Betfair Trading Explained: Complete Beginners Guide for 2024

Are you one of the growing number of people thinking about learning Betfair Trading this year?

If so, it might be a wise move with the current economic situation.

Here’s my ultimate beginner's tutorial on getting started as a Betfair trader, with everything you need to know to get started on the betting exchange quickly, safely and profitably.

As many of my readers know (and often say in their testimonials), the UKFootballTrading website only exists because of my genuine desire to help committed people become successful traders.

No fluff, no ‘secrets’ withheld, just useful explanations to help anyone who’s serious about Betfair trading to achieve their goals and maybe even… their dreams. 🙂

(Don't forget to download a free copy of my Betfair Trading For Beginner's ebook)

Ok, let's dive in...

What Is Betfair Trading?

The shortest possible answer is: Bet trading, as you're trading bets with other people, be they bettors or other traders like yourself. But I'd usually describe it more like this:

Betfair trading is the process of placing multiple trades (bets) on the sports betting exchange in order to guarantee a profit regardless of the outcome of the event.

Just like any other business, if you buy low and sell high, you make money. (Psst, if you don’t, you don’t!) Due to the fluctuation of prices (odds), and the huge sums of money in the markets, you can generate regular profits and earn a good living from betting exchange trading.

I won’t bore you with the full history but it is useful to know where this new type of trading came from.

When founded in June 2000, Betfair was unique from the start. Unlike traditional bookmakers, Betfair chose to create an ‘exchange’, so instead of punters betting against bookies, they could now bet against other punters.

With this new exchange being little more than a piece of software running on a website, their costs were tiny in comparison to a high street betting shop. This led to better odds being available, causing the company’s explosive growth as millions of gamblers shifted their normal betting over to Betfair.

But this also resulted in the creation of a new and enormous trading environment, where traders could make regular profits by predicting the moves in prices (odds), without any real interest in which horse or team may win the event.

I trust you now understand why the Betfair exchange gave birth to a completely new breed of trader, the Betfair Trader, people like me and maybe soon, you!

How A Betting Exchange Works

On most types of ‘exchange’, the ‘stuff’ changing hands is a stock or commodity like wheat, sugar, or gold.

On a betting exchange, the only thing you can exchange is bets. Mindblowing stuff I know!

The ‘price’ of these bets is the odds. But this exchanging process wouldn’t be possible without the ability to place lay bets as well as back bets.

In the old days, when the bookie took your back bet, they were actually ‘laying’ that event, placing a bet of their own that your selection would not win.

If you lost, they’d keep your back bet. If you won, they’d pay out your bet multiplied by the odds (their ‘liability’).

The exchange made it possible for the average ‘man on the street’ to place lay bets instead of only back bets. So you can now bet against something happening as well as for it.

What this means is that since you can now bet on both sides of ‘the book’, if you backed a horse at 3/1, and laid the same horse at a lower price like 2/1, you would make a profit from that ‘spread’ (difference).

In principle it is no different to buying shares at £8 and selling them for £10, except here you can actually go both ways, so you could sell them first and buy them back later, exactly like traditional ‘spread betting’.

With Betfair exchange trading, the real gold lies in understanding the influences or 'market forces' that cause prices (odds) to move up or down, and we'll get to that later.

For now all you need to know is this:

• If you believe a horse’s odds are going to drop or 'shorten', you’d back it first, and then lay it at lower odds later.
• Conversely, if you think the odds will rise you’d lay first and then back to close your profitable ‘trade’.

That's the Betfair exchange explained, now let's talk about how traders profit from it...

Betfair Trading Basics

It’s over a decade since I began helping people to trade the Betfair markets.

In that time I’ve learned that most beginner traders make the mistake of diving into their chosen trading methods too early, before gaining a proper understanding of the markets and the underlying forces at work.

This foundational knowledge is essential before any strategy can be employed successfully, so I will cover those crucial foundations in this section with links to more detailed articles where needed.

Backing and Laying

I've already referred to these types of bets but due to their fundamental importance to trading, I have a dedicated article about Backing and Laying on Betfair.

You can read that later but for now just be aware that:

• When you back something, you are placing a bet that it will happen.
• When you lay something, you are betting that it will not happen.

Understanding Decimal Odds

This can scare people a little, especially those with years of bookmaker betting behind them (Moi? How dare you!) But it’s really very simple.

In fact once you understand it, you’ll realise how much easier it is to work in decimal odds than fractional odds. Fractional odds are what you’d expect to see in a normal bookmakers.

There is a simple way to convert fractional to decimal, although you won’t need to convert it very often (if ever) when trading. If you take the odds of 4/1, the decimal equivalent is 5.0. When you understand why, you’ll see that simplicity I mentioned!

Fractional odds only relate to the profit your bet will earn you if you win. So if we look at 4/1, if you placed £10 at 4/1 and won, you would receive £40 back as your winnings, plus your stake. Total return = £50.

Decimal odds are simpler because the price tells you exactly what you will get back, i.e. your total return including the stake. £10 placed @ 5.0 = 10 x 5.0 = £50. Didn't I say it was simple?!

P.S. You may want to read my more detailed explanation of betting odds. 

Understanding Price Moves

Before you can attempt any sort of trading, you absolutely must have a good understanding of why prices move at all. Without that, how could you ever hope to predict the most likely direction, never mind timing the move correctly?

In the purest sense, there’s only one reason prices ever move in a market: Money!

As my old stock trading mentor used to say:

“Never forget the 3M’s: Money Moves Markets”

If there’s more money trying to lay a horse than there is trying to back it, the price will rise. Vice versa and the price will come down.

But money belongs to people, so you need to understand what motivates real human beings to either back or lay in any given market. And this can vary between markets.

For example, the team announcements before a football match will always cause markets to move, not so much in horse racing! However a jockey change or ill-health report on a horse might have a similar effect in a horse race, not so much in the FA Cup final!

Understanding how to assess these market forces, depending on what type of trading strategy  you choose, is utterly essential to making profits on Betfair.

* I will soon be writing a detailed article just covering how to read Betfair markets. Check back for a link to that when it's published, or Subscribe for free notifications by email.

Charts / Graphs

Betfair provides basic charts showing the general direction of prices. You can only view them when logged in.

Trading software (covered later) also provides charts and they are generally better than Betfair’s ones.

For now all you need to know is that charts show you the ‘raw data’, with prices up the Y axis, and time along the X axis.

This means you can see what has happened to the odds in any event, from the opening of that market through to the current second. It’s a basic graphical representation of what people, sometimes millions of people, have done with their money in that market.

This data gives a great insight into what the market sentiment is towards any particular team, horse, player or whatever else. It is of no use to you when using some methods like football laying the draw, but it’s almost essential to others like trading horses before the off.

* Interpreting Betfair charts and applying their patterns to your trading is another planned article I will be publishing soon.

Ladder Interface

If you’ve never heard of the ladder interface, it’s just the screen format which many traders use in their preferred trading software.

It presents prices in a vertical ladder, one ladder for each team or runner in a market.

It’s a nice way to trade because it allows you to see a wide range of prices, where you can enter an order with one click quite a long way away from the currently traded price.

This allows the placing of orders in advance of a price move, and you can also see other useful information like how much money is sitting in the queues at each price increment, whether a short term trend is developing, whether there are any obvious areas where the price got to and then reversed, and so on.

Understanding Support & Resistance

This is another topic I will soon covering in much more detail with a full page article. It's too important not to, although like the charts above, it only applies to certain methods.

Football trading generally doesn’t demand any knowledge of this because it doesn’t have any bearing on your trading, but for horse racing it can be a very lucrative thing to master.

Essentially, support and resistance both just mean ‘price resistance’.

• If the odds on a horse keep shortening to a specific price but then stop and drift up again, this would be called ‘support’, because the price is being resisted from going below that point, and thus the price is being ‘supported’ (upwards).
• Conversely, if that horse’s odds drift out to a specific price before getting backed in shorter again, that would be called ‘resistance’ because that effect is limiting it’s rise any further.

Glossary: Commonly Used Terms

Red/Green

Red means losses, green means profits. This comes from the Betfair website colours for win/loss figures.

Greening up

The process of ‘levelling up’ all green outcomes across the board.

If you back a horse at x and lay it lower than x, you have a profit, but that profit is only earned if that horse wins, as you only traded the price of that horse and thus your profit is locked into that one.

By ‘greening up’ you place another small bet which spreads that green across all outcomes, guaranteeing a set amount of profit for the race no matter which horse wins.

Trading software has a ‘one click green up button’ which takes care of all calculations and makes it a thought-free process, ensuring you don’t risk losing any of your 'green'.

Likewise you can also ‘red up’ which spreads any losses across all outcomes to ensure you have a fixed and known loss on the event.

Hedging

To place a small complimentary bet which ‘covers’ or ‘hedges’ against your liability on another bet or trade.

So if you felt sure Arsenal would go 1-0 up in the first half, you might back Arsenal for the first half, banking on that early goal (when their price would plummet and you’d lay to exit your ‘green’ trade).

To ‘hedge’ your position, or remove some risk, you could place a small back bet on the correct score of 0-0, which would recoup some of your potential losses, should Arsenal fail to get the expected early goal.

In that case, you’d close (lay off) the winning 0-0 bet when exiting your losing Arsenal back bet, significantly reducing the overall loss. This would be 'hedging your position' as the 'position' you took in that market was the expectation of a goal. You were just too much of a sissy to believe in yourself. 😀 (Joke!) 

Ticks

This is commonly used to refer to odds increments. So if you backed a horse at 1.66 and then laid it at 1.62, you’d have netted 4 ticks.

Liquidity

Amount of money in a market. A market is described as 'very liquid' or with 'high liquidity' if it has lots of money flowing through.

Generally if you look at the trading ladders (or money waiting at each price shown on Betfair exchange) and see large numbers like thousands or tens of thousands upwards, that would be a pretty 'liquid' market.

Some might also say it has 'high volume' which means the same thing. If you have just £tens, £20s and £50s in the queues at each price, that would not be a very liquid market due to the low volumes of money involved.

Scratch (out)

This refers to cancelling a trade for break even. If you scratch a position, you will generally exit at the same price you entered, hence no win and no loss.

An example would be if you've opened a trade and you're waiting for the markets to move and they don't, or perhaps the event you're trading suddenly goes 'in play'. You'd exit the markets immediately by 'scratching' your trade.

Edge

An advantage in any market which you have and most others don’t.

A casino has an edge on the roulette table, it’s called the zero slot!

That tilts the playing field in their favour, statistically. Without it they wouldn’t be guaranteed a profit in the long term.

Cash out

Befair’s term for their one click feature (a button on the website). In the past this type of one-click closure of positions was only possible with trading software. It closes your position and ‘greens up’ for you automatically, all with one click on the “Cash Out” button which appears once you open a position.

Dutching

Most people define this as backing multiple outcomes (i.e. teams or runners) in the same event to increase the chances of winning or 'cover' the risks, a bit similar to 'hedging'.

In the purest form, and certainly in anything I have done which I would ever call true Dutching, I would define it as backing all outcomes at the correct odds to guarantee an overall profit.

It’s obviously rare to find an opportunity do this and match all orders at the same time (years ago it was possible sometimes).

Instead you might order three back bets on a football game, Team A to win, Team B to win, and the draw. But you would order those at prices a bit higher than the currently traded prices, so that if all match, you have a guaranteed profit before the game kicks off. If not, you need to ‘scratch’ the ones already matched and cancel the ‘dutching’ trade.

Bookmaking

Laying all outcomes for a guaranteed profit. The opposite of dutching, and something I used to do for hours every day as it’s highly addictive!

It’s what a bookmaker would do, hence the term! Bookies took people’s back bets on all runners in a horse race, hence they were ‘laying’ all horses by definition. That’s why they would monitor their odds carefully to ensure they could make a profit no matter which horse won.

Betting exchanges made it possible for me, you or anyone else to do some book-making, and it can be damn good fun!

In-Play or In-Running

An event or market which is live and underway. Football goes ‘in play’ from the first whistle. Horse races are usually referred to as being ‘in running’ after they set off.

Steaming

If a horse is drifting in price, it’s called a ‘drifter’. When its price is shortening for a prolonged period, it is ‘steaming’. Racing commentators use the term, as do traders.

Field

Horse racing term meaning ‘all the runners’.

You might hear “this is an experienced field”, meaning all runners are experienced at racing. Or if you lay all runners in a race, you would be ‘Laying the field’.

Crossovers

Crossover points are specific decimal prices on the ladder where the ‘tick’ size changes. This is a subject well worth understanding fully, as it is one of the simplest ways to stack trades in your favour, and it is an integral part of trading 'pre-race'.

In short, these prices make great places to enter a lay trade due to the much greater reward compared to the risk.

Each tick in the right direction (upwards) is worth nearly double what each tick in the other direction is worth.

The picture shows that if the price goes against you (comes down), you'd lose £1.03 per 'tick', but if it goes in your favour (upwards) you'll make £1.93 per tick.

* I will be writing more on Crossover Points soon.

The Mechanics of a Trade

Although trading methods vary, every trade should consist of these 4 steps:

Entry

Here you are ‘opening your position’ in the market. This will either be a back or a lay bet, depending on which direction you expect the price to go.

Stop Loss

Ideally you should decide this before your entry. But if not, then immediately after your entry you should determine the maximum number of ‘ticks’ you will accept going against you before you exit for a loss.

This is a crucial self-defence step to protect your bank, and your entire career as a Betfair trader will depend on your ability to do it. Knowing how much you can afford to risk on a trade is vital.

You’d be hard-pressed to find a successful trader, in any market on earth, who doesn’t know, understand, and employ a stop-loss religiously.

A stop loss can be a mental note, but it's better (especially when learning) to avoid any chance of forgetting or changing your mind and actually pre-order your exit trade. This can be done in trading software with a right click on the price where you want to get out if it goes wrong, and it will happen automatically (including if you get up to use the loo, yes, I have, and yes, more than a few times!)

You can ‘trail’ this behind your position if it’s going in the right direction too, this would be called a ‘trailing stop loss’ and it would basically begin by defending you against losses, but as your trade moves into profit, it can then protect your green as well.

All of my ebooks include detailed guidance on stop losses as it's critical to long term success and profitability.

Management

Between opening and closing your trade, you are ‘managing’ it.

This is often overlooked by beginner traders which is a serious mistake.

More green can be made and more red can be avoided, by proper trade management.

For example if the picture gets stronger for your trade, you could add more money to your position on its way up/down the ladder.

Conversely you could remove some of your liability if you lose confidence in the move for any reason.

Exit

Whilst it sounds obvious, this simple task is one which should be done with great care.

It’s very easy to make the mistake of rushing off to another market to open another trade before carefully checking that you have closed out your previous positions.

Exiting will usually consist of:

• Ordering your exit position and checking that it has fully matched.
• Greening (or redding) up so you have identical profit/loss regardless of the outcome of the event.
• Checking and double-checking that you have no sneaky liabilities hiding away to bite you later!

We have all made the mistake of rushing off, only to see a nasty red on our profit and loss sheet later in the evening! Check, Check, and Check Again! Oh and keep reading to see how it can cost £Thousands if you forget this! (Author hangs head in shame!)

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Betfair Trading Software

Originally the only way to open and close positions was using Betfair’s website, clicking on the back and lay buttons after calculating stakes manually, yuk!

Trading software soon arrived which made the process a hundred times more efficient. Without software, many trading methods would be somewhere between difficult and impossible, especially in the racing markets.

Betfair has an API (data feed) which your chosen software connects to, getting data bursts several times per second, giving you a very busy live trading screen much like you’d expect to see on a financial trading floor.

There are many huge benefits to using dedicated trading software, such as the advanced charts which help to show trends and reversals etc. There’s a few trading programs available these days, all of which are good and perfectly usable for full-time traders, but I won't go into that here as I have a detailed review of Betfair trading software.

Which events are best for trading?

This is often asked but it's a bit of a 'piece-of-string-question' . All markets can be profitable but you can’t trade them all so you must choose. But I have one very important point to make in answering this, it’s called….

The Zulu Principle

As many of you know, I have prior experience of trading stocks/commodities. That’s where I first heard this phrase and I just discovered it has its own Wikipedia page!

From a trading perspective, using this principle is a way of laser-focussing on what you find easiest, or have most knowledge and interest in. And that’s my advice to those trying to choose a Betfair market or trading method to learn.

The point being made is this:

Don't try to be a jack of all trades.

At least not until you can do so successfully, and that is years away, trust me on that!

Most professional Betfair traders are earning their crust from just one or maybe two sports such as soccer, horse racing, tennis, cricket, rugby, NFL, F1, Snooker etc. Most focus on one of the first two or three.

By specialising and focussing on one sport for your first year (or 5!), you exponentially increase your advantage and reduce your risks, as you grow in knowledge about that subject and this will always help to increase profitability. You learn the pitfalls too, think of red cards in football, or non-runners in horse racing.

What Interests You?

If possible, you should choose a sport which interests you at least to some extent.

You don’t need to know much about it, but that slight interest will mean you absorb information much more readily, and you will likely retain it much better too.

Many people like football, even if they don’t watch it regularly. I am not a fan of modern football, I like the sport itself but not the business, nor the players very much if I am honest. But I do like the game enough to be able to enjoy watching it and appreciate the talent etc. So when I started trading, I practiced what I preach here, and I focussed on football.

Over the years I developed my football trading until I had more than enough methods locked down, and then (and only then) I delved into others like tennis and the mighty horse racing markets.

This was more due to wanting a new challenge than to any particular desire to watch horses run in a circle! Also my wife was a bit sick of never seeing me in the evening, and most horse racing takes place during the daytime, unlike the footie which always had me pinned to my desk from dinner time 'til bed time, and if I did pop to see her we’d never get much peace with the goal alerts pinging on my laptop/phone!

Long Term Trading Opportunities

Most full time Betfair traders are trading markets just before they go in-play or during the event itself. But I’d urge all traders to keep a look out for longer term opportunities which sometimes pop up.

If you’re not ready for them, you’ll miss them. It’s nice to have a few longer-term positions running in the background, and they can offer some damn good profits too.

A good example of this is my trade on Leicester back in 2016 which I am sure many of my readers will remember well for all the right reasons!

If you’re a football fan, you’ll probably already know what I am referring to, but at the time most people laughed at my position!

It wasn’t emotion-based, it was evidence-based, and this is key to successful trading in any market. Don’t just ‘go with the flow’, as the flow usually goes down the drain!