What is Betfair?
Betfair is the world's largest betting exchange where hundreds of thousands of people place bets directly with each other.
Betting with other people through Betfair removes the need for a bookmaker or "house", allowing exchange users to bet directly with other exchange users at a price and amount that they both agree upon.
All Betfair does is hold the money for every bet and then pays out the winner with the loser's money, taking a small percentage (2%-5%) from the winning side.
Betfair has no control over the prices and will not close or restrict winning accounts, like bookmakers do, because their profits aren't affected by winning accounts in the same way a bookmaker's profits are.
Betting against other people on Betfair, instead of betting against a professional bookmaker, means that the bookmaker's profit margin is removed from the prices, meaning that prices on Betfair are on average 20% better than the same prices offered by the bookmakers.
Free Download!
BetTrader 4.0 is free to download and it's Grid Interface is free to use. All you need is a Betfair account.
Backing on Betfair
Backing a horse or team on Betfair means placing a bet which will payout to you if the horse or team wins the race or match. If the horse loses then you lose your stake.
For instance, if you Back
£10 @ 3.50 on the Favourite horse in the race, that means you want the Favourite to win:
If Horse wins:
Back bet wins so you will be paid £10 x 3.50 = £35 (including your original stake)
If Horse loses:
Back bet loses so
you will lose your £10 stake.
Every bet that is matched on Betfair has at least 2 counterparties: the Layer and the Backer. A bet is matched when both the Layer and Backer agree on a price.
How To Place a Back Bet on Betfair using BetTrader's Free Grid Interface (1:37)
How To Place a Back Bet on Betfair using BetTrader's Ladder Interface (1:20)
In Play Trading on Betfair
In Play Trading on Betfair is different from trading because it refers to trading the price of a horse or team while the race or match is actually running or playing.
When a race starts, Betfair suspends the market, cancels all unmatched bets and reclassifies the race market as In Play. Users can then place bets on the horses in the race as the race is running, up until the winner crosses the finish line.
In Play prices are much more volatile than prices are before the race starts because they are directly affected by each horse's performance during the race.
In Play traders watch the race or match unfolding and Lay and Back accordingly, trying to lock in profits by correctly reading what is happenning in the race or match.
Betfair's In Play markets allow skillful race readers to profit from Laying a tiring favourite midway through the race, or Backing a tennis player who gets off to a good start. Never before have gamblers had so many opportunities to make money in so many different ways from sporting events that until recently had a very limited number of betting products available on them.
Betfair imposes a 1 second delay on bets that are submitted into In Play horseracing markets, and a 5 second delay on bets that are submitted into In Play sports markets. This is to prevent people that are watching the event live from taking unfair advantage of the majority of people who view sports pictures that are delayed by a few seconds.
Hedging on Betfair
Hedging on Betfair is the cherry on top of the ability to trade price movements.
Hedging allows traders to lock in an equal profit regardless of whether the horse or team that they were trading on wins or not, allowing you to completely remove the outcome of the race or match from the equation.
For instance, in the example in Trading on Betfair, the trader Lays £100 @ 4.1 and Backs £100 @ 4.6, giving him a profit of £50 if the horse wins and no loss if the horse wins.
That's great if the horse wins, but if it loses then you still haven't made any money, despite having made a profitable trade.
Hedging your £50 profit will make sure that you make the same profit whether the horse wins or loses. You can do this pressing the Hedge button on BetTrader which will divide your profit by the available to Lay price and will then Lay the result of that calculation to give you an equal profit whichever horse wins the race:
Press Hedge Button >
£50 / 4.6 =
Lay £10.86 on same horse
If Horse wins:
You make
£50 (from Laying 4.1 and Backing 4.6)
You lose
£39.13 (from Laying £10.86 @ 4.6)
Result = £50 - £39.13 = +£10.87 profit
If Horse loses:
You make
£10.86 (from Laying £10.86)
Result = +£10.86 profit
By Hedging your £50 potential profit which you will make only if the horse wins, you can ensure a smaller, but guaranteed, profit whether the horse wins or loses.
Hedging on BetTrader's Free Grid Interface (0:37)
Hedging on BetTrader's Ladder Interface (1:17)
Live Hedged Profit/Loss Figure
(4:06)
Bookmaking on Betfair
The ability to Lay bets means that anyone can do what the bookmakers do, namely Make a Book.
Bookmakers Lay every horse in the field with the aim of collecting enough money in bets to cover the amount they will have to payout on the winner. By Laying every horse on Betfair you can make your own books to try and make a green book, where you will make a profit no matter which horse wins the race.
BetTrader's Bookmaker tab works out exactly how much money you need to Lay at the precise price for you to achieve your maximum desired liability. The trick is to collect more in Lay bets than your liabilty on any one horse is, that way you will make a profit whichever horse wins.
BetTrader's Bookmaker Tab (4:52)