Laying the favourite

Be careful! Many people see the betting exchanges and think of the famous phase 'You never see a poor bookmaker'. Then work towards the conclusion, if I lay the favourite on the betting exchanges I will eventually win money.

If you blindly lay the favourite football team or favourite horse you will almost inevitably lose. The next stage of most peoples thinking is to lay a number of selections, this is a much better approach as it reduces the amount of commission you will pay. The ideal scenario is when you are able to lay all the selections, so that no matter what the result, you win (known as a rounded book). This rarely happens and in general you will end up with an unbalanced book.

The only way of winning money by laying the favourite is if the favourite's chances of winning the race are actually lower than the price would suggest. For example if you believe the real chances of a horse winning a race are 40%, then it is OK to lay the horse at odds of 2. Odds of 2 suggests that the horse will win the race 50% of the time. In fact you could lay the horse up to odds of 2.5. Odds of 2.5 suggest the horse will win the race 40% of the time.

False Favourites

In football there are a number of teams who are backed blindly. For example Man United and Real Madrid. These teams are often over bet, meaning that people are just backing them because they support them or because they always back them and think they are unbeatable. In general these people do not have any specialist betting knowledge, but the weight of their money often influences the price. If you are able to tell when the odds are too short, for example Man United playing away on a rainy day at Southampton, then it is time to lay the favourite.

At this stage I would like to recommend an excellent book called 'Against the Crowd' by Alan Potts. It is an excellent read and explains the principle of betting the opposite way to public opinion. In the authors opinion this is one of the best ways to make money.

A good example of laying the favourites was England during the 6 Nations Rugby Championships in 2004. There was a massive wave of optimism in English rugby after they won the World Cup in 2003 and the media talked them up to the status of untouchables. They headed into the 6 Nations as odds on favourites, despite the fact that they were missing their captain Martin Johnson, kicker Jonny Wilkinson and numerous members of their World Cup winning team. In my opinion it was debatable as to whether they should be favourites, they were trading at odds of 1.7 at the start of the tournament. Certainly the price was influenced by patriotic punters who listened to the media and had backed them blindly. In this case going against the crowd was a very profitable option.

Over hyped horses who are continually talked about by media pundits, and by punters in message boards, are profitable for laying. But over hyped horses do not appear regularly. Every week there are many over bet favourites. These are going to be the horses with the best form, jockey, trainer, sire, owner etc. They will be the ones which will attract the most money because they look like 'a winner'. The masses of punters out there do not understand value and are only looking for winners. With media pundits only interested in 'winners' too this creates over bet favourites.

Overall, laying favourites can be a profitable strategy, but beware it is not a sure thing!

Delayed LIVE Broadcasts

You may have seen on some betting exchanges there are words of warning telling you the pictures you are watching may not be LIVE. Take heed of these warnings. They also represent a lucrative way of making money.

ITV coverage and Sky/Cable coverage
Often coverage on Sky/Cable is 3-4 seconds behind the terrestrial coverage. This can be very useful when trading an event like an in-running tennis match during Wimbledon.

Example
It is 30-30 in a close tennis match and the server is just about to serve their second serve, you are unfortunately watching the Sky coverage. Someone watching the match on BBC 2 may already know that there was a double fault, that could mean a massive swing in the match and in turn a large swing in the odds.

Radio Coverage
You may find that the radio coverage of an event is ahead of the TV coverage. The best way to take advantage of this is on golf. When the TV companies cover golf they often record putts and show you 1-2 minutes later. This is a disaster you think you are watching LIVE prices and yet other people know whether the putt is made. The best way around this is to have LIVE radio broadcasts of the golf. In Britain radio 5 is good.

A telephone link to the event
The best way to keep in touch with an event is to have a friend there and keep in touch over the telephone. I always think it is best for one person to have an overview of the market in front of a PC, perhaps looking at two or three betting exchange prices. Hopefully if he is able to provide useful information like an eagle putt just made by Woods before the putt is shown on TV and the market can react.

Trading - It is better to trade heavily on a few events than to place one bet on every event

In my opinion, this is the best way to make money on the exchanges. Many people don't realise the effect commission has on their winnings.

For example, you trade with 1,000 Euros on two football games, you may end up winning 98 Euro on one game and losing 60 on the other game. If you were paying say 4% commission you would be charged 3.92 Euros commission on your win of 98 Euros and no commission when you lost the 60 Euros, your total commission charge will be 3.92 Euros. If however you bet your 1,000 Euros on single bets throughout 8 games you might end up winning 150 Euros on one match, 426 Euros on another, 198 Euros on another and 198 Euros on another. Then lose 225 Euros, 145 Euros, 426 Euros and 102 Euros. Your net gain is the same with a profit of 32 Euros, but you end up paying commission of 38.88 Euros.

To reduce the effect of commission it is better to trade heavily on a few events, than to place many bets on a number of events. When we say trade heavily we mean to place multiple back and lay bets on one market.

In general, it is difficult to overcome the commission rate charged by the exchange by placing only one bet on each event. I recommend you decide on an event you are interested in placing multiple bets and then trade this event.

When deciding to trade events it is important that you have enough time to watch that market. For example it is no good trading a golf tournament winners market for the first day if you know you will be away and unable to trade days 2, 3 and 4.

Typical events which I will trade :-
1. LIVE in-running football game - over the 90 minutes I will probably place over 100 bets (both backing and laying).
2. LIVE in-running tennis game - probably less bets than with football, but still over 50 bets (both backing and laying).
3. Golf tournament - Over the 4 days I will try and trade for 2-3 days solid and will probably place over 300 bets.
4. Cricket test match - The odds tend to move a little slower and hence I only seem to place about 50-100 bets, this also appears to be my least profitable sport - hum! I am looking into this!

Other Events
Many people trade more long term markets, for example, the FA Premiership or Big Brother and they do very well. I have always found these markets tough to trade and find that when I am least expecting it, something important happens. For example Chelsea during the 2003/2004 season. You can read about that disaster in the using information section!

I believe that some people are better at long term markets and others are better at short term markets. I find it hard to focus on a market that will last for 1 year.



Making money by trading

Basic Trading
Once you have decided you can dedicate enough time to a particular event, be it a football match, golf tournament or horse race, this is how to trade the event to make money. The idea is simple the execution is not always so easy.

'Back at high odds and then lay the same selection back to the market at lower odds.'

This is the same principle as with shares: buy low sell high. It is easy to understand that if we back Man Utd to win the league at odds of 3 for 100 units and then we lay Man Utd at odds of 2.5 we will make money if Man United win the league. If Man Utd wins the league you will win 200 on your Back bet and Lose 150 on your Lay bet. This will mean a net gain of 50. If Man Utd don't win the league then you will lose your Back bet of 100, but win the Lay bet of 100 thus breaking even.

Hopefully you have grasped the basic idea of trading. All you really need to know is to back the selection at a higher price than you lay the selection. If we can achieve this aim throughout the event we will make a healthy profit no matter what the outcome of the event. In fact if you are able to complete just one profitable trade then some people will stop there.



Football - In-running matches

This is my favourite trading event. The aim is to lay a selection and then back it back for a profit or back a selection and then lay it back for a profit.

Example
As half time approaches the score is 0-0 and the draw is available at odds of 2.9 to back. You have done your homework and decided that the draw should be about 2.7 at half time. After all the draw was 3.3 at the start of the game (very normal for a competitive premiership encounter) and is normally about 2.6 during half time. The half time whistle blows, you place your bet as quickly as you can and manage to back the draw for 500 units at 2.8. Immediately put the bet back on the market at the price you believe is correct, in this case 2.7 and watch as the bet gets taken. This will secure you a tidy little profit.

If you watch the way football markets move you should begin to pick up a sixth sense about when the market is going to move against a team and your aim is to be just ahead of the market.

Football - Long term markets

During Euro 2004 many people traded the overall winners market. They will put trades up to BACK and LAY all the selections in the event and then as the bets get taken they put them back on the market in the opposite direction to try and create a guaranteed profit.



Trading Horse Racing

There are two different methods, you can either trade one horse or you can trade more than one horse.

Trading One Horse
This is the option I would recommend especially if you are new to trading. Choose one horse to trade, normally this will be the favourite as it sees the most action. Then you will need to concentrate on backing the horse at a higher price and laying the horse at a lower price. To start with try backing the horse for a stake you are comfortable with (say 10 units). You should ask for a price which is higher than the current BACK price. If the price gets taken, immediately put the bet back on the market at a lay price lower than people are willing to take.

Example
Best Mate is trading at odds of 2.44 (to BACK) and 2.48 (to LAY) try asking for a BACK bet at odds of 2.5 for 10 units. If this bet is taken then lay the horse back to the market at odds of 2.4 for 10 units. As long as this bet is also taken we are guaranteed a profit of 1 unit if the horse wins and breaking even if the horse losses. If you are not able to lay the bet back to the market at odds of 2.4, try moving the price to 2.42 and then 2.44 until you are able to lay the bet off. At first you should try to make one profitable trade on each horse race. Once you have mastered this, you can try and place two or three trades in both directions on the horse.

Trading multiple horses
This is much more tricky and should only be attempted in larger races and even then you should stick to three or four horses. It is very tempting to think that the more horses you trade the more money you will make. It just doesn't work like that! You need to concentrate on a few horses and make sure that you react to changes in the market.

Betting Exchanges Compared

Click here to see the betting exchanges comparison we have put together. Please check the details with each betting exchange, as they may vary over time.

Deposit and withdrawal methods:-
CC = Credit Card
DC = Debit Card
BT = Bank Transfer
MB = Moneybookers
WU = Western Union
NT = Neteller

Odds Conversion

Click here to find an "odds conversion chart" for the 3 ways in which odds can be represented, there is also a column showing the percentages that these odds imply.

UK - Often known as fractional odds, this is the way odds have traditionally been represented in the UK

EU - Often know as decimal or digital odds, this is the way odds have traditionally been represented in Europe. Most betting exchanges have adopted this method to show their odds.

US - These are the odds commonly used in the US.

% - This is the % expectation of the selection at the given odds. For example if a selection was at odds of (UK 1/10 , EU 1.1 , US -1000) you would expect the selection to be successful 90.9% of the time. This assumes the odds reflect the true chance of the selection being successful.

Basics of Betting Exchanges

What are betting exchanges?
Simply put, betting exchanges allow people to bet against each other instead of betting against a bookmaker. They are often referred to as 'person to person betting'.

What are the advantages of using an exchange?
Okay, you have already made it this far, so I'm sure you already know the main advantages, but here is a reminder.

1. Better Odds - you can guarantee that you will get better odds on the betting exchanges than with traditional bookmakers. Often they are between 30 - 10% better. On the rare occasion that a bookmaker is offering better odds, this is either a mistake (watch out for this) as some bookmakers will claim palpable error and void the bet or they are out of line with the rest of the bookmakers and will have adjusted their odds before you bet. If you are able to get on they will often cut the volume they accept. More about this in the arbitrage section.

2. Ask for your own odds - You don't have to take the odds you are offered you can simply ask for better odds, you will be surprised how often you receive them.

3. Great in play action - betting on a LIVE event is better catered for on the exchanges.

4. Become a trader (acting as a bookie) - Ok so this is my favourite. You can act as a trader backing and laying selections to make a guaranteed profit. More about this in betting exchange strategy section.

5. Flexibility - the exchanges never close and their markets are also rarely suspended, this gives you the opportunity to bet when ever you want i.e. in the middle of the night or just as some vital news comes out.

Important Concepts
There are a number of important concepts to grasp. Once you understand these then you can move on to using the betting exchanges to your advantage.

1. Decimal Odds - Most betting exchanges use decimal odds so firstly it is important to have an understanding of decimal odds. We have compiled a conversion rate table for you to familiarise yourself with the conversion between decimal odds and fractional odds.

2.Understanding the concepts of 'back' and 'lay' - When you "back" a selection (be it a football team, horse, person etc), you are betting that it will win. This is just like betting with traditional bookies. When you "lay" a selection, you are acting as bookmaker and offering odds against it winning. If the selection loses, then you pick up the backers stake, just as a bookmaker would. If they win, then you pay out.

3. Matched and Unmatched Bets - Matched bets are bets which have been matched against other customers. For example, if you wanted to back Man United at Odds of 2.5 and someone else is prepared to lay Man United for the same Odds you would have a matched bet. Unmatched bets are outstanding bets left on the exchange. For example, if you wanted to back Arsenal at odds of 3, but the best odds anyone was prepared to offer was 2.9 the order will not be filled and your bet would remain on the exchange as an unmatched bet. You are normally able to cancel your unmatched bets at any time. In general the more competitive your Odds the more likely it is to be matched.

4. How do the Betting Exchanges make their money? - The betting exchanges make their money by charging their customers a commission rate. This rate will vary from exchange to exchange, but normally the commission rate is charged on the net winnings per market. For example, if you backed Man United to win the premiership for £20 at odds of 3 and backed Arsenal to win the Premiership at odds of 3.5 for £10. If Man United won the league your net winnings would be:-
Man United win = £40
Arsenal loss = £10
Net win = £30
You would then pay commission on the net win of £30.

If you lose money on a market you pay no commission.

What do I do now?

To start with you will need to open an account at the betting exchanges you wish to use. We suggest that you look around our site, especially the POKER ROOMS AND SPORTS BOOKS area, and then decide which accounts are most suitable for you.