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Betfair trading for beginners
Learn the key areas and techniques for successful betting exchange trading and understand exchange market movements before you start long-term trading.
Published on 04 December 2018
Updated on 04 December 2018
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Are you someone that trades on betting exchanges now? You’ve probably used exchanges such as Betfair, Betdaq and Smarkets for years, but have you traded profitably? Do you treat betting exchange trading like win/loss betting? If so, you may need to check out this post a little more carefully, than some of the other posts.
This is not going to be easy
Yes. I know this is almost a common theme with betting, but I’m sure you’re aware that any form of financial risk on an uncertain activity can be subject to randomness. You need to look no further than the changing odds.
This means that you cannot rely on your skills as being the only reason for profiting. Sometimes you will lose money, but trading requires a different betting mindset.
The trading mindest is more focussed on ‘give and take’, so you’re losing money with some of your bets and wining money with other bets by taking a trading position opposite to the initial bet (similar to a hedge, but within the same market). This approach is the best to find betting options and solutions, which may give you more bang for your buck.
If you don’t understand the difference between a betting exchange and a bookmaker or sportsbook then it make a lot of sense for you to read through some of the information, here, so you can place bets with more knowledge.
How to trade on betfair? Betfair trading tips
Trading on betfair is one thing, but successful trading across any betting exchange in any situation is another thing. That’s why I’ve put together a few betfair trading tips. This will help any betting exchange newbie get to grips with exchange trading and also help you to place bets with more structure.
• Finding opportunity within betting exchanges
• Understanding market and odds fluctuations
• How do the betting exchange markets really work
• The main reason why trading is a profitable strategy
• Managing your thoughts and your betting expectations
• Find your betting super power
• Long-term patience and perseverance
Finding opportunity within betting exchanges
Do you know where to find the opportunity?
That’s the fundamental question for newbie traders having issues within the markets. You have to know where to go to find profitable opportunities. This means that you have to sometimes find markets that are less favoured and away from well-known betting markets where potential inaccuracies (and therefore profits) from the betting opportunities are few and far between.
I would go so far as to say you should seriously ignore much of the information in the press and the media and focus more on what you know of the different teams and clubs. If you do not know the football clubs and the teams, you’re going to have to use the market dynamics and fluctuations to make betting decisions. More information on this tactic is to follow…
However, if you know more about a certain market, team or specific bet than the majority of other traders, it may be easier for you to recognise where there could be the potential to remove profits from your competing exchange traders.
How do you spot inaccuracies within the market for trades?
Let’s look at example, if you check out the starting odds position of a team to see what happens with home wins, you can usually make a judgement on where you believe the odds should be. This is because there are sometimes significant differences between the starting odds and the final odds when the match is about to kick off (and then there are even more changes if you start to place bets/trades when the match is in-play).
You would have to wait for the odds to move, so that the lay odds where shorter than the back odds. This means that you could immediately lay the same selection you have backed and effectively receive the profit difference after the final whistle.
This approach is a combination of art and science, but having information on the team selection may also help you to place trades in favourable positions.
When you’re trading, you’re trying to obtain value from the inaccurate market conditions before the odds eventually settle around kick-off.
Understanding market and odds fluctuations
As mentioned above there is another trading approach, which is sometimes handled by automated bots and trading programs, which allow you to find profit potential based on the fluctuating market.
Although, automated bots and apps may help you to trade profitable positions and lock favourable trades, they do not help you to understand why this occurs.
At face value, you do not need to understand why as you only need to trade a profit, but if you understand the reasons behind movements, it will make it easier for you to price movements.
How and why do odds and prices fluctuate?
Much of this can be blamed on human nature.
Most of us like to believe we’re lone rangers with unique thoughts, but the reality is that most us prefer to move with the crowd and will make decisions based on other people. This means there is generally a pack mentality to a lot of betting markets.
There are sometimes wide odds variations within betting close to kick-off. This means there are several areas where you can make money trading, if you can review odds a week or so prior to the event, so you take your position before the crowd begins to splash their cash.
That’s an interesting area, which could help you to return significant value for your trades…
How do the betting exchange markets really work?
Understanding how the markets work will help with the recommendations above, but this may not provide the best options for you to make betting decisions.
Understanding what affects the different betting markets and judging when things will move with and against you are key areas to pursue and identify trading options.
Following a number of trading methodologies, such as contrarian betting could help you to understand market movements.
Many of the other trading techniques are similar to financial trading and involve, normal daily trading (i.e. the common trading as discussed earlier; finding value within different betting markets), Trading Long-Term Market Positions, Trading Undervalued Selections, Trading Market Swings and Scalping Market Differences.
Trading Long-Term Market Positions
Most bettors will not review their betting options until they’re very close to the event and they will concentrate more on the soccer matches and related to upcoming betting markets rather than concentrating more on the future events. Such, as league winners, promotion and relegations, where there is sometimes tremendous value that can be found.
This is due to the issue with taking long-term betting or trading positions and having to wait until you’re able to take a perfect hedging or opposite position against your initial trade.
This trading technique can be very attractive and profitable. It means that traders can take positions with long-term bets and then trade against their current positions, to ensure they’re able to lock down profits.
If you take the season when Leicester won the premier league, there were massive profits that could have been gained if someone had taken a position for one of the big teams to win the league and then actively traded against that position when it looked like Leicester were getting closer and closer to winning the league.
Understandably, this may have been considered a one-off event, but the same rule applies to many betting markets that require a slightly longer approach than a common daily trade against different sporting events.
Trading Undervalued Selections
Popularised by Warren Buffet and many value investors in the financial world, is the notion that you can buy a particular undervalued security, such as a shares within a business and a) actively take part within the company to increase the business value or b) wait until the stock appreciates in value to gain your positive returns.
It’s very difficult (and illegal in most parts of the world) to artificially influence the outcome of a sports event. This would be known as match fixing and is 100% against the spirit of the game and the law!
If someone is risking money against an event, that event cannot and should not be fixed, so you’re left with the only option to wait until value of the asset (odds) increases, so you can sell (lay against) with a tidy profit.
Waiting for odds to change over a long period is one method to deliver business profits, but requires you to take a long term positions without any certainty.
As this trading process lacks control and could be considered a slow burn for most people, which is why market swings is popular within some trading circles.
Trading Market Swings
Understanding the fluctuations and market volatility are profitable options. When a big event or unforeseen circumstance occurs, there will commonly be a change in the odds prices within the market. Significant odds changes and unsteady prices within any market are potential for extreme profits.
This is where the betting exchanges can be a good ground for Swing Traders that really understand how to capitalise on a market and make betting and trading decisions, which can provide decent profit potential.
The best approach is to buy and sell during the periods of violent odds fluctuations across different betting exchange markets and bookmakers. With the aim of finding positive positions and ensuring you can finalise profitable trades.
This is sometimes known as contrarian trading or contrarian betting and can be used as a way to profit based on the opposite of public sentiment. It’s very popular to believe in the wisdom of the crowds, but sports betting and wealth in general is usually achieved against the majority.
Think about it, if the majority of people are doing something then it’s probably not the thing you want to be doing, considering the majority of soccer bettors will lose money. You want to achieve profits and bankroll growth, which requires you to maintain discipline and trade against popular public opinion.
Scalping Market Differences
What is a scalper trader and what do they do? Scalp trading or ‘scalping’ is a sure fire way for a beginning trader to understand how betting exchanges allow you capitalise on two opposing market positions.
This is classic exchange trading where you’re searching for inaccuracies and finding small amounts of value across a variety of different sporting events and occasions.
If you’re planning on scalping, you would not only limit yourself to football matches, but you would look across a variety of sports to find exchange inefficiencies.
Most scalpers will use automated techniques and scalping software to find market differences and automatically take the appropriate positions to obtain profits. This is the classic characteristic of the trader pursuing value across a betting exchange without understanding the reasons behind market movements, unlike swing trading or contrarian trading.
The main reason why trading is a profitable strategy
Learning how to trade is one of the more fundamental methods to find guaranteed profits within betting exchanges. It’s not hard to understand; focus on the odds differences, market movements and market inefficiencies is inherently profitable.
If you can maintain discipline and learn to trade value, which is what is really happening between different parties that want to buy or sell that value, means that you will always return a profit if you take the appropriate trading position over the long term.
Fundamentally, if you buy something for less than you sell, means you will profit.
The difficultly comes when you have to find the matches that produce that difference in value, which is more down to understanding the market, using appropriate software tools that can do a lot of the trading work for you and making sensible betting and trading decisions.
Find your betting and your trading super power
You need to relentlessly focus on one sport, one betting market and one trading technique, so you do not spread yourself too thinly across many different options and confuse your trades. If you do not understand why and when you should take specific positions in different markets, it makes no real sense to continue to pursue that methodology.
You’re not aiming to just return a profit, you’re aiming to fundamentally understand why you should be trading at specific times and under specific circumstances.
Take the time to learn the ropes and trade without real money, so you can get to grips with what you would do in every situation rather than simply going for it and losing your shirt before you’re able to understand why you lost your shirt.
A life of betting exchange trading life is not always easy
Unfortunately, practise does not always make perfect, as a trader could be fantastic when practising on their laptop without real money, but as soon as real money is involved, things often change.
Beginning traders find it difficult to maintain the same level of discipline and dedication to learning when they start to lose money (which will happen when you start trading) over a short period of time. For some reason beginning trades don’t seem to finalise with a profit in the same way and they lock in small loses over time.
The small loses can easily build if newbie traders chase their loses in the same way as a traditional sports punter, who wants to win the money back rather than sticking with the process to find value.
Taking the leap from fake money to real money is the hard part and this is where you should continue to focus on learning and understanding why you need to take specific trading positions until you have identified how to return small profits and then larger profits over a significant period of time.
Many of the more successful betting exchange traders have usually worked on their craft for a number of years before becoming skilled betting exchange traders.
You should also remember that you’re often trading against very skilled traders all trying to do the same thing, so you need to take the time to learn before playing in the popular betting markets against trading professionals.
Long-term patience and perseverance
How long is a piece of string? That’s the common statement to signify that something is uncertain, as a string can be any length, short, long or theoretically at least, the length of string could be infinite!
I don’t want to confuse the situation, but this demonstrates there are always trades available for you to find, but it also states that there are sometimes very few trades available.
You will not always find a suitable trade, so you should not take a position. The market will make a successful trade possible and you should not try to control the market, you’re there to take market positions to secure profits from people making decisions that you think contain profit between the buying and the selling.
Maintaining and growing your bankroll is the primary objective and just betting blindly (as that’s what you would be doing if you do not or cannot take a profitable trading position) means that you will not have the chance to meet that objective.
There will be many moments when you will have your laptop open and you will not find a suitable trading position, so you should not take any position!
A few final words...
Trading for long term positive bankroll growth is a slow process and there is only one way to ensure that you can maintain trading profits.
You need to pay less for whatever you want to sell, but remember you always need to find someone to pay for what you’re selling. That is the true essence of betting exchange trading, you’re dealing with different people all wanting to do the same thing…
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