about your account being restricted or closed, reading the following advice should re-assure you about what you should do to avoid this scenario.

So let us find out the reasons why your account may be restricted and what you can do to avoid it or get your account re-opened or reinstated.

How do I know my account is closed or suspended?

The first you may know that your account has been suspended or closed is via an email or when you try to login with your username and password to your account. At this point, you may be notified that you have either done something wrong, or something is wrong with your account.

Probably your first port of call will be with Betfair customer service and this will resolve certain issues concerning the suspension of user accounts, but not all. If your account suspension is towards the bottom of this list, your standard support person will only get a message and not be able to remedy your issue. You will hit a brick wall.

Therefore, we will list not only the most common reasons for suspension, but also the paths you can follow to remedy them. Especially when you get stuck at Betfair customer services.

Betfair account suspension – Easy to solve

Account pending password change

If you get this message when you try to log into your Betfair account via some API software, this means that your account has been locked because of a failed login. This is easily resolved by attempting to log into your account directly on the Betfair web site.

If you try this and it fails, a password recovery process will start. This will use the information you have previously supplied in your account. If that fails, you would then need to contact Betfair customer services to re-validate.

Self-Exclusion

In some cases, you may have chosen to have a period of temporary or permanent self-exclusion. For the temporary self-exclusion, it is possible to have the account reactivated by contacting Betfair customer service providers. However, if it is a permanent self-exclusion, it is not possible to have the account reactivated. This is permanent and will not be reversed under any circumstances.

If one gambling company merges with another, then it’s not impossible they will try to combine operations. If you have excluded yourself from a connected company, you may find the database matches your exclusion as well and your account defaults to exclusion.

Account verfication

One of the reasons why a Betfair account may be shut down temporarily is that there might be some issues verifying the account. There is an entire section on the Betfair account page when you log in which tells you exactly how to verify your account and what is required to do so. If you are stuck, the Betfair help desk can get involved to nudge the process along.

If you fail to verify your account you will be unable to withdraw any funds and your account is likely to be suspended without notice. So make sure you make the effort to get verified. It’s a pretty simple process and should be the first thing you do when you sign up.

Betfair account suspension – Complex issues

When we talk about more complex issues, these are issues where a quick chat to Betfair customer support is unlikely to resolve your problems and you will end up talking to Betfair at a much more elevated level.

Some are a bit more complex than others, but some there is a clear and obvious process to get the account reviewed.

The account owner and user are different

This is linked to the ‘account verification’ process. If there is a situation where there is ‘reasonable’ suspicion that the owner of the account is not the same as the person running or using the account. Betfair will suspend the account and start an investigation.

There are many reasons why this is clamped down on, one will follow this paragraph. But this is incorporated in their terms and conditions so be aware that you could be in technical breach of terms if this is what you are doing.

Premium Charge Avoidance

This is linked to the previous reason. You may think that a ‘neat’ way to avoid the Betfair premium charge is to simply trade on somebody else’s account. This is what some people ‘claim’ to do. But from personal experience, I can tell you that if you are a moderately sized trader then Betfair with obviously see your profits drop dramatically, only for some random person to suddenly become a brilliant trader. It’s a bit of a dead giveaway that you are using somebody else’s account to avoid paying premium charges.

Your account will be suspended pending an investigation and you will likely forfeit your balance to make up any unpaid premium charge. You have been warned, read the thread on the forum if you want to see this happen in real life.

There is no process to appeal this and you will contacted, probably by the pricing team, at Betfair.

Suspected Money Laundering

Betfair and other betting companies are legally obliged by the governemnt and regulators to be red hot on money laundering.

Most bookmakers have very advanced fraud preventions systems which are also geared to spot unusual activity. So if you are thinking of swapping money between accounts by taking advantage of thin markets, watch out! It doesn’t mean you will definitely see your account shut, but it will almost certainly get flagged in a few milliseconds.

You may also send up a flag if you deposit and withdraw money too many times in a short while and other such similar activities. Account reviews in these sorts of circumstances can be long-winded and tough to prove, but if you are innocent then that will shine through.

However it can take a lot of effort to prove exactly what you were doing, so it’s better to avoid any sort of activity that could fall into that trap. But all genuine cases get resolved in my experience.

Account closed due to a commerical profile usage

This issue requires a more in-depth explanation as it can occur due to overuse of practice mode. Why will be explained towards the end of this section. But let us explain what a ‘commerical usage profile’ is.

Betfair considers it’s data and your bets, propertiety information owned by them and they want to protect this. Betfair doesn’t want to share its (your) pricing of its markets to any competitors, as this may confer a business advantage. After all, betting exchange markets are more efficient and often better priced than a traditional bookmaker.

In days gone by, bookmakers would price their own markets. But in order to not get caught by people arbing, or just a gamble in general. All prices in the industry tend to converge and betting exchanges are a key part of that mix. You can bet more on an exchange, so it tends to lead the price action.

Betfair charges commercial organisations large fees to access its data. Therefore if you create an account and just read data from markets and never place a bet, it will look suspiciously like you are just harvesting or relaying data. Therefore your account will be limited so that it fails to function correctly.

This can happen if you use Bet Angel in a practice mode and never place a bet. Betfair has no idea you are in practice mode, so as far as they are concerned you are probably harvesting data. Restricted data or refreshing also occurs if you have no funds in your account.

It’s easy to avoid falling into this trap, as all you need to do is fund your account so you are positively indentified and then make sure you place real bets or Betfair trades on a regular basis.

If your account is restricted in this manner check out this forum thread for how to appeal a restriction – https://forum.betangel.com/viewtopic.php?t=15692

Betfair Account closed on business grounds

This problem is very similar to the previous issue but is slightly more nuanced as it’s more based around your activity against the amount it can generate for Betfair.

Like all businesses, Betfair is, err… a business and if you hammer the exchange, like refreshing it frequently and placing few bets there is little incentive for Betfair to service your account. If they allowed people to hammer the exchange without any revenue, losses would soon rack up and they would go out of business. Nobody wants that!

Before you panic, Betfair don’t close accounts like this lightly, they are only looking at real outliers.

For example, we were recently following a case of a user who accidentally racked up millions of refreshes on top of their usual activity and had his account suspended. But on review, it was fairly obvious what had happened and all was well and good again.

Using streaming on Bet Angel will significantly minimise any chance of this happening. Also using the many features within Bet Angel’s Guardian tool will help you manage your activity and market searching in a carefully controlled manner. Curiously, the Betfair website is much less efficient and more likely, when used with software, to generate a lot of activity while not immediately generating any revenue for Betfair.

The appeal process to this is the same as listed here.

Summary

Betting exchanges are the only place in the betting world where you account will not be closed if you are a consistent winner. I opened my account 20 years ago, have been very succesful and still enjoy the many advantages of betting exchanges.

However, there are a number of regulatory hurdles that all betting companies have to adhere to so make sure you are aware of this and fullfil your obligation to be compliant.

Betfair is also a business, and while they can be a bit heavy-handed and clumsy at times, our experience is if you have your account accidentally closed or limited, then it’s very likely this will be reversed. Our discussions with them indicate the number of accounts affected is very small in comparison to the total user base and truly errant closures are often reversed.

But to achieve that, you may need to go beyond the helpdesk as they will not be aware or have the authority to look any deeper.

The post Betfair account closed, suspended or restricted? appeared first on Betfair trading blog | Expert advice from Professional Betfair trade.

Bet Angel – Betfair trading software – How to buy

Buying a serial number

If you wish to use Bet Angel, you will need to purchase a serial number. Buying a serial number means that when you next log into Bet Angel you can register the serial number to extend your access to either Bet Angel – Trader edition or Bet Angel – Professional.

Registering a serial number

Once you have a serial number, simply start up Bet Angel and register the serial number during the log in process. If you have validated your email on Bet Angel, it will automatically look up and apply any serial numbers that are within one month of your renewal date.

If you are within one month of renewing your subscription to Bet Angel, registering a serial number will simply add it to your existing term, meaning that you do not have to wait for your existing term to expire.

How to purchase a serial number

Purchasing a serial number to register on Bet Angel is easy, just click on the links below and complete the purchase process and you will be sent a serial number.

Bet Angel costs much less than you would think, with Bet Angel Trader starting at only £5 per month and Bet Angel Professional £12.50 a month.

Bet Angel Professional

5 days – BUY NOW – 99p per day

60 days – BUY NOW – £20 per month

365 days – BUY NOW – £12.50 per month

Bet Angel Trader

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The post Bet Angel – Betfair trading software – How to buy appeared first on Betfair trading blog | Expert advice from Professional Betfair trade.

Where does profit come from when Betfair trading?

People often ask me, where does the profit come from when you’re trading? How does it magically appear, who is actually losing if I’m winning?

To answer that question. I’m going to follow a trade I filmed a few years ago. I came across it recently and it is an excellent example of this. This trade illustrates in the way profits are achieved when you are Betfair trading and I hope this can help you understand a little better, as I often get questions about the ins and outs of how profits are generated.

Where do you start?

Above is the chart of the favourite on this particular race.

The chart is showing you that the favourite started at 3.50 when the market opened early. You see this changed significantly as it got closer to the start of the race which is shown on the graph as about two-thirds of the way across the chart, which would have been the last 10 or 15 minutes before the race begins.

So up until the last 10 to 15 minutes, effectively everybody thought this horse had a 1 in 3 chance of winning. If you want to calculate out the probabilities, you have a number of ways of doing that. I’ll go through the calculation to show you how the graph and the odds correlate to the chance of winning which will help you reinforce what I am about to explain.

So if the odds on the horse are at 3 and we calculate 1 divided by 3. By doing that we get: –

1 ➗ 3 = 0.333333

Here you can see it comes up with 0.33 chance so if we convert that to a percentage, it’s saying that the horse has a 33% chance of winning the race.

So when the price was backed in the early market, which went down to 3. Everybody said, the chance of this horse winning is 33%.

A strange shift in market…

But then you can see we had this dramatic drift in the market!

I was watching this market and the activity of this course and there wasn’t anything particularly stunning that caused the price in this horse to go out dramatically. When you see things like this, you sort of think, well, that’s a bit crazy!

Green arrow showing this dramatic drift

So if we if we do the same calculation with the new price:

1 ➗ 5 = 0.2

You can see it said there was only 0.2 or a 20% (if you multiply that by 100 to get the %) chance of this horse winning the race. Basically the odds of this horse or the chance of this horse winning this race shifted by 13.3% in this very short period of time.

For this to happen, you could have possibly thought that something mysterious had happened to the horse, it almost doesn’t make any sense!

But actually, this presents you with two opportunities in terms of where the market is.

Now for you to lay this horse at 3.00, a liability would have been significantly lower than if we laid this horse at 5.00. In fact, now there’s a massive value gap of 13.3%.

It makes no sense that the market should go, ‘oh, this horse has got quite a good chance. Wait, no, it doesn’t. Well, actually, yes!’ It just doesn’t make any sense whatsoever. One of these prices has to be wrong!

How is the chart showing?

When looking at this chart it is easy to conclude that there must have been something wrong with the market’s judgement and it could have been driven by any number of factors. You can see their indecisiveness through the trough in the chart (which the green arrow points to) or the peak (which the pink arrow points to).

The fact is, one of these two things (the trough or the peak) has to be wrong. By trading this rampant indecision you could make a profit, either from trying to pick off value at either extreme or by trading it to profit regardless of who goes on to win the race.

Profting regardless of who goes on to win is, obviously, a fantastic benefit of betting exchanges!

So how do we take advantage of this?

Let’s say you saw the price at 3 and you thought, well, I’m not going to back it at 3.00, but I could back it at 5.00. You can actually put your order in the market and wait for the price to reach 5.00 where it will get taken and you would have got fantastic value. You will make money in the long term if you can back something at 5.00 that should be available at 3.00.

But in fact, you could have traded out of that initial position at some point in the market and you could have still guaranteed yourself a profit, even if you weren’t looking for a particular strategy, making a nice trade. However, what I’m trying to illustrate to you here is that one of these two points definitely has to have been wrong.

You can see that there were a number of opportunities gere to be able to actively trade that or to get value from your bet. This is something you can’t do that with a traditional bookmaker and something you can only really do on a betting exchange.

When you look at this, it also explains where the money comes from.

Let us say that there was £100,000 bet on this horse – we will simplify this dramatically – but let’s say £50,000 was bet at 3 and £50,000 was bet at 5, then obviously there’s a 13% difference of £50,000.

So let’s do the Math:

£50,000 ✖ 0.13 = £6,500

So we’ve got a £6,500 differential between those two points, effectively you’re saying that there’s been a 13% shift in the book at that particular point in time.

How does this show where profit comes from?

Now this is fundamentally where the profit comes from when you’re trading, the profit comes from other people’s indecision, people’s inability to understand what price they should be backing out, or perhaps they’ve taken a worse price than they could have got a few minutes later.

The wonderful thing about pursuing a strategy that exploits this is that whether you were backing or laying, you would have backed up at the peak or laid at the trough, you would have got a much better price than the average price over the course of this entire market.

If you were trading this market, this would have been a nice opportunity for you.

It’s worth noting that it’s basically impossible for a market to do two things:

  1. It’s impossible for the price of a horse to drift endlessly in a market…
  2. It’s impossible for the price supposed to come in endlessly…

Now that’s where the trading opportunity comes from, because very often it will revert to a more sensible price. So whatever the reason behind the drift and then the dramatic collapse back in price, that’s where opportunity comes from.

If you’re a traditional backer in the market, you can always ask for price that doesn’t exist because you will get matched at that higher price. If you’re a layer, you’ve got the opportunity to lay at low prices even if the price is coming in dramatically, you’ll probably get an opportunity to grab a decent price.

Additionally, if you’re trading, the indecision within this market presents the opportunity. That’s where the money is in the market.

Where is the best place to get a profit?

The way I would summarise trading is you’re effectively selling uncertainty and volatility and this is important to remember.

The winner is on the peak?

The perfect point in this market would have been to get in at the top of the peak, but it didn’t matter if you didn’t get in there, you could have got in at some other point within the market and waited for it to come back down to more reasonable odds.

Why would you do that?

We know that the market can’t permanently go in one direction or the other and that the market tends to meander around. If people were laying this horse at 3 was that was fantastic, but laying it at 5 isn’t such a good decision. So eventually people will stop laying it and the price will reverse.

Relying on indecisiveness for profit

The same situation occurs on backers because if they’re backing it at 5 then that’s a great price. Obviously, as the price comes down (shown through the pink arrow), then backers will start to weaken within the market when they realise that they’re just not getting as good a price as perhaps they had wished for.

Looking through those scenarios and explaining where the money comes from when you’re trading it, should have provided you with a better understanding as to where profit comes from.

Fundamentally, it’s through volatility that profits are made. People either back or lay at prices that contrast dramatically from the average price, allowing for traders to find these great opportunities for profit.

It’s here where the money comes from if you’ve made a profit while trading and better than that. It’s something you can quantify.

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