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BetfairTrading

Betfair Trading

We all heard that convincing and tragic story about 1% percent of the world population that actually manages to make a living from betting. The rest, as we were assured, are losers, who are unable to make a long term profit. And quite frankly, the story makes sense when you think of a lone punter who faces a huge financial body known as the bookmaker. Or, to be more precise, it made sense. Once.

The truth is, the betting market develops just like any other market, and the number of opportunities grows exponentially alongside it. Bookmakers are no longer your only option when it comes to betting. Moreover, what was once known as betting slowly evolves, becoming more fair, becoming Betfair.

A new way of Internet betting has been announced by Betfair in 2000 and has been in use since then. The idea was quite simple and quite genius – provide punters a platform where they can bet against each other and take a small commission from the winner. Yes! You’re no longer trying to outsmart a huge financial body, all you need to do is to outsmart another punter. And, hey, this is by far easier.

But before we dive into winning strategies, the first and the most important step to success is to understand how Betfair trading works. In this tutorial, we’ll concentrate on the Football market, though the same principles apply for horse racing, basketball, and co.

How Betfair Trading Works

Betfair is the world’s largest Internet Betting Exchange Company that offers punters a platform for online betting trading. Betfair was the first to introduce the concept of betting exchange, where punters bet against each other instead of betting against a bookmaker. Thus, Betfair differs from an ordinary bookmaker. With Betfair you’re no longer betting – you’re trading.

The best example, used by Betfair to explain their idea, is as follows: imagine two friends having a bet while watching a football match. Betfair holds their money while the game is on. When game is over and the bet it settled, Betfair hands the money to the winner.

Matched and Unmatched Bets

When you suggest your friend to have a bet, he may accept or decline your proposal. That’s exactly what happens when you bet with Betfair. You may offer other people to have a bet with you, or you may accept the offer from another punter. When you suggest someone to have a bet, you must wait for another person to accept it. Only when another punter accepts your offer, your bet is matched. Sometimes, it’s Betfair itself that matches the offer instead of other players.

How Betfair Charges Commissions

Betfair charges a commission on your net winnings. If you lose, you won’t have to pay anything at all. If you don’t trade often, you’ll pay a winning commission of 5%, while active bettors are offered a discount rate. The discount rate is calculated based on accumulated points. You get one point for paying winning commission of £0.1, or when your opponent pays similar commission in case you lose.

To receive a 50% discount rate, you must accumulate 80,000 points or to pay £8,000 commissions together with your opponents. The maximum discount allowed is 60%, and is given when you together with your opponents accumulate a commission of £15,000.  To understand how the commissions are charged, see the examples below.

Betfair Trading: How to Buy and Sell

The concept of Betfair trading is quite similar to that of stock exchange trading. In the same fashion a trader is offered a platform for trading operations, and in the same fashion he can either buy or sell stakes. However, Betfair’s terminology is different from that of stock exchange market.

On the stock market, when a trader buys or sells he/she enters the so called short or long positions respectively. On Betfair, buy and sell operations are known as back and lay. When performing a back operation with Betfair, the trader bets just like an ordinary punter; When performing a lay operation, he gets to be the bookmaker.

The combination of the two operations above is what makes Betfair such a powerful platform for online betting – as you’re basically offered an option to become either a punter or a bookmaker based on your convenience.

Betfair website offers two types of odds for each potential outcome of a football game, horse racing results, etc. The first type represents the back odds and the second represents the lay odds. Let’s see in detail how the back and lay operations work in Betfair trading.

“Backing” Operation

A back operation is a bet on something to happen. For example, you can back a certain team or horse if you believe that the team/horse will win. Just like with the ordinary bookmaker, you choose your stake and click the back button. There is a slight difference however – unlike with the ordinary bookmaker, you can set your own odds as well!

If you win, you receive your stake multiplied by the odds minus the commission of Betfair. The commission is about 5% of your profit. If you lose, your stake is fully lost and you pay no commission at all.

Since ordinary bookmakers don’t charge a commission, the standard back odds of Betfair are usually higher. This fact sometimes confuses punters who turn to Betfair in a search for higher odds.

In the example above, we choose to back Manchester United in a match against Valencia. The table below summarizes the profits/losses in all the three scenarios, i.e. one of the teams wins, or a draw takes place.

Manchester WinsDrawValencia Wins

“Laying” Operation

A lay operation is a bet against something to happen. For example, you can lay a certain team or horse if you believe that that team/horse will lose. In other words, you act like a bookmaker, and just like a bookmaker, you can set your own odds.

If you win, you receive your stake multiplied by two, minus the commission of Betfair. If you lose, your losses will be equal to your stake multiplied by the odds – no commission is charged in that case.

It might seem that the lay operation is much more risky than the back operation, as you lose much more when losing a laying bet. That’s why many punters tend to ignore lay betting. We, however, are not like many, and in the next tutorials we’ll show how to legally exploit the combination of lay and back operations to our advantage.

In the example above, we choose to lay Manchester United in a match against Valencia. The table below summarizes the profits/losses in all the three scenarios, i.e. one of the teams wins, or a draw takes place.

Manchester WinsDrawValencia Wins

Setting your Odds

Betfair allows you to set your own odds in both back and lay bets. This option comes in handy when you want to decrease the risk associated with the trading operation. The odds displayed by Betfair are the average odds of all the punters who back or lay a certain outcome. Therefore, your odds will influence the market and change the average odds accordingly.

When enough people increase the lay odds, backing punters will have no choice but to accept the new market conditions, and vice versa. On the other hand, if you’re the only one to increase the lay odds, your bet might stay unmatched, as no one will be ready to accept your conditions.

Remember that you cant change your odds unlimitedly. The table below offers an explanation how to do it:

Odds FromOdds ToIncrement

In our previous example, we chose to lay Manchester United in a match against Valencia. If you change the odds (pointed by a red arrow) from 1.59 to 1.55, your potential losses will be decreased as follows:

Manchester WinsDrawValencia Wins

However, in this case your bet might stay unmatched by the backing bettors, as long as the average odds of Betfair stay at 1.59.

Coming soon – a profitable Betfair system. In the next tutorial, we’ll explain how to exploit the statistics of Football games and profit from trading on Betfair.


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