My Experience Trying To Make Money Trading On Betfair

For years I have been obsessed with trying to make money trading on Betfair. And like any overly optimistic sucker, I have spent an enormous amount of time and money researching and looking into different systems.

The closest I ever got to making it work was when I entered a trading on Betfair competition. Everyone started with the same amount of money, and the person who made the most during a one month period would win. 200 hours and over 10,000 trades later I won.

Which is great! I had found a way to consistently and safely make money out of betting on horse racing. I’m now sipping champagne from my yacht…

Except I was never able to scale up my strategies enough to make it worth the time and stress. Despite spending a lot more time and investing in a lot of technology, I eventually gave up and returned to the much easier matched betting. I am going to tell you exactly what I did and what happened with the hope that you’ll be able to improve on (or at least laugh at) my successes and failures.

What Is Trading On Betfair?

Betfair is a betting exchange. A marketplace where punters go to buy and sell bets on sporting events. There is no bookie, when you trade on Betfair you are betting against another human being.

This means that Betfair becomes just another marketplace. When there is no house, phrases like ‘the house always wins’ and ‘house edge’ don’t make sense.

Just like on the financial markets where a trader will ‘buy’ at a low price and then aim to ‘sell’ it at a high price, when trading on Betfair you attempt to ‘lay’ low and ‘back’ high. Locking in a profit before the event has even occurred.

If people can make money trading on the highly regulated financial markets against professional traders with millions invested in the best tech, surely it should be much easier to make money trading on Betfair against regular punters?

In the below screenshot you can see a pretty typical Betfair marketplace where I am ‘laying’ (taking the bookie side of) a bet on Malaga. If I can later ‘back’ Malaga at higher odds, I will lock in a profit.

trading on betfair lay bet

The Gambling Times Trading Competition

The competition was posted on one of my favourite forums. The Gambling Times, which has since unfortunately closed down. I interviewed the founder in this post.

The rules:

Betfair trading challenge

There are a total of five top cash prizes for the five traders who make the most profit during the month. The top trader will also win a one year subscription to BetTrader worth £150!:

  • 1st prize: £50+1yr sub to BetTrader
  • 2nd prize: £40
  • 3rd prize: £30
  • 4th prize: £20
  • 5th prize: £10
    Traders will have until 4th August 2009 to submit their final profit and loss totals – your final overall total for the whole month..

I, along with 47 other people, signed up. I thought that if I could make it work with £50, I could scale up and get very rich very quickly.

My Tactic – Scalping The Horse Racing Markets

I created a new Betfair account, deposited £50, and after a lot of research, I decided to use a tactic called ‘scalping’.

I would watch the highly volatile horse racing markets, where the odds move all the time, and try to place hundreds of small trades, making a few pence each time, but also not risking very much on each bet.

Here’s a video of someone trading on Betfair using scraping through the software The Geek’s Toy. Yeah, it’s very boring to watch….

All that information relates to just one single horse race. Exactly. It looks so incredibly complicated because the software is throwing all the information it can at you.

Which I like. It gives me an edge. Everyone else just has the information from that first Betfair screenshot. Simple, no indicator of market depth, or historical performance and with a torturous 3-second delay on market data.

Using a piece a software like The Geeks Toy, I should be well ahead of the regular punters.

I actually used Bet Trader, which as far as I can tell is exactly the same just more expensive. The same programmer even made them both. The Geeks Toy costs £15 for three months vs £29.97 for Bet Trader.

Scalping is basically just guessing what is going to happen in the next few seconds. To make those guesses educated, I would look for indicators, clues, on which way the price would move. Here are some of my indicators:

  • Weight of money. If there is a lot of money waiting to be matched on one side, but hardly any on the other, it could imply there is more of a desire for one side of the bet and prices will soon move.
  • Momentum. If prices start moving and I notice quickly, they often keep moving as punters try and jump on a good thing.
  • Gaps in the market. If there is space between the back and lay I can sometimes place both sides of the bet in the gap (this is called market making in the financial markets).
  • Watching out for big orders. Sometimes large bettors will ease their money into the market to try and stop the market moving. If I notice a lot of money starting to appear on one side, it could imply that there is a lot more to come, which will move the market.
  • Price movement on the other horses. The way that the market works, is that if one horse becomes more likely to win, another must become less likely. But the market can be slow to keep up. By watched what other horses were doing I could predict price changes on the one I was betting on.

If I got it wrong I would trade out immediately (well that was the plan).

How I Got On

I started off just betting £2 a go. It is the minimum that Betfair allow, and would limit my losses. But the downside is that scraping one tick a time would also earn almost nothing.

I was betting on horse racing in the 30 minutes before the race started. Following my scalping strategy, I would place 50-100 bets per race. And hopefully keep locking in more and more profit.

The hardest part I found was trying to condition myself to enjoy taking small losses (with the logic that it means I didn’t take a big loss). Which is easier said than done. I kept holding on and hoping the odds would move again giving me a profit, sometimes it did, sometimes it just got worse.

Eventually, I set myself a few rules: If I have an open position and there is one positive signal then I try and exit one tick out. If there are more than one positive signal I wait and see what happens. If there are no or negative signals then I exit at the current price.

I also decided to stop trading around the 4 minutes to the off. I found that I wasn’t fast enough to keep track of my open positions and notice the signals on one horse, let alone all the other horses in the market. My motto became: don’t be greedy.

By week three I was in profit. But only just, £19.26 up. The bet size was too low and even though I was earning money most races, it was hardly anything. I was occasionally still seeing the red mist descend but was now confident that I could make money with a larger bet size. I decided that I was finally ready to start scaling up for the final ten days.

I rose my bet-size gradually. £3, then £4, then £5, then £10.

Here are the profit and loss statements for each race in my final week (click the image to enlarge).

betfair p&l final week

60 races traded on and only three lost money, and the total losses on those came to just £1.22. Considering each race involved 50-100 different trades, by this point I was pretty confident with my abilities.

Winning & Final Thoughts

My final balance was £135.11. With a total of 204 markets traded on (all horse racing). I averaged 42p a race, although that shows marked improvement. In my first three days of trading, I averaged just under 4p a race. On the last day of trading on Betfair, I averaged just over 72p a race.

Of the 48 people who started the competition, only nine ended up in profit. That was less than I expected, a lot of people bust out and lost their £50. (I am Grandthrax in the screenshot below).

trading on betfair results

Of those nine who ended in profit, not a single one was able to turn their success into a career in trading on Betfair.

After the challenge, I initially just tried scaling up my bet-size. But my one-tick scalping tactics didn’t work so well with £200 bets. The larger bet sizes spooked the market too much. Then I tried writing computer programs to place the small size scalping bets automatically on lots of different markets. But it turns out I wasn’t a good enough programmer to make it work.

Over the years I kept returning to trading on Betfair. Each time with a new idea and trying to make it work. And that’s the reason I am writing this: I am still fascinated with trying to make money trading on Betfair. And would love to hear from anyone who has made it work?

I think the logic is sound that it should be possible to make money. I believe I have shown that it can be done, even if only on a small scale. But I am yet to work out how to scale that up or automate it. Has any of my readers been able to make it work (more than earning a few pennies a race?). Is anyone looking into it?

  • Patrick

    have you ever considered building a model to trade financial markets ? your approach to trying to trade betfair, risk management and understanding of discipline sounds promising if you attempted to try. Patrick

    • I have, but my thoughts are that Betfair should be an easier version of the financial markets. You’re up against normal punters rather than massive firms with millions spent on high frequency trading algorithms. I’ll take another look, there might be something interesting I could do with spread betting or binary options.

      • Patrick

        mmmm – yeah if youre trying to beat the algos in terms of speed and execution, you have 0 chance. but, if youre looking to take positions for like a few hours/days , and come up with a model based on mathematics to determine your entries, stop losses and take profits – the playing field is pretty much level. look forward to see if u can come up with something regarding binaries- thats heavily stacked against you regards to odds of winning long term..

  • This guy has info on programming your own Betfair algorithms and has even written a few books on the subject:
    http://www.betfairprotrader.co.uk/p/programming-for-sports-betting.html

    It seems to be the only way to make consistent profit on Betfair these days. As an added benefit you would learn some pretty handy programming skills, which you can use on much more than that.

  • Rob

    Been trading betfair for a while now since Xmas, best product I found was this: http://www.bfscalper.com It took me a while to get to grips but doing pretty good now and learning to pick my races wisely as earlier on I was just trying to trade every race. My profits are increasing as well and trying to build my bank higher so my stakes can increase. Getting there.

    • Cheers man, I’ll check it out. Looks like he’s doing basically the same as what I was. How much are you now earning per hour? (if you don’t mind me asking!)

      • Rob

        Hi Sam as I say I started it around Xmas I bought it whilst off work over the hols to save boredom and making between £30 – £70 ish a day now, not always been easy and spend endless hours practicing it, but paying off if you have the time.

        • That’s awesome. Christmas really wasn’t very long ago. Nice one

    • Mike Kleinsteuber

      And I’m sure you’re nothing to do with the site lol

    • janis

      Hi im customer as well, its toff start for me, how do you pick your races, im practicin and hopping it will work out…

    • Mj Justas

      Do you mind, how much did you invest initially apart from the product cost

  • Personally I have always found scalping very tough in the horse racing markets. It takes a lot of experience and very fast reaction times to do it well.
    I much prefer taking a longer term style swing trading approach. You can manage your risk versus reward better and take a bit more time between trades.

    Trading the odds of a football match before the kick off is my personal preference. If you can react to new pieces of information breaking before the majority of the market. There is often very good profits to made with relatively low risk.

  • Caant Berry

    Just a quick word on trading. There is a very dangerous individual called Caan Berry that is conning people into paying out money for trading tools and investment pots. He is not a full time Betfair trader but a marketing man who uses a fake persona to sell his goods. Please look at @Scaamberry on twitter to see how he has been fully exposed. If it saves people from following a fraud like Caan Berry it will give me great satisfaction