|I started trading UK horseracing markets full time on Betfair in November 2002.
I made GBP 40,000 profit in my first year from a starting bank of GBP 200 without
even watching a horserace or picking up a formbook. With absolutely no knowledge
of horseracing I would win an average of 9 races out of 10 and go months at a
time without a losing day. I have made over GBP100,000 profit from trading on
Betfair, placing over 50 million pounds worth of bets in the process.
I had returned home to my parents' in 2002 after spending years travelling
all over the world and it quickly dawned on me that the party was over: I was
28 years old with no job, nowhere to live and not a penny to my name. As the
frightening prospect of working for a living started to loom, my Dad showed
me an interesting website that had popped up while I'd been away. He had always
been interested in gambling systems and the stock market and things like that
and my background as a futures trader was instantly awakened when he showed
me. The website was Betfair.com.
In appearance Betfair was no different from the financial markets, the only
difference was the underlying instrument which was being traded. Instead of
buying and selling stocks or bonds, people were buying and selling bets on sports
events. There was nothing stopping me from Laying a bet with one person at a
certain price and then placing that same bet with somebody else at a slightly
higher price, so long as I could read the short term direction of the market.
The major advantages that Betfair had were how easy it was for anyone to get
started and also how cheaply you could start learning. To get back into the
futures exchanges as a trader takes capital and some hefty monthly bills on
seat lease, round turns etc, Betfair immediately struck me as the poor man's
stock exchange, instantly accessible to anyone. Even their commission structure
was better than the financial markets: Betfair takes a small percentage of your
winnings instead of a fixed transaction fee based on Volume. I was free to trade
huge volumes of ultra short term positions whilst trying for only single tick
profits and was still able to make it pay.
My enthusiasm about Betfair rubbed off on my Dad and we talked about nothing
else for the first few weeks while I traded 2 pound bets from our new Betfair
account. Being able to trade in such tiny amounts meant I could try any kind
of strategy out that I wanted without having to worry about whether I lost 10
pence or 20 pence on the final outcome, and it wasn't my money anyway! Rent
was free, food was free and I was still in that honeymoon period with my parents
as I'd not seen them for so long so I could get away with it. After about a
month of mixed results the figures started to settle down and it soon became
clear that if I could do the same trades with larger amounts than 2 pound bets
I would be able to make it pay. The excitement of realising that I could make
a living from sitting in front of a computer from anywhere in the world was
almost to much and I lived, breathed, ate and drank Betfair. The alternative
of getting a job, especially after years of bumming around the third world drinking
beer and fishing and lying in hammocks, was just to unbearable and now failure
wasn't an option. Dad gladly funded our Betfair account with 200 pounds and
we upped the stakes.
The strategy was simple: Trading the favourite's price in the last 10 minutes
before the race started on all UK horseraces using all of the available balance.
A big advantage I had was that I wasn't interested in horseracing at all, and
we didn't have satellite television so I couldn't watch the racing even if I'd
wanted to. My complete attention to trading the numbers up until the race time
and then moving on to the next race removed any thought of horses or races or
who was going to win the race, I didn't care. If I was showing a potential profit
on the favourite as the race was about to start I would divide that profit by
the available to lay odds and lay that amount to make sure I made the same whether
the horse won or lost. Likewise, if i was showing a potential loss on the favourite
if it won I would divide the loss by the available to back odds and Back that
amount to make sure I lost the same whether that horse won or lost. It was all
about the numbers, nothing else. I barely knew one end of a horse from another
and was glad to keep it that way.
My trades were placed according to which way I thought the price was going
to go in the immediate term, by which I mean in the next 10 seconds or less.
As soon as I was matched on an opening Lay bet I would instantly be trying to
Back the same amount at the next highest price. And as soon as I was matched
on an opening Back bet I would instantly be trying to Lay the same amount at
the next lowest price. If I couldn't get out with the minimum profit immediately,
I would move my price to get out at the same price that I had just got in at
to make sure I didn't lose. The Scratch Trade, laying and backing at the exact
same price for no profit or loss, was my biggest friend, well over half of all
my trades were probably scratch trades.
My trading decisions on whether to Back or Lay were based on what I saw everybody
else doing. If money was coming into the market and Backing the favourite then
so was I, if large amounts were Laying then so was I. All I was doing was looking
for the trend and jumping on it and then jumping off it as quickly as I could.
I took quick profits and even quicker scratches with occasional losses. I found
that the longer I held a position the more chance it had of becoming a loser
so I became fanatical about getting out as quickly as I could. I figured that
the less time I held a position then the less that could go wrong and it seemed
to hold up that way. Quick scratch trades inevitably cost me a lot of profits
which I could have had if I hadn't scratched so quickly but they also saved
me from the big losses. There was no point in making lots of small one tick
profits and then having a ten tick loss every now and then, the small profits
strategy only worked if I was psychotic about avoiding losses. I never held
onto a losing position and never let a bet ride hoping that the horse would
win or lose, that was gambling and I wasn't on Betfair to gamble.
My stake size was determined by how much money was in my Betfair account. If
the favourite was trading at 3.0 and I had 200 pounds in my account then I could
Lay up to 100 pounds so I would Back and Lay in 100 pound stakes. If the price
was 2.0 I would back and lay in 200 pound stakes. As the account balance slowly
crept up so did my stakes sizes as we had agreed not to withdraw any money from
the account. The balance was divided by the odds before each race and in this
way the profits were allowed to compound as I gradually bet bigger and bigger
stakes as I got better and more profitable.
By the end of February 2003 I had run my Dad's 200 pounds initial deposit up
to 3000 pounds and I decided that anything over that level I would withdraw.
I needed to be able to jump in and out of the market quickly, and there was
no point in me keeping any more than that in my account because I couldn't place
such large bets easily in the same way that I had started. And besides, that
meant that now I could start withdrawing my profits! The cold, dark, totally
broke days of winter were finally over, now it was time to dust off the old
backpack again and take Betfair on the road...!
Founder of RacingTraders
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