Betfair trading strategies – Trading order flow

04/02/2018 | By | Reply More

There is no doubt trading is an odd thing to do in a betting market.

‘Real’ Trading is generally tricky to understand, can be counter-intuitive and worst of all it’s a great way to profit.Why worst of all? Well, there is the problem, people find it hard to really fully understand it. Cynics of the world unite!

How I trade on Racing

On Racing, I’m a ‘pure’ trader. I trade order flow. When I arrive at a market, I observe how it is trading and then start making decisions on what I think will happen next. Is the favourite being backed? How much? How far? I’ll have an idea about the market long before it gets close, but only when the money arrives will I truly understand it.

I was more or less forced to adopt this approach as when I started trading Racing, as I knew little about. So I defaulted to what I could see, rather than trying to predict it through the form or some other means. I figured that people were much on that than me, so why try and compete on that basis? I was at a point in my life where I had spent a lot of time on financial markets, so I borrowed from my experience there.

Trading order flow is odd because you can’t describe specifically what you are going to before it happens. It unfolds around you. It’s incredibly effective though, much more effective than most can imagine, but it can also encourage people to pursue errant strategies. Trading is uncertain by nature, it’s a balance of risk and pay off. That doesn’t suit most people. Therefore it is easy to get fixated on systems and processes and ignore ‘pure’ trading. An easy to understand, ‘if a then b else c’ type process, is very appealing and easy to execute. But longer term it’s flawed. Beware people offering simple solutions to difficult problems.

How I trade on Racing

When I look at the card on any particular day , there are several races where I already know what I was likely to do and how the markets are likely to act. I could guess the average money traded on the race and the runners and when it was likely to arrive. But likely, average, expect, guess are common words in my trading vocabulary. There is often no definite answer when trading in this manner. Despite all the things I know, I can’t say for certain that it will happen. I need to watch the market for some level of confirmation.

There are set-ups that occur frequently and repeat with a decent degree of certainty, but there is always uncertainty due to the nature of the sport.

True trading can be a little ambiguous, but that’s also why it is so effective.

Structure and flexibility

There is structure to what I do, it’s not really feeling. I’ve spent years carefully unpicking all aspects of the markets. I’m hunting for repeatable patterns and then following them. But you would be surprised how much practice helps. You often find yourself getting ahead of the market. You know what you are looking for and what is going to happen and the better you get, the further you arrive ahead of it. I summarised this process in a video.

I’ve now clocked up 17 years and over 190,000 markets. Now and again patterns appear a long way out, but that’s generally rare. However, you can usually see the general shape of a market well in advance. But you just don’t know specifically what your trade will be, trades appear as the market unfolds.

It’s important to understand that when a trade appears, you don’t need to take it. You can actively manage the trading risk that way. So I try and take acceptable risks with a good payoff. The range of trades I’ll take and how aggressive, varies from one market to another, from one day to another. You will know I particular love big meetings where my strike rate is normally high.

The key and the flaw

The ‘trick’, for want of a better word, to really effective trading in the same manner. Is to arrive at a market, assess what you are going to do, then execute to the best of your ability. But right up to the point you place the trade, you can’t be completely sure you are doing the right thing.

The flaw with this approach is that humans love patterns and reason. So much so, that the brain often makes it up if it can’t find it. Give it uncertainly and it hates it, give it reason, no matter how false, and it loves it. Read up on Apophenia if you want to learn more. This is ultimately how system sellers work. They calm brain by giving it a clear set of instructions and reason. As a trader, If you trade against this, you will probably do pretty well!

If I headed this post ‘five easy ways to make money with little risk’ it will get ten times the views, but that’s not the true reality of trading. But it does lead you into where you can find an edge.

Your mission

Edges can be found in many places. But by trading in this manner, I eventually figured I had a ‘hidden’ edge.

I’d say a big chunk of it comes from people not being able to understand that it’s possible to trade this way. Even if I try hard to lay it out clearly, people will still swear blind you are just making it all up. You can’t really tell people what is going to happen before it unfolds, so to the outside world it often appears you are being wise after the event, or perhaps being evasive, but that’s not the reality.

When I first discovered this trading method I realised that it had HUGE potential and maybe I had three years to exploit it. But somehow, nearly eighteen years later, I am still doing it. I would have bet at massive odds that this wasn’t possible way back at the start. I should have been put out of business ages ago. I’m sort of embarrassed to still be so far ahead in terms of thinking. So I’ve learnt that rather than get upset at the amount of scepticism I’ve received, I should be embracing it. So many questions, so many queries, so many doubts. But here I am still ploughing away to the best of my ability.

Live love and prosper

I understand why people are sceptical, but I think it more or less comes down to your brain wanting a binary decision on a trade. Your brain wants a yes or now. It’s not built for a wishy-washy 65% right sort of decision. Most people just can’t do that and the world isn’t built that way. Humans act on emotion, not particular logic. Realising this was a watershed moment for me, in all aspects of my life. If you can provoke emotion, people fall into a predictable response mechanism. Politics ruthlessly exploit this and take a look at social media for second by second examples.

This is why politics is such a strange place, people want strong leaders, they don’t want a ‘Well this is probably the right decision’ sort of approach. But in fact that, this is exactly what is required for optimal decision making. I can tell you now that it’s never going to happen unless Vulcan’s are in fact real.

When you realise that, it’s an enlightening moment as it’s a reflection on the human state of mind. It’s both amazing and frustrating at the same time, but also explains everything that happens in the world. You will feel a sense of calm when you realise that.

To follow up this blog post I’ve created a video, you can watch it below. It’s already got five thumbs down as I don’t specifically tell you how to make millions with a few clicks of the mouse. I am really reassured by that, live long and prosper!

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Category: Trading strategies

About the Author ()

I left a good job in the consumer technology industry to go a trade on Betfair for a living way back in June 2000. I've been here ever since pushing very boundaries of what's possible on betting exchanges and loved every minute of it.

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