Betting exchange trading strategy
There are many reasons that the odds swing. The largest swings occur after or just before a major event during the game — such as goals, red cards and penalties. There are several general reasons why the odds drastically move. The change in weather will favour some horses more than others.
The skill in swing trading is predicting this move early on so that your trades are well positioned. You can learn more on pre-race market movements from my post: Think about Football — a sport with so much bias.
You might for example determine — statistically or otherwise — that a football team is either over or underrated based on the odds for an upcoming fixture. This is particularly true of illiquid or unformed betting markets. If the odds are too far in one direction then it presents an opportunity to Back or Lay an outcome, predicting that the odds will inevitably shift back in the opposite direction as more money participants enter the market at a later point and sharpen the prices.
Swing traders usually prefer to sit for relatively long periods in the market. They take a long-term view and hold their positions — for several hours, overnight or ante post.
Swing traders are looking for large price movements, typically employing a stop loss facility to cut their losses if the price moves against them. You have to decide what your exit price is and stick to it. However, we can summarise the majority of participants fall into one of two categories: Value Creators and Value Takers. Essentially, Value Creators are people who are active within the market but don't necessarily care about the exact price they are getting.
They might happily put a big stake within the market and take whatever price is available. Here's a list of people who might fall into the Value Creators category:. They usually have a rough idea of price but won't care about the exact price, to the tick that they get. Punters generally don't trade out so will usually just place one single back or lay bet. They are quite happy to take any price they can get so long as they exit quickly, before the price moves against them even further. All of these people create value within the market by being inefficient.
They are happy to take any price, even if it is far away from the "correct" price for that particular horse. This is where the efficient, Value Takers come into action! Value Takers take advantage of situations where money is available at good value odds. If a large bet comes into the market, people will often panic. The market behaves erratically, creating value for the Value Takers to snap up. The techniques below will look at low risk approaches to taking value from the markets.
Short-term Trades There are lots of different approaches to Betfair's Exchange markets. So long as they are profitable, all of them are just as valid as each other. However, we're looking to keep things as low risk as possible. For that reason, we need to adopt a defensive style, keeping trades short term, often offering a good entry away from the active price.
Being defensive like this means that we will probably have less trades, but they should have a higher strike rate. Low risk, short term trading involves placing orders outside of the trading activity. For example, if the price of a horse is trading between [5.
We now have stakes sitting either side of the market activity. You'll often see that the market will move outside of recent activity for a short period, only to come back and trade within its normal range. Our technique takes advantage of these small detours from the normal traded range, the catch being you'll have to be fast in order to avoid the price going past your entry.
We're looking to get matched either side of the activity so we can trade out for a profit once it goes back within the usual range. A quick, short-term win. And if not, we need to cancel the bet my matching the opposing back or lay at the same price.
Laying Low If you look hard enough, there are plenty of opportunities to lay at low odds. For example, if we lay a horse at odds of [1. Of course, the odds suggest that this horse has very high chance of winning. For this reason, we want to be able to make a profit whether it wins or loses.
If however, you have a reason that you suspect the market will 'bounce' or be volatile, you could see yourself stealing a little short-term profit for minimal risk.