Seasonality in racing
February is historically the poorest and hardest trading month of the year on the pre-race horse racing markets. We are deep into the heart of national hunt racing and typically there will only be around £450m traded this month which is around 40% less than the amounts expected as we hit peak season where the monthly volume will of increased to around £750m. In short, the amount of money in the markets is much lower.
How does this affect Betfair trading?
When looking at any trading strategies, liquidity is key. None more so than the pre-race horse racing markets. The less money going through a market means the weaker the market, which means the markets are prone to more sudden and violent moves making them far harder to read. This can be a good thing if you happen to be on the right side of an unexpected move but can be very disheartening when you’re on the wrong side. You could see hours if not days of steady profits wiped out with sudden unforeseen erratic moves. You can almost feel it can be two steps forward three steps back this time of year.
Those who have traded for several years they will know this is quite normal and expected this time of year and is just part of the yearly cycle that is repeated every year. It’s those who are still within their first year of trading that will have been caught most unaware, especially if you started around the beginning of summer last year and were maybe just getting to grips and finding their feet in the markets. Suddenly the last few months will have likely left you scratching your head wondering why you now seem to be going backwards or wondering if you have lost the touch or perhaps it was beginners luck last summer.
For those who only started in the last few months, it’s not actually as bad for them as they are yet to experience the more liquid summer markets. So for them at least, they are in for a more pleasant surprise in store and things can only get better.
Light at the End of the Tunnel
Nevertheless, these last few months every year are the hardest for trading the pre-race horse racing markets, with February being the worst of all. So that’s the bad news, now for the good news… yes, there is light at the end of the tunnel!
If you look at the graph above you will see that even though February marks the lowest and worst trading month of the year it’s then followed by several consecutive months of increased growth in liquidity. As liquidity picks up, the markets will become a little calmer and easier to read with less unexplained erratic moves and generally will be far more tradable.
Starting with March the next 4-5 months will see a steady increase in traded volume month on month as the number of meetings and quality of racing quickly begin to pick up. It has it’s beginning with Cheltenham in early March, April sees the Grand National and start of the Flat turf season, then in May there’s the Guineas and Dante. Then there are plenty more festivals and quality meetings as we head into summer, peaking around June/July before beginning a steady decline back down.
Believe me, once it gets going and if you trade the whole summer by September/October you will be praying for the winter to arrive and some shorter less intense and hectic days to finally get chance to take a breather before the whole cycle starts again.
So, with eight months of good quality racing ahead and with plenty of trading opportunities on the horizon if you’re going to take some time off do it now before while things are still at their lowest.