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Trading on Betfair for Beginners

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Trading on Betfair is big business.

It has been estimated that as much as 75% of the money matched on the betting exchanges is traders opening and closing trades.

In case you didn’t know, the basic idea behind trading is following the “weight of the money” i.e. trying to predict the direction of the odds on the betting exchanges by looking at the amount of money in the back column, versus the lay column.

This gives you an idea of the supply and demand, and a rough idea of which way the price is going to go. You then use this knowledge to your advantage, and it goes something like this:

If there is more money on the back column, the price will rise – and if there is more money in the lay column, then price will fall.

In the first case, you would lay first and then back at a higher price. And, in the second case, you would back first, with a view to laying later at a lower price.

Trading on Betfair sounds simple, right? Wrong. The weight of the money is not as simple in practice for several reasons I won’t go into here (basically it comes down to increased competition in certain markets, especially the British horse markets just before the off). This means that the elite punter uses several indicators when deciding to back or lay, and doesn’t just follow the weight of the money blindly.

When trading on the betting exchanges, here are some extra indicators you can use to super charge your accuracy.

Indicator #1

Basic Momentum

This is slightly different to the weight of the money indicator. Basically, we look to ride movements that are already happening – future movements on Betfair are related to previous movements. So, if we see a price move in one direction (from looking at the information box on the Betfair screen, click on the horse name to see this), and the weight of the money suggests the trend will continue, then we can jump in and ride the trend.

Indicator #2

Big punter momentum

What on earth is “big punter momentum”? Well, it is a term I created recently to describe a specific scenario. The majority of big punters trade off the back of other big punters, but how? Well, in case you didn’t know, there are punters who will manipulate the weight of the money to trick rookie traders – and they are called market manipulators.

The thing is, a market manipulator will enter an amount in one of the outside columns, but will not intend to get matched. We don’t trade off the back of these guys. We want to trade when a single punter is chasing the price down to get matched – in other words, you see a big amount come in one side, and the start to get swallowed up. Then the price moves and he changes his price so he is the first in the queue again. If this happens, and you can see there is one big punter forcing the momentum in one direction, take advantage of it fast.

The trick here is to watch for a single big amount that keeps moving into the middle column, moving into the middle column, and then back into the middle column again – this suggests we have a big punter desperate to get his bet off, and this can very often cause a stampede in one direction. So next time, take advantage.

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