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How To Trade On Betting Exchange

How To Trade On Betting Exchange

To the novice punter, a betting exchange can look overwhelming but to the value-conscious punter, they are manna from heaven. Why?

Better prices – because the bookmaker/tote is taken out of the equation, you are not subject to their 5, 10, 20 or even 50% margins. No overheads to support, no employees to pay, you are betting directly against other punters and their opinions. As a result, you end up with prices that average 20% better than bookies. This is especially true on markets with more selections – racing, football premierships, golf tournaments etc, where bookies traditionally make their ‘bread and butter’.

Winners don’t get banned or cut back – many online bookies will limit your stakes or close your account if you dare to beat them. It doesn’t matter to an exchange, they only bring punters together, not take the risk themselves!

Betting in-play – with so many sports shown live on TV these days, why not bet in the run? Unsure about the team line-ups, what the tactics will be, or the state of the pitch? Then try watching the game for a while before placing a bet.

The ability to trade – Ever backed a golfer at big odds and be in contention coming into the final round, but you’d prefer to bet some of it back and walk away with a guaranteed profit? Now you can lay selections as well, so you could choose to recover your stake to leave you with a ‘bet to nothing’, or hedge your position to give you a profit no matter what the outcome.

The ability to oppose a selection – Ever thought Michael Schumacher was way too short with a Grand Prix, but couldn’t decide who was going to win the race? Problem solved – by laying Schumacher, you would effectively be backing the field to beat him. So much easier to cheer the whole field!

In this series of columns, we will look at all of these options in depth. This week though, we will start with the basics to trading with an exchange.

As the clear No.1 in the exchange market, we will use Betfair for our examples, however the basics should work on all the sites.

Once you’ve signed up with an exchange, the first thing you should do is set aside some money to ‘test’ the system. It is very easy as a new player to make the mistake of backing instead of laying and vice-versa.

Find a market with little or no liquidity so you can have your own fun. It might be a horse race at obscure venue, or a Swedish bandy match or similar. Post some offers to back and lay selections. Note how an unmatched ‘back’ offer appears on the ‘lay’ side of the market screen (for someone else to match your bet), and how the reverse applies when place a ‘lay’ offer. Now vary the price and see how it changes on the screen. This is very important for when you are betting in-play or just before a race starts, when prices are quite volatile. Note that there are ‘safety’ screens before placing a bet, so you can be sure of what you are doing. Once you are confident you know what you are doing, you can bypass those screens by unticking the ‘verify bets’ box on the MyBets tab.

Next week, we will work on chasing better odds and how to trade a low volume market.

Let’s end with a ‘lay’ tip – Manchester City are in all sorts of bother in the Premier League. One goal in five matches does not send fear through the spines of their opponents and Leeds are starting to resurrect their season. Lay Man City at any price below 2.20.

How to trade a low volume market

With the tennis circuits kicking back into action this week, it’s a perfect time to learn how to trade a low volume market.

Being a head-to-head market, bookmakers’ margins on tennis are relatively tight (average of 108%), but that doesn’t mean you can’t find value on an exchange – it comes down to judgment and timing.


How exactly are you making your selections? Do you do plenty of research before working out a set of prices (or percentages) in your head, or do you use someone else’s prices as a guide? There is no single way to profiting on an exchange – there are many different ways to trade. Some people like the constant action, others like to pick and choose where they play. Either way, you need to have confidence in the prices you are using as a basis for your trading.

Let’s use a hypothetical match between Lleyton Hewitt and Tim Henman on a hardcourt surface. You look at their respective lead-up form, noting what sort of players they have lost to or struggled against. Is each player in top form? Is this their favourite surface? Do they have a good record at this event previously? Are they fully fit? What is their head-to-head record?

Do not look at any other prices until you have formed your market. This will only skew your judgment.

After going over all the statistics, you come up with a market of Hewitt 1.67, Henman 2.50 at 100%. Now you can look around at the bookmakers’ opinions – you note that in Australia, Hewitt is marked shorter, whereas in England, Henman is shorter – bookies catering for the parochialism of their client base. Overall though, your market is pretty close, the average is 1.57 for Hewitt, 2.30 for Henman, and this is reflected in the opening market on the exchange. If your market is out of sync with the rest of the world, you may need to adjust your ratings accordingly.

Now comes the fun part. Everyone can read the ‘back’ prices on an exchange and compare them to their bookie, but can they look at the ‘lay’ side as well? Say that you wish to bet on Hewitt at any price better than your assessment. You have two options – ask for a price on Hewitt well above the market (which will probably stay unmatched), or you can offer to lay Henman at what looks to be a good price, but in effect is only offering you the price you want on Hewitt.

One Man’s Bet is Another Man’s Lay

How does that work? In a two-horse race, backing one runner effectively offers your layer (or bookie) the reverse price on the other runner. Think of it in fractions. If you having a standard bet with a mate on a football match, you usually will bet at even money or 1/1 – $5 of yours against $5 of his. But we all know not all contests are even. If you want to bet your selection at 4/5 (1.80), then the person laying the bet is receiving odds of 5/4 (2.25) on your selection NOT winning. This could either be 5/4 on the other player in a tennis match, the whole field in a horse race, or the other team and the draw in a soccer match.

Back to Hewitt v Henman. You want to back Hewitt at 1.70, but the best price on offer is 1.62. Henman’s price is currently 2.34. Try offering 2.36 for the Englishman – if matched, this would deliver you a price of 1.735 on Hewitt. Remember that early on, liquidity in these markets can be quite weak, however by laying in a 108% market, rather than 100.2% at the close, you can snap up some extra value. If you are confident in your ratings, you can go up before any other prices are available and post a wider margin, and see if you can pick up some easy money from punters too impatient to wait for the market to form.

Patience and Timing

If the largest bet size on the screen is only ??50, putting up an offer of ??500 will most likely scare punters away. Be prepared to take small bites to achieve your overall goal. Timing and patience are crucial. You will have to factor commission rates into your projected profits, plus the potential need to vary your prices to get all of your bets matched.
If you manage to lay Henman at 2.36, giving you a price of 1.735 for Hewitt, you can then improve your price by laying some back.

Trade for a Better Price
Laying $100 at 2.36 gives you a risk of $136, a profit of $100. If you laid Hewitt for $50 at 1.64, your position would then become Hewitt wins +$68, Henman wins -$86 – a nett price of 1.79 for Hewitt, and a price almost impossible to find anywhere else!

Trading on an exchange gives you more options. You can trade in and out of positions, put up offers on both sides according to your ratings and play bookie, or just follow the money trail and go with the flow.

Why laying a selection is often a better choice than backing it

Ever looked at a bookmaker and thought that looked like an easy way to
riches? Well, it’s not quite that easy, but it certainly does have its

A licensed bookie has to offer a price on every betting option – every
horse in a race, every player in a tournament and nearly every match on
the football/tennis schedule. They can’t hide the selection they like,
or the match they don’t want to get involved in.


As a layer on an exchange, you have the choice to bet when and where you
want to. You can lay one horse in a race or all of them. You can price
all 64 matches in the opening round of a Grand Slam or just the one you
like the most – it’s your decision.

Bookmakers can suffer if they try to spread themselves too thin – i.e. by
offering too many matches or events and not being able to do proper
research so they are highly confident of their prices.

When bookies do get it right though, the punter by placing a bet offers
the bookie a great price on the alternative option. Let’s use the
example of the men’s match in the Hopman Cup final over the weekend.
Using a sample of 12 betting firms listed on TipEx, the top price
available on Kucera to win at 3.46. The Betfair price never even got
above 3.10. However Blake traded as low as 1.31 up to a high of 1.41,
closing at 1.40. By laying Blake early at 1.33 (1/3), the price you are
effectively backing Kucera at is 4.0 (3/1). Even if you were slow off
the mark, you could have laid 1.36 (4/11) or even 1.40 (2/5), and still
returned a better price than any bookmaker on the sample (before taking
commission into account).

As mentioned last week, you could even improve your price by laying
short then backing at a higher price.


The beauty of laying favourites comes down to the lower level of risk
involved. Favourites are traditionally backed strongly – hence the name.
Any time there are reasons why the favourite is a risk – poor form,
coming into an event fresh from a break, injury concerns, bad barrier in
a race etc – then it is worth opposing them. Laying a 1.20 shot for $100 has a big upside ($100) and a relatively small downside ($20). Only one in six selections at that price has to get beaten for you to break even. Any more than that, and you are in profit.

Media favourites

Often there are factors which force the price of the favourite down to
well below its true price. Media attention and popularity are the main
ones here. Some players or teams are good enough to win anyway despite
the weight of attention – eg Manchester United, the most popular soccer
team in the world, are always shorter than they should be. Others, on
occasion, struggle under the weight of the support like Tim Henman. In
England, Henman comes up shorter than he deserves for every match of
every tournament. In futures betting, his price is never anywhere near
the all-up match-by-match price of his path required for victory.

Lleyton Hewitt last year was an interesting player to price up. It was
clear by June that something was wrong with him – two changes in coach
within six months, the lawsuit with the ATP, and poor form. Bookmakers
and punters were divided as to whether he would return to his best or
slide further into a slump.

Using Centrebet prices for every ATP match Hewitt played in the four
months between Hamburg and the US Open, laying ‘Rusty’ for a stake (not
risk) of $100 at the final price in every match (23), you would have
recorded a profit of $318. In only three matches was his price any
higher than 1.35 – low risk, high reward. Betfair prices recorded on
odds comparison sites for these matches are affected by live trading on
several of these matches, and thus cannot be used. It can be safely
assumed that the prices traded on the favourite spanned both sides of
the bookmaker price and closed slightly higher on nearly all occasions.

Lay The Fav

If you look at the trading history of a market on an exchange,
particularly one with a clear favourite, you will always find that the
‘jolly’ accounts for the vast majority of the bets matched. So if you
are keen to cheer on the outsider, try the laying the favourite instead
for better value.

Make profits from someone else’s research

There are thousands of licensed bookmakers around the world – how many of them do you honestly think do all the hard work themselves? Realistically, very few. Most bookies will have their own area of expertise, but there simply aren’t enough hours in the day for them to price up every market for every match in every league around the world by themselves.

Do some homework – work out who is good at certain events, particularly the less popular leagues. You could spend months working out who the best judge is on the English Premiership, but the matches are so popular and the exchange markets so tight, that it is very hard to make an earn as a ‘trader’. The smaller the market, the more time you have to prepare.

Let’s take a look at something more obscure as an example – the Conference. You’ve spent a few weeks following which bookmakers take an opinion on a match (by offering best price rather than being ‘vanilla’ or the same as everyone else), and now you are prepared to follow them by offering the same figures or slightly better than their prices on Betfair. The best part? You can set your risk amount to as much or as little as you like. have had great opinions in recent weeks, so you want to lay any team they have best odds for. So from their market of Barnet v Halifax, you see that they are best price around on the home side at 1.80, with conservative prices of 3.30 the draw, 3.80 for Halifax – a market of 112%. Unless you are first to price the market up on the exchange, you will have to improve on those prices to jump to the front of the queue and get matched.

Click on ‘Lay All’, then offer a slightly better price on all options – say 1.82, 3.40, 4.10 – a market of 108.7%. You are now top price on the favourite, but still in the mix on the others, and with some margin (the 8.7%) up your sleeve to manoeuvre later. Click on ‘Liability’ to set how much you are prepared to lose on each selection. If you are keen to lay the home side as per the ‘expert opinion’ of XYZBookie, then offer to lay Barnet to lose ?100, with just ?50 of risk on the other pair. With your conservative prices on the draw & away options, you might not get matched anyway.

Note that when you are entering an amount as the ‘lay’ figure, this is the stake that the backer can take on the other side, NOT the risk – this is shown in the column to the right if you have selected the liability option rather than payout. So to risk ?100 on Barnet at 1.82, you will need to offer ?121.95 on your lay.

In smaller markets, don’t expect these funds to be matched instantly. You may need to wait several hours or even a couple of days. Check back on the market every few hours to see your position. If you are still head of the market, then be patient. But if someone has jumped ahead of you, you will have to tweak your odds a little, remembering to keep the percentages in your favour. This might sound like a lot of hassle, but it can reward you greatly if you take the time to mould the market your way.

And remember this – if you get to the market first, you can post offers as short as you like. At least 3/4 of exchange punters are market TAKERS rather than market MAKERS – they either don’t understand the concept of value or aren’t prepared to risk it. Lay low, back high and you’ll be well on the road to success on the exchanges!


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