Trading on Betfair
Making money before the race has even started. Caan Berry explains
For a long time the average punter didn't realise you could make money before the start of a race.
Thanks to the rise in popularity of Cash Out and Betfair's Exchange, more than ever realise it's possible. However, it's often easier said than done.
For those new to pre-race trading, let's start from the bottom...
What is pre-race trading?
As the name suggests, we're talking about trading before the start here.
Before the start of any event (some more than others) a betting price will fluctuate in the market. And if it doesn't, money will be matched on both sides of a price. As this happens there is an opportunity to make a profit, be it from 4.10 to 4.20 or 4.10 to 5.10.
Horse racing markets appeal specifically to traders because of the regular volatility and intense betting that occurs just before the start. You can trade in-play too, although a rather different opportunity is presented. More on that in a moment.
Why trade before the start?
Of course there's more options than just trading the ten minute window before the start of a race. You can bet and trade in-running also, but it's a completely different approach to master. One that requires a huge amount of discipline. The markets move extremely fast in-running, and televised feeds have been known to be significantly delayed.
Before the start of a race you'll be trading the support, resistance and market sentiments. And should things go wrong there's the chance to take a loss before it gets out of hand. These are just a few of the reasons I focused on pre-race trading early on.
Other markets tend to behave quite differently, maybe excluding the final minutes before the start of a football or tennis match. The volume of games and matches each day are limited when compared to horse racing though...
How does pre-race trading work in racing?
Around 90% of a horse races money is matched within the live show.
The live show is the final betting show before the start of a race, typically the final 8-10 minutes. With this being the peak period of betting activity, it makes sense to focus your energy on turning a profit here.
It's still quite possible to place an opening trade in the morning of course, although liquidity is more limited. Making it harder to manage the overall risk. The benefit being, the markets are less efficient earlier on. Finding a winning trade isn't so hard, scaling it up and limiting risk is the harder part.
To understand the basic concept of trading see this article.
Where to get started
Starting blind will just lead to losing money. I'd almost guarantee it.
Working hard is always important. But in trading it's a lot more effective to work smarter, and if you can - do both. Pouring over all the trading articles here on the Betfair blog, learning directory and YouTube is the best place to hit the ground running.
Racing traders often use third party tools as well, giving themselves a small speed-advantage among others.
The most important thing to understand about trading pre-race is that; you want to find situations where the market is incorrect, volatile, or out of line with where it should be. Not so much a case of predicting the future like some kind of psychic. Too many go on to look at a horses form, directly linking it's chance of winning with market movements.
Trading doesn't work like that. You'll just end up chasing your tail in circles.
Where can you start to build a strategy pre-race?
It's best to build any kind of strategy with some reverse-engineering.
So we know we are looking for mistakes, or short-term corrections in price to make a profit, right? In order to make good use of this it's important to understand the situations limitations, rules and restrictions.
For example; if a horse has been weighted to extreme levels within a handicap race, which way is the price more likely to move? Notice I didn't say anything about the horses chance of winning or assessing its chance, but made reference to the situations limitations. Of course it doesn't mean a horse won't be backed, or even win. But it becomes easier to make a judgement on which way a price is more likely to move.
When you start to couple various limitations of a situation, along with market activity it becomes easier to see if the price at which a selection trades is more likely to move one way than the other.
Another: if a horse has just un-shipped a jockey behind the starting stalls, is it more likely to shorten or drift in price? Bearing in mind it's just about to race...
In addition you could also consider what kind of race the horse is about to run. If it's a three mile race over hurdles it may well affect the market differently to it would if it is a five furlong dash.
Hopefully that qualifies my point sufficiently, start by understanding the market parameters - and make good use of over/under reactions.
How much profit do pre-race traders make?
One of the first questions for many. After all, you want to know if it's worth your while before you start.
The answer is tough, purely because results can vary so much. Depending on skillset, betting capital, experience, self-control and time spent trading - results can really vary. Also, different edges and advantages in the market yield different levels of profit.
However, it's quite reasonable to say that; a £100 traded between 4.0 and 4.2 is worth around £5 profit. With there being up to 40 races on a Saturday afternoon, and increased betting activity (making it easier to get bets matched) consistent small trades of this nature could quite easily see a pre-race trader net around £200 profit.
*disclaimer: in reality, it's not likely to be so easy as I said earlier in this article. However it's certainly possible having done it many times over myself.
