"In Chaos there is opportunity" Old Chinese Proverb
The old chinese proverb is very true and in the case of betfair, the volatility of odds creates an opportunity to make guaranteed profits from a risk-free position. Traders exploit market movements by backing a selection at high odds and laying it at lower odds.
The timing depends on whether you think market moves will go up or down. If you think that odds are going to increase then you want to lay it first then back it when the odds increase. Conversely, if you think that odds are going to shorten, then you want back it first and then layed it when odds shorten.
To illustrate how the trading strategy locks in profits on the Betfair exchange, we are trading a race favourite called "Black Beauty". The odds are currently 1.5 but we believe that it is too short and that at these odds, layers will dry up. So we believe that the odds will increase. So we first lay Black Beauty at 1.5 for $140. Say that the market does drift to 2.20 where we back the Black Beauty for $100. The table below shows how the above Betfair trading has locked a guaranteed profit.
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Trade 1 : $140
Lay at 1.5 |
Trade 2 : $100
Back at 2.2 |
Net Profit |
BB win |
Lose $70 |
Win $120 |
$50 |
BB lose |
Win $140 |
Lose $100 |
$40 |
If Black Beauty wins, we have a net profit of $50. If Black Beauty loses, we have a net profit of $40. We have traded our way into a risk-free position on the race, where we profit no matter what! (Hint: As a rule, you always want to be laying for more than you are backing to created the guaranteed profit.)
It is possible to entirely base your professional gambling strategy on betfair trading alone. You'll need to play around until you find a market that you have a feel for. Remember that successful trading does depend on market volatility. (Hint: Horse racing in the final 10 minutes is always volatile)
Good Luck
Beginner Hint: Start small. You'll make mistakes. But to make things less stressful start with smaller bets. Also, to create a completely green book you'll need quite a big market move. It might be easier to get the "free bet" on just a single outcome rather than a guareented profit across all outcomes. So just keep the lay and back bets the same size and close off the trade quickly. This still creates a free bet on that particular outcome winning.
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