Betfair Race Trading Strategy: Step By Step
Guide For Betting Exchange Success: Part 1
Author: Mike Davies

What I am going to outline over this series of articles is a
method that can be used successfully for trading horses on
Betfair.

I guarantee this method works and will make you a profit with
minimal financial risk to your overall betting pot. If you
stick rigidly to the rules!!

I am going to have to make qualifying statements because if you
don't stick carefully to the rules and instructions, you will
lose money over the long term.

My qualifications are as below:

+ 5 years as a traditional horse racing punter (loser overall)
+ 2 years of Betfair punting breaking even.
+ 6 months using my finely tuned trading method (overall
profit)

Why am I giving away this information, wont it affect my
profits?

I'm sure you've seen these sort of statements before on your
own research into Betfair.

There are betting systems galore presented on the internet.
Everyone claims their system is the only one that works.

Surprisingly, the standard answer to this question for once is
actually true, and I will attempt to explain why.

Similarly to the Stock Market trading or scalping on Betfair
relies totally on liquidity and volatility or in layman's
terms.CASH and NEWS!!

The more cash flowing through any financial trading system the
more bull and bear trends are followed and therefore
exaggerated. This in turn leads to trends being more defined
and longer lasting and so becoming easier to trade.

With more cash attempting to trade these peaks and troughs
bigger bets can be matched and so on and so forth.

These systems are self perpetuating until the bubble created by
buyers matching sellers, in other words demand matching supply,
bursts!!

And what is the initial trigger for a trend up or down or a
sharp change of direction?

Well in the Stock Market there are a variety of different
factors, but ultimately the sharp price movements are all
triggered by NEWS.

Okay, this news may come from a thousand different sources ie
profit warnings, changing fundamantals such as account
statements and balance sheets, movements of the related
exchange index, all the way down to things as spurious as
hurricane warnings, terror attacks and the interest rate.

Trading the Stock Market, it's extremely difficult for the
average punter to follow these sources of news 24/7 and piece
them together because they come from so many different angles
and by the time you hear about them the market is often already
pricing in the news.

You are competing against multi billion pound corporations,
banks and pension funds, guys in the city who are paid huge
sums to trade this information. Robots and multi-million dollar
auto-trading computerized facilities compete for every penny.

Unless you are sitting in a news conference with a laptop and
wi-fi you will never beat these markets.

The news can happen at any time of day or night meaning you can
wake to find you've missed an important piece of news and your
Stock has plummeted at opening time.

The reason Betfair is the perfect "trading" medium is due to
the massive volatility involved in horse racing, and enough
liquidity around the top horses in a race.

A horse race is also a defined entity with prices starting the
night before, a race start and a race end i.e. the Stock exists
essentially for less than a day. The market is too volatile and
unpredictable for the big players. It is a collection of small
players like yourself pitting their wits against each other and
the system.

The racing prices given early in the day reflect purely a
historical paper-based assessment of a horses chances as viewed
by the bookmaker, but as the day wears on "news" begins to move
prices rapidly, and as the horses start "going down" the action
really takes off.

Prices at 10/1 in the morning can be 5/1 or 20/1 by the time
the horses are entering the stalls.

This is where the experienced confident trader can really scalp
the market and make guaranteed profits depending on their
expertise.

Before you get carried away with this information, beware!

The real challenge in horse trading is as always the crucial
missing link in the chain that other so-called "experts" always
forget to tell you.

"knowing" which race and which horse price are going to move to
a significant enough degree to cover the market spread and so
allow you to trade.

Steaming is the movement of horse prices downward. Drifting is
the reverse. Movement of horse prices upwards.

It is possible to trade in both directions. Most professional
traders however look for steamers as this is where you will get
the greatest liquidity due to lack of backers on horses which
are drifting for obvious reasons.

This is where most trading "advisors" and book writers and
manuals leave you. Like most promises of wealth and success on
the internet, there's hype more hype a little bit of
advertising and then a tiny nugget of an idea at the end which
has cost you £200.

Later I will be showing you exactly how I go about looking for
steamers that I can get on early enough to guarantee a
worthwhile profit for my efforts.

As you learn and refine your own trading style and expertise
you will get a feel of your own for steamers. Everything else
is academic and can be taught, the art of finding a steamer and
timing your trades is just something you develop and learn by
practice.

Innovate, experiment, and learn by doing. Take the pain of
losing bets and always ruminate, cogitate and digest the
information as to what went wrong and why.

This is the only way you will learn to identify steamers and
trade them effectively.

FACT: The more people using these and any other methods and
systems on Betfair the better for everyone.

For every punter that I teach to win, there will be a hundred
others who will be using this and/or other systems.

90% of people attempting to learn and follow a system will
ignore a lot of the rules and caveats, or won't be as good or
determined as the top 10%.

Therefore they will lose their money, which then in turn
becomes available for you to win!!

Let us get one thing straight about Betfair:

When you begin to win then the money you will receive is being
taken from losing punters.

Betfair is just a MEDIUM, hence the phrase "EXCHANGE" that
matches your money directly with money from another punter or
punters with an opposing view about an event.

If you are backing an "event" to win then the money you are
wagering is matched against another who is "laying" the event
to lose.

To really understand Betfair trading we need to understand the
benefits of liquidity and volatility to experienced traders,
and to do this we will use an example of liquidity and
volatility in action in the Stock Market.

In my next article I will be looking at a recent FTSE 100 Stock
situation to demonstrate a perfect example of volatility and
liquidity in the Stock Market and how professional traders make
easy money by disseminating vital news in advance of the market.


About The Author: Mike J Davies is a Computer Analyst, Day
trader on the Stock Market and a Betfair Trader and Advisor.
More information, advice and articles are available at Mike's
website. http://www.ELottaLotto.com  Mike also blogs regularly
at: http://betfair.wordpress.com

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