Betting exchange training course

Due to popular request and after my recent presentation at the traders day in Clitheroe. I am pleased to announce that Global markets have agreed to arrange a full day training course on betting exchanges. I have done several private sessions on this subject but this is my first public session. The event will be held in the Manchester area on November 26th. Places are available on a first come first serve basis.

Please visit www.glomtc.com for further details.

About betting exchanges

If you could participate in a market that allowed you to buy better than market price, become market maker, gain near risk free profits and only pay commission when you have a winning trade - would it be interesting to you? Betfair and many similar betting exchanges have revolutionised the betting markets by turning them on their head to the point where they are no longer seen as gambling but more like modern financial risk and derivative markets. Hundreds of millions of pounds a week are now matched on betting exchanges as more and more people discover these fascinating new markets.

About the course

During the course I will take you from the theory and basics of betting exchanges right through to "front line" strategies that are being used by professionals on the exchanges to make a living from them. My passion for all things statistical has lead me to examine betting exchange markets and their participants in great depth. You will learn from somebody that has traded the exchanges profitably for some time and does so on a daily basis using a variety of tactics on a variety of markets. The course objective is to show you how each of the markets work, what to look for and how to trade them profitably. During the course you will perform a live trade to ensure you understand the concepts. By the end of the day I trust that all participants will have set themselves on course for a profitable relationship with Betfair or other similar exchanges.


Some key benefits to trading on betting exchanges:-

All winnings are tax free
No rejected bets, All bets are matched at the market price, guaranteed.
Very tight spreads
No underlying knowledge of the event necessary
You only pay commission on your winnings
Large and regular swings in prices
You can go long or short on the underlying event
Betting exchanges are relativity new and underutilised as a trading platform
No "shock" warnings, takeovers and external events to wipe out your position
Betting exchanges are an exciting new marketplace and I would love to have the chance to tell you about them. Attending the course will give you the chance to get a great start in this market. Please feel free to ask questions on this thread and I will do my best to answer them.

Kajman
It is really like day-trading financial stocks, where you are looking for momentum of price movement. Watch the Betfair screen and follow the volumes of money on the Lay and Bet sides of the screen. Most activity is in the last ten minutes before race time.

Scripophilist
Very interesting thread, hope that there will be an ongoing discussion.

Scripophilist - 31 Oct'04 - 15:27 - 74 of 107


kajman, Because of the way prices are constructed on Betting exchanges a move somewhere on the same event has an effect on all other prices, always. Some races I will avoid simply because I believe I will not be able to profit from them. Some are much better than others.

I'll often look at an event and adopt a different strategy based upon what I believe is about to happen.

At the end of the day I'm not looking to be prophetic, I am just looking to take money out of the market.


Scripophilist - 31 Oct'04 - 15:41 - 75 of 107


Jeffmack, A day of rest today. I have put an experimental position on the Bolton vs Newcastle match though.


Scripophilist - 01 Nov'04 - 14:25 - 76 of 107


On the racing this afternoon. Just to show it doesn't always go your way I am down 12 ticks after three races. Hoping for better for the remainder of the day. Will make a cup of tea and close all my other browsers so I don't get distracted!! Will endevour to give you an update after the last race.


Steph - 01 Nov'04 - 15:54 - 77 of 107


Scrip please pencil me in, will confirm in a day or two, thanks.


Scripophilist - 01 Nov'04 - 16:06 - 78 of 107


Will do, Drop an email to sarah@glomtc.com to reserve a space. I have emailed them as well to make sure a place is available.


jeffmack - 01 Nov'04 - 16:27 - 79 of 107


Just had a bet on Dow finishing negative at 4.0


Scripophilist - 01 Nov'04 - 16:30 - 80 of 107


Results from the afternoon on the horses. An "interesting" day! The +/- is for ticks per race. This is my preferred measure as I equalise all bets to a tick size to ensure good money management.

1350 -5
1400 -9
1410 +6
1420 +0
1430 +0
1440 +1
1450 -1
1500 No activity
1510 +3
1520 +0
1530 +12
1540 No activity
1550 +10
1600 +0

+17 Ticks gross on the day. I haven't looked to check the net total yet but not a particulary exciting day.

A very poor start but just didn't have my head screwed on. These things tend to average out over time. I've made an attempt to document some of the activity recently to present at the course. This should give you a good feel for how a day goes and the sort of decisions you will need to make.


Scripophilist - 01 Nov'04 - 16:31 - 81 of 107


jeffmack, what price did you get?


Scripophilist - 01 Nov'04 - 16:32 - 82 of 107


I find there are some odd prices on the financials every now and again. It looks like the underlying includes a calculation using beta and when the market is volatile intra day it can throw up some odd prices.


jeffmack - 01 Nov'04 - 16:39 - 83 of 107


Scrip
4.0

No backers at the mo, just layers at 4.0, 3.5, 1.62


Kayak - 01 Nov'04 - 16:53 - 84 of 107


Scrip, what do you mean by a "tick"? E.g. from 1.34 to 1.35, or 6.0 to 6.2, on BF?


Scripophilist - 01 Nov'04 - 17:07 - 85 of 107


Kayak, Yes, 3.05-3.10, 1.80-1.81 etc. I have found if you do not equalise your risk according to the tick size you are unable to balance your risk longer term.


Kayak - 01 Nov'04 - 17:12 - 86 of 107


Oh. Then I had a good day :-))

13.00 +13
13.10 No activity
13.20 -6
13.30 No activity
13.40 +7
13.50 +6
14.00 +13
14.10 +0
14.20 +9
14.30 +0
14.40 +3
14.50 +7
15.00 +4
15.10 +6
15.20 +8
15.30 -6
15.40 +8
15.50 +9
16.00 +0
16.10 -13

Total +68


Scripophilist - 01 Nov'04 - 17:17 - 87 of 107


Probably at my expense :(

I didn't really get it together today. Still there is the football tonight.


jeffmack - 01 Nov'04 - 17:46 - 88 of 107


Slow market the financial bets


Fundamentalist - 01 Nov'04 - 19:55 - 89 of 107


Good job kayak - well done!!!!

Steph - good to see you attending the course

Jeff - hope you are right - im short ftse futures from the close and could do with a drop in the dow


jeffmack - 01 Nov'04 - 20:10 - 90 of 107


Laid off my bet, so if Dow is up I'm level, if its down I win. Looks like up tho


Scripophilist - 01 Nov'04 - 20:10 - 91 of 107


Greened up on Man City vs Norwich before kick off so a win whatever happens during the match.


Fundamentalist - 01 Nov'04 - 20:14 - 92 of 107


greened up scrip ????


Scripophilist - 01 Nov'04 - 20:22 - 93 of 107


Missed the chance to grab a screen shot as Man City 1-0 up already. See the England Poland example in the top right hand corner. The P&L is green on each line so I win whatever the result. The process to achieve this is nicknamed, "Greening up"


jeffmack - 01 Nov'04 - 20:27 - 94 of 107


Script
Been trying to Green up but never seem to quite get there. Will have to attend a course.

One thing, the way you bet, do you need to have a substantial sum deposited with betfair (1000+)

Is it a case of big stake small margin


Scripophilist - 01 Nov'04 - 20:44 - 95 of 107


jeff, You need to turn it on its head. Work on the basis of "I want to win X", I measure mine per tick. Then that defines your bank. You would start when you are learning at maybe 1 a tick then increase that as your confidence grows. Over time the capital I have at Betfair has grown quite a lot so I take large positions when I am confident that the position will mature.


Kayak - 01 Nov'04 - 21:02 - 96 of 107


jeffmack

I developed this formula to "green up". I have it programmed on a programmable calculator for convenience, but you could translate it to a spreadsheet formula. It looks a little forbidding but once you get the hang of it, it is simple to use and covers a lot of situations. Most importantly you can use it whatever the state of your book at the time. You don't need to know the overall back or lay that you are trying to close (which would not be obvious if you have carried out a string of backs and lays).

STAKE=CLOSEDOWN*(-(1-TOUP)*UP+(1+TOUP)xDOWN)/(2*TOUP-(1+TOUP)*ODDS)+(1-CLOSEDOWN)*((1-TOUP)*UP-(1+TOUP)*DOWN)/(2*TOUP+(1-TOUP)*ODDS)

Where:

"up" represents the top line on Betfair for a two-outcome event, or the outcome you are trading for a multiple outcome event, "down" represents the bottom line on Betfair for a two-outcome event, or the rest of the field for a multiple outcome event

CLOSEDOWN = 1 if you want to use the bottom line to "green up", 0 if you want to use the top line
TOUP = 0 if you want to "green up" totally, 1 (100%)if you want to move all the profit/loss to the top line, -1 (-100%) if you want to move all the profit/loss to the bottom line, .3 if you want to move 30% to the top, etc. etc.
UP = the amount you currently have as profit(+)/loss(-) on the top
DOWN = the amount you currently have as profit(+)/loss(-) on the bottom
ODDS = the odds you wish to "green up" at
STAKE = the stake you should back or lay to green up at those odds (be careful of the direction, which will however be obvious from your book)

The formula will "green up" as well as "red up" if you are actually in loss. As in trading, it is a lot more difficult to "red up" (take a loss) than "green up" (take a profit)!

So for instance if you have +105 on the top and -50 on the bottom, and odds of 1.4 are available on the top,

CLOSEDOWN = 0
TOUP = 0
UP = 105
DOWN = -50
ODDS = 1.4

which will give you a stake to lay of 110.71 at 1.4 to "green up" fully, giving you 60.71 profit top and bottom.


jeffmack - 01 Nov'04 - 21:16 - 97 of 107


Kayak
Thanks, I will try to decipher it.

Managed to get in a win all ways situation after the Norwich equaliser. After the Man City goal I back Norwich at 18.5, so laid some off.


Scripophilist - 01 Nov'04 - 21:27 - 98 of 107


Kayak, that's dreadfully complicated! To green up you simply divide your line P&L by the current lay odds.

Jeffmack, I can send you a spreadsheet if you wish. Drop me an email.


jeffmack - 01 Nov'04 - 21:39 - 99 of 107


Script
Message sent via MAM, thanks


Kayak - 01 Nov'04 - 21:43 - 100 of 107


The formula is complicated Scrip, but it is buried in my calculator and I never see it. It handles partial greening up and also e.g. backing the opposite side rather than laying. All things you could work out by hand but it would increase the potential for errors. Also it forces me to think in terms of top and bottom on the screen which again removes a lot of the potential for errors. I'm sure I'm not alone in having occasionally backed rather than layed or backed the top outcome rather than the bottom.


Sonofagun - 01 Nov'04 - 23:49 - 101 of 107


I think I'll do the degree course first or maybe nightschool-1 day sure as hell won't cover it:)


DocProc - 02 Nov'04 - 09:21 - 102 of 107


I do think that, at first, the concepts involved are quite difficult to grasp. I devised for myself some calculations to do as 'exercises'. They helped me to get my head round things more easily.

eg, A 'Bet' has been placed on the Democrats to win the USA Election. After a time the odds change for both 'Bet' and 'Lay' and the following position is resultant:-

Republicans: Bet 1.71 / Lay 1.73
-100.00

Democrats: Bet 2.36 / Lay 2.4
300.00

Starting from a position like this, one can then work out what would be effect made to it after doing various sizes of Bets and Lays to each of the two sides and what would happen with a particular event result.

Next, one can add a third 'political party' (runner, player, etc) and do similar exercises.

Eventually, the concepts become much easier to understand and you begin to be able to spot the potential for the doing of various things. I suppose doing this kind of stuff just made me that bit more familiar with it.

I'm afraid I couldn't understand the two 'points' lists above and Kayaks formula lost me completely. I think they assume the reader (me) has possession of various types of other basic information. For me this assumption was incorrect. :-)


Iain - 02 Nov'04 - 10:41 - 103 of 107


I cant work any of that out.Its seems very complicated for a CSE Maths boy.


Tim3 - 02 Nov'04 - 11:42 - 104 of 107


Reminds me of traded options.

I spent ages looking at all the diffrent plays buy,sell, write, combis ect,before coming to the conclusion in my view anyway that the odds were nearly always against you :)

Not saying that is the case here though.


Bullshare - 02 Nov'04 - 11:50 - 105 of 107


Iain; I find it very easy,not, although I have a BSc ( Bronze Swimming Certificate):-)

It would help if betfair was not down today for 5 hours.


Iain - 02 Nov'04 - 12:01 - 106 of 107


LOL.


Kayak - 02 Nov'04 - 12:15 - 107 of 107


Tim3, the comparison between betting exchanges and traded options is a good one. Some of the characteristics of options are there. However Betfair is much much more liquid than UK traded options markets, with much tighter spreads. The gradual decay in value of an option (which makes any strategy based on buying, rather than writing, options a mugs' game) maps on to the tipping of the odds towards one outcome or the other as the end of the bet approaches and the outcome becomes more certain. However you can easily get onto either side of this movement, and in any case in many/most cases it is dwarfed by the possibility of the event itself taking a different turn, e.g. horses falling at the last hurdle or a goal being scored in the final minute, so that much of the decay will often occur very quickly in the last few seconds of the event when the outcome is very nearly certain.