RacingTraders Blog

BetTrader Basics

A demonstration of using BetTrader in the free grid mode and the advantages of this over the standard Betfair website interface.

BetTrader from RacingTraders is a free trading tool for use on the Betfair platform.

First issue of our new newsletter, The Scalper

Check out our new newsletter, The Scalper

10 Reasons Why Trading is Better Than Gambling

I just posted on the website 10 reasons why trading on betfair is better than gambling on betfair:

Click Here for 10 Reasons

The Scratch Trade: Heads you Win, Tails You Break Even

The scratch trade is probably the single most important key to success in short term scalping of the UK horseracing markets on Betfair. Being able to Lay and Back at the same price without loss, and without even having to pay commission on the round-turn, is such a benefit that it has to be used to the absolute maximum. Anyone that learns how to use this powerful get out of jail free card to it’s full effect will make money as a scalper. A scratch trade is a winning trade because it will often get you out of the market before the price turns against you. A scratch trade may cost you some profits but it’s the losses that they save you that are important.

The scratch trade is like a house edge that’s actually in your favour: using the bid and offer you can make a single tick profit if the market price doesn’t move at all, 2 ticks profit if the price goes in your direction, or you can break even if the price goes against you.

For example, the market is 2.34 bid and 2.36 offered and 2.36 is trading heavily and is about to go bid. You snap up the remaining offers at 2.36 making the market go 2.36 bid and 2.38 offered. Others join the queue behind you wanting to Lay at 2.36 making 2.36 a stable bid and as the market continues to trade at 2.36 you get matched on your full amount while the market price remains at 2.36/2.38. You are now in a position to join the offer trying to Back at 2.38 and attempt to make an instant 1 tick profit without needing the market to go up. The price can remain at 2.36/2.38 and as long as both sides are trading you have a chance of making an instant profit without needing the market to move at all. If you believe that the price is going to continue rising you can put your Back offer in a tick higher at 2.40. Now you are only asking for a 1 tick movement higher to have the chance of making a 2 tick profit. And if the price doesn’t go up to 2.40 but instead actually goes down to 2.34/2.36 you can quickly try and Back your position at 2.36 to get out with no loss.

To summarise that trade, if the market stayed the same you could have made a profit, if the market went up you would have made twice as big a profit, and if the market went down you had a good chance of breaking even. With odds like that you can choose your trades by flicking a coin and still make money. The skill is not in picking the direction of the market but in reacting to what the market does as soon as you have been filled. The advantage of taking such small profits is not only the speed with which you can realize such small profits, but also the fact that the bid and offer spread makes such a huge difference to your profits and losses. Couple that with being able to get it wrong but still not lose anything and you have the formula for being able to creep forwards slowly without needing to know anything at all about the horse that you are trading on.

With all the advantages that a short term trader has, such as the ability to hold back and pick his moments, all he needs to do is get only 50% of his trades producing a 1 tick profit, 30% of them breaking even and 20% of them taking a 1 tick loss. If you can do that you can be a full time professional trader on Betfair, unaffected by all of the factors that full time gamblers have to go through like losing runs, bad patches, bad luck, lack of confidence, chasing losses etc.

Scratch trades should be aggressively sought after by the short term trader. Far from being a waste of time or a missed opportunity for profit when the price goes your way just after you’ve got out, traders with the highest number of scratch trades are the most consistently profitable operators in any exchange environment because they are the least vulnerable to unexpected moves. They are not successful because they are always winning, but rather because they’re not losing.

The advantages of short term trading

The secret of successful trading on UK horseracing favourites in the final minutes before the off is simple: the less time you hold a position the better. When making trading decisions based on nothing more than the most recent price pattern you have to accept that things can turn against you instantly. As there is no way of knowing which trade is going to be the bad one then you have to enter each new trade with the assumption that it is going to be the one that gets you. Therefore it logically follows that if the trade that you have just opened is going to lose money then you should get out of it as fast as you can! The quicker you make yourself flat and get out of danger the better.

What do we call a short term position? You may think that a minute is not a long time to hold a position but a lot can go wrong in a minute. If you were to hold the same position for 30 seconds then you instantly halve your risk, but you are still sitting there like a sitting duck for a full half a minute. As you are not aware of everything that is going on in the market you are exposing yourself to factors over which you have no control or even knowledge. To make money consistently you cannot be putting yourself in that position because you cannot consistently predict such a complex series of events as can happen in half a minute or a minute without getting your fair share wrong. If you’re taking small one and two tick profits but taking large 4 or 5 tick losses when the price goes against you then you’re going to lose money.

You must only trade when you are as sure as you can possibly be of what is going to happen, and the longer you’re in it, the more factors can come into play against you. Forget about how much money you are going to make if you are right, your chance of getting out unscathed is inversely proportional to the amount of time that you are at risk: the longer you’re in it the more that can go wrong. Trading is all about damage limitation, and if you can survive each trade while making the occasional profit here and there then you are succeeding. The overriding emotions of successful trading should be fear and anxiety coupled with a general feeling that you’re getting nowhere fast whilst wishing that you didn’t have to put up with this shit to make a few quid. Survival is the name of the game and every trade that you get out of without losing is a success, and the best way to make sure a trade doesn’t cost you money is to get out of it immediately. By immediately I mean within 5 or 10 seconds, every extra second you’re exposed is increasing your chances of the price turning against you. Your chance of a profit may also be increasing but you should only have entered the trade with the certainty that it was going to be an instant winner, if you are now holding a position for a different reason than your first reason then all you’re doing is gambling. The most clueless gambler in the world can put money on red and make money when red comes in; making money by holding onto a trade until it comes right doesn’t mean you did the right thing. If you can’t get out of your trade with an instant small profit then you should get out immediately at the same price that you got in at, a Scratch trade. If you can make a single tick profit on 30% of your trades and break even on the rest of your trades you will make money by getting it right less than half of the time on an up or down chance. And by reducing the amount of time that you hold a position to the absolute minimum as well as reducing your profit goal to the absolute minimum you are boiling each trade down to as close to a coin flip as possible because within such constricting conditions the price can only do 1 of 3 things before it is liquidated: go up, go down or stay the same. If you are using the bid and offer to your advantage and asking for good prices then you can either make a small profit or break even no matter which one of the 3 outcomes happens.

The short term trader is an operator, a mathematical grinder capable of making consistent profits from buying and selling something intelligently. The simple reason for this is that they spend such a small amount of time actually exposed to the market whilst at the same time watching every slightest market move with an eye for a quick profit. A trader’s biggest advantage is being able to choose when to be invested and when to hold back, and an ultra short term trader will be open to every opportunity whilst also being unexposed to any risk at all for over 99% of the time that he is watching the market.

Short term trading is a volume game: as your profit only equates to a fraction of a percent on turnover you have to do as much volume as you can to make it worthwhile. For instance, you can see that my percentage profit return on turnover in 2003, 2004 and 2005 from scalping the Betfair horseracing markets was less than a quarter of one percent. Many people would not bother with such a small return and would be tempted away by the relatively huge payouts (and losses) of guessing which horse will win the race. But by doing a turnover of over GBP50 Million worth of bets during that time using a trading bank of only GBP3000 I made that quarter of a percent worth having. A quarter of a percent of GBP50 million is over GBP100,000 profit without ever having a losing week and at one point going 11 months without a losing day. And I was only able to do such a large volume of bets because by taking such small profits and doing lots of scratch trades and getting out of all positions quickly I was free to churn my bank over and over again. A losing trade of several ticks not only takes all of the profits from several profitable trades but more importantly it robs you of turnover also. All the time that you are sitting on a losing trade doing nothing more than hoping and praying that it will come back is lost time where you could be turning over more money, scratching and taking single tick profits.

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About ME!!!

Just in case you were wondering how I got into Betfair and what kind of success I had trading on Betfair you can check out the new About page which explains it all and has my full trading results for 2003, 2004 and 2005. These figures are from info@betfair.com and prove that I have made over GBP100,000 profit trading the favourite in the last 10 minutes before the off on Betfair's UK horseracing markets, and that I have placed well over 50 million pounds worth of bets.

More Demo Videos

I had a bit of a demo video bonanza and the Demo Videos page of the website now has 23 demos explaining the different features of BetTrader PRO, 4 demos of soccer games that I traded on in the World Cup and 4 demos of me trading on the horses. The latest horse trading video I made today has live commentary as I place the bets.

And another one...

Here's another video of a few more races that I did on Friday.

Play Horseracing Trading Video (25:00, Sep 1st)

Betfair Trading Video

Here's a new video I made yesterday showing how I trade on UK horseraces in the last minutes before the start of the race. It's 35 minutes long and shows me trading on 7 different races with commentary that I added later to explain what I was doing and why. You can see how much faster I'm able to trade by using BetTrader instead of the Betfair website interface, entering Back or Lay trades at any price with only one click of the mouse.

Play Horseracing Trading Video (35:51, Aug 31st)

Betting is more like financial trading now

Which team actually wins the game is getting less and less important for the fast growing number of sports traders out there. More and more people are realising that you can now make money by being able to predict only a certain short section of a game and then Hedging your bets so that you make money whatever the result. Why take the added risk of predicting the winner before the game has even started when you can wait till the game starts, see how the odds are moving, and act accordingly?  In the South Korea v Togo Demo Video you can see that I made my profit from correctly predicting that South Korea would not score a goal in a 5 minute time window. I was right and so was able to Lay GBP100 @ 2.16 then Back GBP100 @ 2.66 5 minutes later.

There are now so many possible predictions that you can profit from by trading on Betfair. Have the discipline to choose your moments, and to take your losses quickly, and there really is no reason why you can't win consistently, even without a great knowledge of the game.