When we are talking Betfair trading, I’m predominately a pre-race horse racing trader. I can carefully manage risk, my potential liability is known and my profit doesn’t rely on what happens in the race. It is a market purely driven by opinion and that’s why I love this particular trading style, you win and lose based purely on your trading skill. I find that trading pre-off balances risk and reward nicely and you stay in complete control at all times. Apart from your emotions, it would seem!
When betting exchanges were born they brought forward a new era in online betting, in-play trading. I do some in-play trading, but it’s mainly automated as I am more focused on the next race as the prior one goes in-play. In-play trading is very different and it involves having an opinion on the race itself, the losses can be brutal when they arrive. In essence, there are two entirely different markets meaning that one thing you should not do is confuse these markets, especially if it causes you to take a pre-off position through to the in-play period ‘accidentally’.
This blog post goes into specifically why you shouldn’t go in-play and will present a solution that will help you overcome that difficulty of accidentally taking a trade in-play.
Here is why in play is SO dangerous…!
Consider this, we’re about to start trading and we have £1000 to put through your favourite betting exchange site.
You start looking at the ladder and you decide to start trading something that’s odds on, so the odd increments are moving 1% at a time. If we get that one trade correct and we trade £1000 at odds of 2.00 we can then lay it back into the market at odds of 1.99. With this price movement, we make the grand total of £10! Meaning we’ve risked £1000 and we make a solid £10.
Here is a great example of Betfair trading for you on horse racing. Trading is all about getting a percentage return on your overall stake. That’s perfectly normal, as long as you have the positive and the negative in balance, it will mean you will trade just fine. But of course, we have to hedge our position in the market, resulting in our £10 suddenly becoming £5, receiving an acceptable profit from our £1000 start. This means your total return is tiny in comparison to your stake.
£1000 = 0.05% profit!
While this seems tiny, it’s perfectly acceptable. If you want to trade this way it is a great way of assuring a profit, as long you protect your trading bank. Remember capital preservation is key when you’re trading, it is your top priority. If you don’t have a trading bank, you can’t trade!
The underlining aspect is that you are risking your trading bank to get a return consummate with your risk profile. They should always be in proportion in both directions. Profits and losses are equally distributed in pre-off racing. So this means you can only ever return a small percentage of the money you are putting in and taking out on each trade. As you can see your risk is very minimal and yet you are still gaining a profit, in this particular case we’re saying we’re going to get a 0.05% return.
So ok we’re only going to get 0.05% on £1000 – let’s take that in play and see what happens!
If back a horse at odds of 2.00 for £1000, it goes in-play and everything goes disastrously wrong. It could be anything, but let’s assume the horse misses the kick, goes wide on the bend and suddenly his odds shoot out! Here you can’t take a loss because the potential loss is huge, especially considering the profit you had a few minutes ago. So taking this loss would be particularly painful at this moment, but the horse could still win so you decide to just let that run. It loses and you lose your £1000.
This is the mountain that you’re going to have to climb to get that £1000 back.
We’ve already said that you’re only going to make 0.05% return on that £1000, so in order to win back the £1000 you’re going to have to do 200 successful trades (at least) to get that back. We are even talking 200 successful trades in a row, so even if you got to 150 and then you lose money on your 151st trade you’ll then be another step behind regaining your money. You can see this will result in taking an enormous amount of time to get that money back.
What’s the solution?
Well, it’s pretty obvious really. You should just double up and dump £1000 on the favourite in the next race and hope that he wins (Well, of course, you shouldn’t!!). But that is the instinct that people have, they blame what happened on something else.
It is best to outsmart disaster and if you get in that position, remember to just hedge it. Whether it is for a profit or for a loss, it will help create a safer result. The point to take away with you is that you should remember to hedge any position you have as that allows you to move on to the next race and do whatever you need to do on that particular race. Trading is about taking losses, not trying to avoid them at all costs.
Remember you’re trading – not gambling!
If you want to have a gamble on a race, set up a separate account and gamble on that, but don’t do it on your trading capital – capital preservation is key. You must retain that trading capital in order to live and fight another day. Don’t go in-play because there’s nothing that will compensate for you when you lose that trade. You may get away with it 50 times in a row, but on that one occasion you don’t get away with it, you’re in big trouble and you will not be able to recover the loss.
A simple trick to avoid trading in play and help trade up to the line!
So as I have said, you should open a trade and close a trade and hedge whatever that is, whether it is red or green at post time. However, you’ll be interested to know that I very often take things right to the wire!
So when I’ve got a decent trade, or maybe even a losing trade that I think is about to turn out good, then what I’ll do is I will hold that position. However, there’s a little trick you can use… You can hold the position right until the horses jump and then exit at that particular point without exiting in play. So how do you do that?
You use the take SP (starting price) option
This is one of the little tricks that I’ll use now and again where I’ll trade as much as I can within the market knowing I’ll probably get out before post time. However, If I think I’m about to get matched on something for good or bad I’ll take it to SP.
SP was originally designed for people who wanted to just have a bet, allowing someone who didn’t want to trade to get onto what the price was on post time. SP was designed for somebody with a tenner, who just wanted to back the favourite in the 3:30 race and didn’t want to have to think about it. It was never designed for trading but in fact, from a trading perspective, it’s a really nice little get out of jail card, as you approach post time you just turn your closing position into a ‘take SP order’.
Now it won’t hedge it because you don’t know what the SP is. SP is very likely to be the last traded price but you can’t absolutely guarantee that, so you will have to hedge it in play. Nonetheless, generally, that will get you out at post time.
Now it works slightly differently on different exchanges, so on Betfair SP resolves slightly differently from on Betdaq. You tend to find that because there is lots of on-course players you get SP’s resolved a few seconds after post. For example, SP doesn’t work so well on shorter races because if a horse gets a good start that will influence the SP.
On Betdaq they introduced X SP (exchange SP) which seems to work pretty well as it doesn’t seem to suffer from the same characteristics. Here it resolves to a much tighter book than you tend to see on Betfair, but you can use it on both of them and I do fully use that.
The way I use it as we’re coming towards post time, there’s a number of ways you can do it, for example on Bet Angel you can click on the ‘Take SP All’ button (as pictured in the illustration above), but you can also use a safety servant that will take all your orders to SP anyway, so if anything happens it takes all yours for SP.
We have a safety servant ‘take all SP’ on the forum, it’s very easy to create one or you can even do it within automation as well. Here’s the link if you would like to read further: https://www.betangel.com/forum/viewtopic.php?t=15199
Simple process: Click the SP button or use a safety servant or automation!
There may be times when you carry over trades in-play, for example, Dobbing or doing a back to lay or lay to back. But going in-play unexpectedly when trading before pre-off horse racing, is very dangerous. Remember you are trading, not gambling!
There are ways to fully maximise your trading right up to the in-play betting period, that can still ensure a reliable outcome. One solution can be clicking the take SP button or another is to use a safety servant or some automation to take something to SP. SP bets were never designed for use as a trading function but by accident is has become a very useful way of exiting a trade at post-time and provides a great opportunity to do so.
It also ensures that you never accidentally expose yourself to outsized risk to any trading position.
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