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Value betting and Betfair trading

A long time ago I started modelling sports betting markets. The key question I wanted to answer was are bookmaker odds created. I knew if I could indentify if their offered odds were wrong then I could get en edge over the bookmaker. Alas, I didn’t know bookmaking that well so the idea faded, until betting exchanges came along and I could bet at odds that I knew were value!

When I first started on Betfair, I started by arbing. But soon I brcame one of the first people to ‘discover’ Betfair trading and the rest, as they say, is history.

Value betting was off the agenda for a long period of time. This was because, in the early days, spreads were wide and fill rate poor. It was difficult to get the price you wanted on the exchange. You also couldn’t get much on, even if you found a price you wanted.

In every problem there is an opportuntity

But several things changed that for me. Matched betting volumes rose over time, the books became much tighter and prices more variable. So this opened up the door to finding value bets.

When Betfair introduced the premium charge, I also suddenly had an incentive to be less efficient. I know that sounds odd, but part of the premium charge is based on the commission you generate, so generating more commission is helpful in terms of mitigating it.

I learnt how to find value courtesy of Warren Buffett. That was in financial markets but the same sort of (modified) rules apply in sports markets. Namely, that price is not value, the market is more variable than the return and human nature is unchanging. If you combine these simple elements, you can find errors in pretty much any market.

I now run multiple trading and betting strategies in a variety of betting markets. You have to seperate the strategies as the two just don’t mix because they have very different payoffs and risk. The difference between betting and trading is very easy to define. When trading your outcome is result independent and when value betting, your result is outcome dependant.

Value is tricky to find though, as the market is pretty efficient.

So finding a value bet it is tough. But Trading, accidentally, taught me where I could find value. You are trying to catch the best moments in a market and where it is likely to turn when trading. So this led me into value territory as I was able to ‘beat the line’ repeatably.

What does value look like? On average…

I’ll often make suggestions around value when I have been able to identify value bets. When I produce football ratings I point to matches that will have above or below value median results. What I am trying to say is this looks value, that is value, this isn’t. But what does value look like?

One thing it is not, is a tip. I’ll liberally scatter the words ‘on average’ into many posts as that is what value looks like.

All sports and most events show a great deal of variability and that means that it’s nigh on impossible to get things right all the time. Therefore when you see something from me, I’m not saying back or lay this item. I am saying there is value in that.

When I say that, what I am saying is that I think the chances of winning of that selection are out of kilter with my model. On horse racing it has higher odds or too little based on the true odds I have indentified for that market. I’ve spent years learning how to calculate the odds, so can’t explain in one tweet but that’s the general message.

I’ve learnt it’s really tough for people to fully understand that. When you say something is value it doesn’t mean it will win, or lose if you are laying it. You are just saying it is mispriced and will deliver a long term profit if you do it enough.

I’ve lost count of the number of times I’ve hinted that something is a value bet or trade only for some smartarse to see it fail and quote “Well that went well”. But the fact that people don’t understand value is probably half the reason it still exists.

So when I make recommendations or give ratings, be sure to interpret it correctly.

What I am saying when I post up information is that, based upon my analysis, it looks value or look for value here. I know from experience that I can generally find it. But it doesn’t mean that thing will win or lose, I can’t control that. But ultimately looking for value is how you end up with a successful betting strategy.

To understand how value manifests itself over time take a look at the following chart.

This chart represents a value betting strategy. I just plucked this out because I thought it was a good example. I run multiple strategies on different sports and markets and they all look a bit different. There isn’t really a standard ‘look’ to a chart.

I have an edge, but this graph shows you how variable the results are. As you can see, the road is bumpy but value plays out over the very long term.

Within that mix, you can get long runs where it’s very positive or very negative, but over the long term, you should see your bank produce higher lows during each draw-down. That’s how you know you are achieving value. Once you are certain, you start looking at how scalable the strategy is.

When you are doing well with a result dependent strategy, it’s easy to think you are a god and when you are doing badly it’s easy to think you are an idiot. This is one key reason that people have trouble replicating or even creating successful strategies.

The psychology,  pressure and anxieties just get too much. You almost have to not care about the result. But, of course, that’s really hard to do especially when using real money. It’s even harder if you are reliant on that income.

I’ve learnt to be very level headed, even when things are going fantastically well. That is because I know that will help me cope when things are not going so well. Because of this, an exceptional loss doesn’t feel so bad and a big win feels like it’s just pre-paying a potential loss. All I care about is that I am up at the end of the cycle.

Rather than measure any value-based strategy on a particular day, week or month. You have to measure over a much longer period.

I tend to measure my return by stakes used, that way you can track it even when you grow your stake. If you measure this as a percentage you will see if you are indeed beating the long term as this percentage will stabilise and moderate in your favour. If it starts to regress in percentage terms to the mean, then it’s quite likely you have no edge.

You can see from the dashed red line that the trend is definitely upward. But can also see some of the wild swings in fortune.

Ultimatley I can’t control that, so I don’t fret on it or congratulate myself either. I just know that’s expected behaviour. All I can do is focus relentlessly on looking for opportunities.

Why a value, outcome dependent, P&L can be misleading

Now and again I’ll post a P&L of a value strategy, but it’s important to understand what you are looking at.

You have good and bad days and now and again you go on a nice little run where you get a decent total. But in reality, any total you get, your long term yield is only going to be measured as a percentage of that. On the flip side, a day of full-blooded losses isn’t to count as losses either. As long as you have an edge you keep plugging away and let everything come out in the wash.

The most I have ever ‘earned’ from a value strategy was nearly £30,000 in one day. But of course, I never actually earned this in reality, just a percentage of that. When you have been going as long as I have, you realise that you are going to catch the odd outlier.

On that day I bet on many markets and didn’t lose a single one. Even with the best selection criteria, that’s going to be very rare! But having a P&L in the thousands in a day isn’t that rare, it’s expected. You sort of ‘bank’ that in your mind for days that are negative.

Value Betting versus Betfair trading

If you follow a betting strategy then you will find you get large swings in your P&L, it’s a sure sign that your outcome is result dependent. I may make money on any one day when betting but it’s highly variable. Over one week I’d like to make something and over one month I’d expect to be positive. Over one year you should almost certainly be positive unless you have been very unlucky.

When you are Betfair trading large swings in your P&L shouldn’t be the case. Trading is all about opening a position, closing a position, maybe repeating that process; but ultimately hedging the position for a result means you win whatever the result. As a result, you would expect a trading strategy to produce a smooth upwards sloping line and be devoid of large swings in the P&L.

That is exactly what you see on the next graph which plots one strategy I have been running for just over two years. Most of my trading strategies look similar as I am aiming to win slightly more than I lose with a half-decent strike rate. On this particular chart, you can see how a tweak in the strategy has accelerated the curve fairly recently.

When Betfair trading, I go into each day expecting to profit. I can’t guarantee it, but I expect it.

Because of the number of markets I trade and how I trade them I would be really unlucky to lose over the course of a week.But underlying those facts is that when you are trading you are effectively profiting from the variability that you see when outright betting. You profit from the thing that is the very nemesis of your betting strategy.

Therefore you conclude that by betting and trading, you can have your cake and eat it!

The post Value betting and Betfair trading appeared first on Betfair trading blog | Expert advice from Professional Betfair trade.

Betting tips – Often missing this vital information!

If you lined up all the tipsters and pundits on a major horse race you would…… still not get a clear opinion.

When I listen to, or get a tip I often feel a lot of them are wrong, ill-informed and they always miss off the most vital piece of information that you need if you’re going to make money when betting.

So what should you look out for when looking for a good bet?

Black and white: the tipsters approach

When you’re looking at betting – whether you’re looking at a variety of different sports or whatever event you’d like, whether it is the royal baby name, politics; you can pretty much bet on everything nowadays! However, there’s one defining characteristic that you should be looking at that will determine whether you have a good bet or not…

There is always plenty of advice available, so why not take some of that? You’ve got tipsters coming out of your ears and you’ve got pundits giving you advice on which team they think is going to win or not, but there is one critical thing that is always seems to be missing.

I’ve bet, traded, gambled, but there’s a core that runs through all of my activity that determines whether I profit over the long term. But when I look at tipsters, whether they’re racing tipsters, football tipsters or just any type of tipster I always see this one piece of information missing – you never see it.

This is why I think tipping is completely wrong. It’s gone way off of where it needs to be, but we can look at this and say, ‘well, actually, you know, it does serve a particular purpose’, however, for who does it give a purpose to?

Let’s say you tune into a football match and they say, ‘right, so who’s going to win then?’ The fact is you can never tell who is actually going to win a sports event!

It’s a graduation of possibilities – from never going to win, to quite likely to win. Odd and strange things can happen, but likewise, the nailed down thing doesn’t necessarily is going to win it. There’s never a black and white answer. But fundamentally it’s the want for a clear yes or no answer that satisfies people.

What you often hear is somebody summarising facts that could conclude in a good pointer towards something. For example, if it’s a horse, they would say ‘well, he ran well last week, I think he’s going to quite like this distance and he hasn’t run for 26 days. So they’re looking good.’

So they’re come to a conclusion: the most common phrase being, ‘With this in mind, I think it’s got a fair chance.’

‘So do you think it’s going to win?’

Generally what tends to happen is that the summariser, the anchor of that particular segment of the program or whatever, will always a question everyone wants to know the answer to, but a question you can never answer with full confidence: ‘Who should I put my money on?’ People tend to go out there after hearing what they want to hear and say:

‘I’ll have a tenner on this. I’ll have a tenner on that. I’ll stick a fiver on there. I’ll have a monkey on the following event, sports, sports person, team, horse…’

The problem is that this is where it all starts to fall down. People are justifying this huge spread of things that will mean that this is more or less likely, which is great, we do need that information to be able to place a profitable bet into the market. However, they are missing lots of critical bits of information.

If we see a team at the top of a football league playing a team at the bottom, are they going to win? Yeah, most likely. But does that represent a good bet?

We don’t know, because we need to know what the price is and we also need to know the chance of that actually occurring. Therefore, there’s one characteristic that underlines everything that you do whenever you place a bet that should be critically important to you.

Now, somebody asked me this question when I was in Dublin when I turned up to do a quick half an hour slot at an event that was taking place. Here somebody did ask me one of the most sensible questions that I’ve been asked for in ages and I gave them the most sensible answer that I could possibly give.

Watch below to see my response:

How to be a smart gambler

Once again it is price that I’m interested in. The funny thing about most betting markets is that punters, your average Joe gambler, just doesn’t ask what the right price is. They just go with their gut and then place a bet based upon whether they think somebody is going to win or not.

You see this is also what a lot of the pundits and the tipsters are feeding off as well. They’re basically saying this is going to win because this can’t win etc. Now the fact is that in this day and age, you know, you can have a bet at reasonable prices at a lot of different places, but you also do have the advantage of being able to back or lay.

So, in fact, your judgement transforms itself nowadays. If somebody says these are the odds that we’re offering you or that the market is offering you on an exchange, you can decide whether you want to back or lay it. It’s perfectly possible for you to look at either of those.

So it’s like the team at the top of the division are playing the team at the bottom and you can back them at 1.05 or very heavy odds on in traditional fractional odds. Does that represent value?

Well, you have to say, well, how often is that going to occur? Because, you know, if this match was played 100 times, how many times with that team go on to win this match? It’s quite possible that in the odd match, it may not happen. For some reason. They get to red cards very quickly within the match, which decimates their team, there’s a serious injury, there’s a fluky goal, and the ref decides bizarrely toward two penalties that shouldn’t have been awarded.

If you look at playing the match 100 hundred times over, some of those things are going to occur, albeit not very often. Out of that comes the price at which it’s worth backing. However, if you listen to the football channels and where people are offering up betting tips, they generally won’t encapsulate that.

How you need to adapt – be smarter then the tipster

I have come to the conclusion after many years of doing this professionally that people just cannot grasp the concept of probabilities. Our minds had been created over hundreds of thousand years to think in binary outcomes.

It’s like, “This creature is going to eat me, now it isn’t” has now been transformed into – “this team is going to win, now they’re not.”

It’s very difficult to get those grey areas in place, but that’s exactly what you need to be profitable. So you’re giving odds, you think that this team is going to win. It’s not going to be really an issue, but what what odds are you being offered?

If you go into a betting exchange and you see odds of two, then if you do one divided by two, that’s basically saying that this event is going to occur 50% of the time.

If you think the event is going to occur more than 50% of the time, you can back it and if it’s below 50% the time you think it’s going to occur, then you can lay it.

You can basically profit on any direction! You can make a judgement on every single price that you see on the exchange. Now, the way that I do it is I think that there’s a natural variability within the market, and that’s in terms of odds and the terms of the outcome of the actual event itself. So what I’m looking for is I’m not looking inside that natural variability – I’m looking for things that are well outside of that.

When I see something that I know, has got a 50% chance of winning, but the market thinks it’s only got a 20% chance of winning there’s a 30% margin of error there for me and I will bet on that. It’s absolutely guaranteed if I bet on that, while I may not win on this occasion, if I do it 100 times I’m going to end out ahead.

Where the tipsters go wrong

So where all these pundits and tipsters are amiss is that they’re not pinning a probability on the chance of something happening. I know you might be thinking, I don’t understand probability, I’m not interested in that!

That’s fine, because that’s not necessarily your job. If you’re receiving advice from a tipster, from a professional punter or a pundit, what they should be able to do is tell you if there’s value there and they should be able to nail that value for you as well. So one of the things that I’ve learnt over a very long period of time is you can find value, but the problem that you have is because of this variability, it’s possible you may go on a string of bad results before it starts to turn up.

In fact, if I show you a strategy that I started fairly recently, I’ll I’ll take a chunk of it and I’ll show you how that variability works out. Because what you’ll notice is I know I was betting value because I’ve modelled this particular sport unbelievably well, so I can nail the chance of something occurring on the chance of a win on this sport.

Basically, I know that there’s a certain amount of sort of wiggle room that I have to have within that particular model. So it could be that I perform this action, but because of a certain amount of variability it may go against me in the short term.

So what you actually see on this graph above goes through a long negative run and then suddenly all of those results start to come in and it swings positive. Now, the longer I run this model, the more I bet to this particular model, the more money I’ll make over the longer term, but I have to accept that it’s going to have ups and downs all over the place.

This is why when tipsters tip a horse or a pundit says something about a football match or anybody writes any article about anything, you should nominate a price at which you’re willing to back or lay at. You should say this is the chance that it has of winning this particular race, this particular event and therefore, I will not back it below this amount or I will back it above this amount, because you are accounting for that variability.

If you take your margins too tight, then you could go bust because the market will swing up and down against you. Over the long term, it basically ends up positive, but if you have very small margins and it swings against you, you could blow your bank completely.

Bet Stimulus: What does it mean?

So let’s imagine a tipster tips something or a pundit and a football match says that they think that they’re going to win what they should be saying, ‘I like Manchester United tonight and I think they’ve got a 75% chance of winning and therefore, I’m willing to back them above this price. Then what should happen is they shouldn’t say and ‘therefore stick a tenner on it’ they should say: ‘therefore, I think it’s got an 80% chance of winning this match, but the market’s pricing it only at a 50% chance, therefore, I think this represents a great bet.’

But of course, that’s not going to happen. It’s not immediate enough. It’s not thrilling enough. It’s not exciting enough. People won’t do that. I could probably go onto a a particular channel of some sort and say to them this would be the chance of this occurring – It does not make for great television!

However, if you go on and say,

‘Oh, yeah! I really fancy this one, it’s the prices crashing in, it’s stepping up and trip and therefore I’m going to have my money on this horse!’

– a classic bet stimulus!

Now I bet that quote stood out the most to you than throwing in a probability statistic, it’s definitely more exciting and entertaining. This is what drives people to place a bet.

Within the industry, this is called bet stimulus and this is what people are trying to do on the sell side of the industry from a bookmaker point of view. They’re trying to stimulate you to place a bet, but what they won’t do is actually give you the chance of this thing occurring, because if they did, you’d realise that you were going to lose money over the long term anyhow.

Every major bookmaker, including betting exchanges, engage in this tactic. None of them particulary care if the tipsters, pundit or analyst is succesful, they just want to stimulate interest in a market. I thought Betfair trading may be immune from this behaviour but unfortunatley it isn’t. So any advice in the betting industry is more or less a total minefield for newbies!

What I would love to see is betting tipsters and punters and all of the people within the industry actually nail their predictions with a percentage probability. However, I don’t think that is ever going to happen, simply because a lot of people are going on gut feel, they don’t have a model in place and therefore they don’t know where the value is.

That fact aside, as I have learnt, the industry doesn’t want solid adivice, they just want people to bet. You can’t escape the fact they the industry is funded by losers! The industry is also hamstrung by the fact it can’t really be seen to promote winners.

So I think we are stuck in mode of operation that will no change, ever. But on the plus side if you understand this article you will be on the right side of it and in a small minority that are actually putting a but of science into their betting and trading!

Summary, Price, Price, Price!

Yes, it may win, but it may have won at a bad price or yes it could win, but it could win at a good price. There’s a big difference between the two because I focus on PRICE. That’s what I’m most interested in.

It’s no good winning frequently if I’m not getting value out of that because over the long term my P&L is going to head off in the wrong direction. If you can get a decent price on something, then you definitely will win money over the longer term.

So the next time you place a bet that’s what you focus on.


  • Focus on the value!
  • Focus on the price!

If you don’t think the price is big enough, and whatever you’re doing suggests that that is the case, then you simply don’t place the bet. You’re under no obligation to place a bet to try and make money!

You can just wait for the right price to come along and when you see it, you just jump on it and take full advantage of it. It’s simple, that’s what I do!

It’s made me a lot of money over a long period of time and you can do the same. The only way to profit in the long term is to know what chance something has of happening and then to find odds that represent value.

Any professional punter, tipster or pundit should be able to give you that particular price. If they don’t, then they don’t know what the value will be and their tip is worthless.

So you can be one up them with having that knowledge of value and chance. Make sure you use it.

The post Betting tips – Often missing this vital information! appeared first on Betfair trading blog | Expert advice from Professional Betfair trade.

Trade one market, automatically watch another!

Using Bet Angel Coupons and Market Syncing

Bet Angel can do a lot of clever things, but I wanted to show you a neat trick that you can do in Guardian if you’re actively trading markets and submarkets of those markets.

I’m not sure I summarise that well, so here is a practical example. If you’re on a football match and you want to look at and/or trade markets that sit underneath the main market, this is a neat way of doing it. Let us say you’re looking at the match odds within a specific football match, but you also want to trade under or over two and a half goals.

This is a really simple, easy, quick way of achieving that using Bet Angel. That’s one of the reasons we think it’s the best Betfair trading software.

Setting up a coupon

To start with you need to set up a ‘coupon’ on Bet Angel. If you want to learn more about Bet Angel Coupon’s before you get started, have a read of this blog post.

To set up a coupon, you need to use Guardian. So click on the ‘G’ to start Guardian. When you first look at Guardian it’s just a blank canvas, so let us paint on that canvas. What I’m going to do is use the coupon feature in Bet Angel.

I’ve pre-prepared some coupons. So, I’m going to look at today’s footy matches. (The only reason I’ve called them A1 is so they appear at the top of this list. It makes it easy for me when I’m recording videos. No other reason than that. You should call them whatever you like).

What this is going to do is it’s going to search for today’s football matches, which you can see on the left over here.

And then at the bottom of the coupon, I’m going to do a couple of different things.

  • We’re going to clear the selected watch list only.
  • We’re going to add all markets and we’re going to add that coupon to Watch List 1.
  • And we don’t want it to change current sync settings. You’ll understand why in a second.

If I do add and apply, what this actually does is it adds them to Guardian and brings up the watch list.

You can see below Watch List 1, today’s footy and Match Odds. These are all the matches that are taking place this evening.

What I’m now going to do is I’m going to bring up the other coupon, which is today’s footy Over/Under and you can see all of the matches. There are lots of different matches going on outside of these. I’ve put a volume limiter on the match odds market, so it doesn’t pull in any sort of games that we’re not interested in.

But I’ve got a slightly looser one on the Over/Under market. You can see there are a lot more of those. So, what I’m going to do is clear the selected watch list, add all of the markets and add to Watch List 2. And then I’m going to do add and apply.

You can now see all of those markets get pulled into Guardian. They’re all populating and stuff is happening within those particular markets.

But you can see that the watch list is blank.

Watch list enchancements in a coupon

If we look at the top bar here on the watch list when using a coupon, you can see we’ve got a number of options. Because we’re using it as a coupon we can actually go in and look at it in an individual match like Portsmouth v Southampton. So you can see you can actually switch backwards and forwards between individual markets if you so wish from there. You could actually show the event that selected in Guardian.

Go and select a market in guardian and it appears, on the Watch List from there.

You could also show the event that’s on the main trading screen. If it’s not on Guardian maybe it’s on the ladder or it’s on the one-click screen and something that you’re doing on the main one-click screen, which could be on another screen if you wanted it to be. But I’m going to do on this occasion is only show only the event underneath the mouse cursor.

So what will happen now is if I actually move around on here, then this will actually change the other watchlist.

So we’re working in one watch list, but it’s automatically changing all of the information over on the other list. If I expand it so we can see all markets, as I move backwards and forwards, all of the information is changing dynamically.

That’s one of the big benefits of the coupons, not only are they customisable, but you can actually create your own coupons that are interlinked effectively.

As you move the mouse cursor over one particular market or subset of markets, then it will appear and automatically sync across on the other screen.And then you can take it to the next level from here, because if we go up to options, you can see it says when a price is clicked, what you want me to do? You could do nothing, display it on the one click screen, display on the ladder, display it on a new one click screen or display the selection on a new ladder.

Benefits of coupon and watch list syncronisations

With Bet Angel, a watch list can allow you to have an ‘at a glance’ look at a range of markets complete with additional information such as alerts. The coupon allows you to do something similar but grouped in a panel that you can manage, with main markets and sub-markets.

Combining the two will allow you to monitor all markets and submarkets together, meaning you can trade a main market, keeping an eye on your immediate trading screen, but get Bet Angel to switch elsewhere without you clicking anything.

This means you can:

  • Work on one screen, on your main trading interface, on perhaps the market that you’re interested in.
  • Get the watch lists displayed somewhere else.
  • Automatically sync to an underlying market and whatever market you choose
  • Initiate an action on any main or submarket really, really quickly.

So if you want to take action you can do so with either a one-click screen, a ladder, or as you can see if you watch the video, I’ve used a quick bet ticket within Bet Angel to do that.

It’s a very neat way on Bet Angel of trading a market like football where there’s one primary market and then lots of secondary markets that sit underneath that. But you can apply it to any sport. On Tennis you could have match odds and set betting, or with Horse racing you could have win and place markets. The only limit is your imagination.

The main benefit is that you can watch all those markets, switch to a different one and place bets in a number of different ways, quickly easily and accurately with the minimum of clicks. This will allow you to act much faster than others who don’t have access to similar tools.

The post Trade one market, automatically watch another! appeared first on Betfair trading blog | Expert advice from Professional Betfair trade.

Trading order flow – Understanding Horse Racing

This article continues on from another article where we introduced the concept of the Betfair trading strategy this is trading order flow.

Trading is the simple process of backing at higher prices than you lay at and netting a profit. While most people use a betting exchange to place conventional bets, profitable Betfair traders use the betting exchange much more like a stock market. When you trade on Betfair you buy and sell risk and often hedge to ensure you make a profit regardless of the outcome. This is the essence of sports trading, it’s very different from traditional sports betting.

In this article we follow on from the previous article, to look specficially at what happens in horse racing and how we trade that using order flow.

Why prices move they way they do in horse racing markets

So I’m looking at a race that I’m interested in. I think it’s going to exhibit exactly some characteristics that I’ve seen before, but there’s only £14,000 traded at the moment in that market as still ‘needs’ another £700k. By needs, I mean that I know the overall matched bet turnover of this horse race will reach roughly £750k, so a large chunk of the volume is ‘missing’.

When trading order flow, you only really get to know what is going to happen when the money arrives. So as that money arrives, I will feel more confident.

If you look at a chart of volume, it’s very low, the rate of change will be the same for ages and ages, and then it accelerates in that last 5 to 10 minutes. Why?

Want more tips and help? Why not visit the Bet Angel Academy?

Well, if you think about it, imagine you’re trying to bet on a one to five-shot or something at very short odds, when are you going to place your bet? Are you going to do it two or three hours before the start of the race when you haven’t even seen the horse and the ground conditions may change with the weather…? Well, you just don’t have enough information, but the closer and closer you get to the start of the race, you get more information.

You begin to see the horse being saddled up, you see how the jockey has performed over the course of the day. You can look at how other horses performed on the same ground? Then the horse moves to the parade ring and they show the horse off to the connections and the jockey and whoever else is interested.

You get another look at the horse there and then you see it go into post. So there’s more and more information coming into the market the longer you wait…

Where betting and trading crossover

Betting markets and trading markets on Betfair are somewhat different beasts. When you are betting you are normally earning a multiple of your stake. Of course, if you place a lay bet then your liability is a multiple, but you hopefully understand what I am trying to say here. When trading you are your stake shouldn’t be at risk but you will put it into the market and net small profits on it, maybe more than one.

Let us imagine you are somebody how has been given the nod on a sure thing. When are you going to place that £10,000 at odds of 1/5?

Are you going to do it three hours out when none of that information exists? Of course, you’re not! You’re going to do it at the last possible moment or when you feel confident. This may at some point in that last 15 minutes or so. People place large bets when they are confident.

So when you’re trading order flow, what you’re doing is you’re picking up on that information. There may be a reason that somebody is backing it, there may be a reason that somebody is laying it, or maybe somebody tipped it up in a newspaper somewhere.

I went off and researched all of that and looked at all of that information to try and see exactly what was happening and if it would help me. Then it just dawned on me one day that, in fact, the guy that has run a system that knows that horses that are dressed in blue and yellow and like courses that are left to right on a Thursday… he’s going to be thinking, ‘okay, now is my chance to place the bet.’

So now he has to place the bet, so why does he go? He goes into the exchange and he places the bet!

So you can see that influence on the market, somebody is confident in a horses chance or that a tipster that’s tipped something up. You can also see if connections think that the horse isn’t looking good in the parade ring , then the price will start to drift. You see all this in the betting exchange market.

You may actually be able to see that on the television as well as actually seeing it in the market. Essentially, all of those decisions get discounted into the market. So really it’s a battle than of which one is liked the most.

Order flow: trading on others opinions?

So what you see in the market when you’re trading all the flow, the aggregation of all of those guesses, all of those opinions crunched down into a number and that’s what I trade. Watching others contribute to the market and how their decisions help me know where to back and lay.

Of course, the problem is, even if you see something and have an opinion on how I think I’m going to trade, you may not be in a position to do so?

You can’t be sure until I see all of the money arriving. Inevitably, if I said ‘back this one and trade out at post time because it’s going to work really well’, then the horse would then not look good in the parade ring, the jockey would have a bad run form and then the ground would be subject to heavy from a downpour the rain starts to come down etc. Therefore, the price goes in completely the opposite direction.

So sometimes good trading is like comdey, it’s all about the timing! So when you’re trading order flow, it’s impossible to telegraph that out far into the future. Well, it’s not totally impossible, there are circumstances where everything falls into place – there is such thing as a 10/10 trade.

When those occur and you have all the information and everything lines up perfectly, you sort of want to remortgage the house, sell off the wife and kids and stick all your money on! (Now, I’m not suggesting you do that!) But those trades do occur, granted they don’t occur very frequently.

Generally, what happens on a day to day basis is there’s a bit of uncertainty floating around the market. You can never be absolutely, definitely sure, all you can do is like have an internal scorecard, which you score from 1 to 10. You know a 10 isn’t going to occur very often and neither is a 1 and you going to be somewhere on that scale.

Having a long term account of your past trades is valuable

So you can sort of say, well, it’s quite likely that this is going to happen, or I think that this is probably going to be happening and then you look for confirming factors within the market. That’s what you’re doing when you’re trading order flow. Of course if you reflect that out into the wider betting world, people just don’t get it.

People can’t understand how that’s possible. They are looking for value and form, they’re looking at specific stats on horses and jockeys and other physical things like that. Whereas what you’re doing is you’re looking at the people that are looking at the form. If you get skilled at doing that, then necessarily you’ll do pretty well because you’re just making an assessment on what’s happening in the market.

Advice I would give for beginners

What goes on in my head is probably a bit more complex than what would go in your head if you wanted to start using order flow to trade.

When I approach it I give it a broad sweep of the market across various different factors because I’ve traded over 250,000 events now. So it’s almost second nature to me. I’m looking at one thing, looking at another and I’m thinking, ‘okay, I’ve seen this pattern before so I can assume I know what’s likely to happen.’

Each time I’m only a few seconds ahead of the markets, you see someone coming in, you see it gradually weakening, then it stops coming in and starts heading back out. So I could lay that if I wanted to or I could back something else on the basis that that is going to start heading out.

These things go through my mind all of the time. You can narrow it down to quite a simple judgement. My suggestion to you when you’re starting out or you’re learning to trade, is you don’t over complicated.

If you try and do it exactly the same way that I do it, which is looking across the entire market for lots of clues, that becomes really hard because you’re going, ‘oh yeah the favourites going in, oh no it’s coming out, now I can see the big order on the third and now…’ So you just end up getting really confused. It gets really hard and it will drive you crazy.

So my suggestion to you when you’re learning to trade order flow is…

Go right back to the basic starts at a very simple base. Go into a market and you say, ‘okay, I’m going to be looking for the favourite to be backed or I’m going to be looking for the favourite to be laid.’

Then that’s all that you look for, one of those things. Not both, not across the market, but just look for evidence to support your position. If you can’t see it, don’t trade.

This way you don’t interpret what’s going on down there or up there, you don’t put up 10,000 charts and loads of fundamental and technical indicators. You just say, let’s focus on this and let’s see what I can learn like, is this being backed? If I’m looking at all of the activity, perhaps I’m looking at some charts you go back to the simple question of ‘is it being backed?’ You narrow it to that really simple process.

Now, the fact is, that you could probably go to 12 races and not see a single favourite being backed and you’ll be a bit hacked off! But what I’m trying to suggest to you here is if you learn one skill and become good at that, then you can progress.

For example, you start looking for favourites that are being laid and learn to fully understand that, then you move on to learn to start asking, is this favourite being backed or laid? Eventually, you can ask questions like, based upon what I see on the second favourite – ‘how’s that going to influence the favourite?’ and then you expand your skill set from there.

It’s OK if you have no idea what is going on

So it’s not a question of looking at the market and just saying ‘err what’s going on?’ It’s more a question (and this is how I started), of solving one problem at a time and then adding additional layers on top of that to become more skilful.

I can turn up to market within a few seconds, get a view on what I think’s going to happen and then I match that to what actually is happening. If the two of them match up, then I’ll do the trade, if neither match up, then I’ll continue looking for an opportunity. I may not actually find one and that’s fine, that’s part of trading. It’s okay to turn up to a market and say, I have no idea what’s going on!

On any one day there are a few races that I won’t touch because I don’t have an opinion on them when I first look and I don’t think you’re going to have an opinion on them in the last 5 to 10 minutes. So I always start with looking at all races, even the ones I am not too sure about, to see if there’s an opportunity. But it doesn’t mean necessarily I’ll trade it.

Sometimes not making a loss is a simple as deciding to not do something at all if you’re uncertain about it. Once again, when you’re learning to trade, this is the sort of process you have to go through. You’re looking at a market and you’re trying to understand what’s going on and if you can’t understand you’re under no obligation to trade, just wait and then a decent trade will come along.

Like I said before, if you’re just looking for the favourite to be backed and you can’t see evidence of that, skip it. Maybe it does come in, but that’s not your fault and sometimes you can’t predict these things.

In summary, just wait for an opportunity that you think you really, truly, understand and then execute against that with an appropiate trading plan.

Order flow – it’s a sprint, not a marathon

Trading order flow is odd because people very often don’t understand it. You’re not going to get a clear decision. You’re not going to have a yes do this or a no, don’t do it. It’s going to be somewhere in between.

People hate that and it makes it difficult to describe and also it unites the sceptics as well because you’ll only ever be able to show a result after it’s happened. You can’t really necessarily predict what’s going to happen, you can have a view on it, but only when that money begins to arrive will you really be able to confirm if your view is correct.

The fact is, all of that money arrives really late and therefore your opinion is going to be based upon that last 5 or 10 minutes, you’re gonna be so busy trading it, it’s difficult to actually offer up an opinion at that point. There are things that work reasonably well and some that don’t. But because of that process, you’ll find that trading order flow isn’t a yes or no decision and it’s something that’s a little bit more dynamic than that.

But for all those above reasons, that’s why it works so well as well. A lot of people can’t see it and won’t want to see it. It’s essentially the sum of all of the information within the market and that’s why trading overflow works so effectively.

I hope this gave you a better understanding of why trading order flow is so valuable and why you shouldn’t be wary of its benefits.

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