Adam's Comments on 2003 Trading Results
2003 was my first full year trading on Betfair. I had started in November 2002 with £200 and by the start of 2003 was up to about £300. Starting from January 2nd you can see that I had a winning run of about 70 straight days without a losing day and this was what really convinced me that I had cracked it.
Some of the winning days in that run were really break evens but the fact that on the bad days I stood still rather than losing was promising. A favourite phrase of mine was borrowed from Abraham Lincoln who said, "I may only walk slowly but I never walk backwards!" You can see that despite some of the days when I made next to nothing, the fact that I wasn't going backwards meant that things started to build up fast even from such a small starting bank.
The good thing about trading is that you can continually use your bank over and over again to generate profits from a much higher amount of bets than you could actually place if you weren't trading. By continually using the same bank in loads of short term, low risk low payout bets I was making the tiniest of margins but on a big enough amount of money to make it worthwhile. A 1% profit on turnover was out of the question, most days you can see I only make more like 0.1% on turnover, the secret was to do such a high volume of these low risk, low payout bets as to make such a small profit margin worthwhile.
As you can see, my total volume of bets placed for the year from that initial £300 bank was £17,620,846 making a profit before commission of £42,130. This equates to a profit margin of only 0.24% profit on turnover. A quarter of a percent profit margin sounds pretty crap but when applied to almost £20 Million it starts to become worthwhile. And the advantage of such low margin trading was the consistency of my results that such a low payout made possible. I wasn't exactly asking for a lot so it was reasonable to expect such a flat growth rate with hardly any volatility and literally no drawdown.
The other advantage of such consistent profits is that it keeps commission down to the bare minimum. If you are gambling on Betfair and have large swings in your results you end up paying much more commission as a percentage of your profits than if you only win and don't have those big swings. For instance, say you're gambling on each race, if you win £200 on a race, then lose £180 on the next race and then win £200 on the next race and then lose £180 on the next race you have made £40 profit overall from 4 races. 5% commission charged on your 2 winning races is £20 so you end up with £20 profit. Even though commission is only 5% you have actually paid out 50% of your winnings in commission.
Now, if you had been trading those same 4 races and made an average of £10 on each race, not only would you have made the same profit without having to stomach the 2 big losses but you would pay much less in commission also. 5% of each £10 profit is 50 pence so you would end up with £38 out of your original £40 profit. 5% commission when you don't have losses to take into account actually means 5%.
You can see that my total commission payments for the year totalled £2,336 which equates to only 5.54% of my total winnings, it's slightly higher than 5% because I didn't win every race that I traded on, I only made a profit on 9 races out of 10. Trading is by far the most efficient and consistent way of making money on Betfair.
And the lack of losses means you don't need to keep a big bank to ride the inevitable losing runs that you will experience when gambling. An evens chance can have a losing run of 8 or 9 no problem, it happens routinely on any roulette wheel. If you're backing horses at odds of 3.0 or 4.0 you can reasonably expect losing runs of 20 or 30. As my chance of winning on each race was 9/10 my chances of a losing run of more than 3 or 4 were very slim so I didn't need as big a bank as a gambler needs.
I ran my Betfair account balance up to £3000 by March and at that point I decided to start withdrawing money. By then I was pretty confident that I was on the right track and I was sick of being broke and living at home. Besides, I had reached a ceiling and didn't need any more than that to be able to place the maximum sized bets that the markets could handle. First thing I did was kiss my parents goodbye, thanked them for letting me live for free while betting on horses everyday and moved to London where I rented a room in a shared house in Fulham with a bunch of Aussies. I didn't want to be cooped up in the house so instead of working from there I worked out of the easy internet cafe on High St Kensington everyday.
Each day I'd get up at the crack of noon, have an hour long bath and then stroll to work. Things had definitely taken a sharp upturn in my life! There were 3 losing days in March, I think due to the adjustment of always having to trade with a hangover now, but apart from those little blips things continued to get better and I didn't have any losing days in April or May as my figures started to average that magical grand a week figure that I had been aiming for.
London was great and I was having a lot of fun but it didn't take long for the old itchy feet to start up again and I decided to really push it to the limit and see if I could move abroad and still make pounds, the ultimate goal. I went to Barcelona and rented a nice apartment near the beach and worked out of an internet cafe at the end of La Ramblas, the one with the best computers. This was in the summer when the evening racing was on so I'd spend about 7 hours a day in there every day and then go out and get hammered every night. After a few months of that I got a bit bored again and as soon as the evening racing finished at the end of August I took the Betfair show back on the road to Rio de Janeiro. The plan of doing the same there didn't quite work because the internet connection was no good in any of the internet cafes, so after a couple of weeks off I headed over to America to try it out there.
San Fransisco was my first stop, I'd heard some nice things about it so figured I'd try it out but the problem was the West coast timezone. UK horseraces started at 6am and if I'd stayed there through the winter I'd have been getting up at 4am to start trading. Not. After 3 early starts working out of Kinkos I decided to bail and headed over to the more civilised timezone of the East coast. Miami here I come!
I loved Miami as soon as I arrived. Being able to make pounds by sitting in front of a computer for 3 hours a day still blew me away and within 12 hours of landing I'd rented a 14th floor ocean view apartment in South Beach. It took a while to get internet hooked up so in the meantime I'd take my new laptop to the Starbucks on Ocean Drive every morning and do my trading from there. By midday I was out of there with another successful day behind me and it was either off to the beach or whatever I wanted. I had never felt so free.
And that was my first year on Betfair. Continue...
Trading Results
Adam made over £100,000 profit on Betfair from a starting bank of £200.
Check out his complete trading results below:
Daily Trading Results 2003
Daily Trading Results 2004
Daily Trading Results 2005
Overview