For many years I dabbled with various types of trading on Betfair. Sporting events which I got involved in varied from the obvious football to boxing, rugby, golf, tennis and of course horse racing. Of all the types of markets I tried to find my way in, for a long time I found horse racing to be by far the most infuriating and difficult to master! For a long time it seemed so illusive it was almost a mystery to me. I soon found out that I was far from being alone in this experience.
Like all the best things in life, the more effort something takes, the more lucrative and worthwhile the potential rewards. Racing trading is no different and is perhaps the best example of this point. The sheer volume of money in the racing markets is absolutely astonishing. Likewise, for someone who can master these markets, the profits can be equally impressive too.
There were various reasons why I found it so frustrating, those reasons only became clear after quite a few thousand quid down the drain trying out methods, timings, race types, and lots of other variables. The short way to explain my experience is …
In the horse racing markets, you can make a lot of money very quickly
…. and you can lose a huge amount of money even more quickly!
Despite my frustrating learning curve, I knew for absolute certain that there was some real gold to be found in these markets because I knew people making extremely good money as racing traders. I saw their P&L, their trades, I watched over their shoulder many times and sat in awe of the greens totting up on their trading software. But when I had a go myself, for a few months I would do really well, only to blow a large chunk of it with a few accidental clicks in wrong boxes, or more often by simply chasing a small losing trade, compounding it into a massive loss and before I took a breath I was dead in the water and thoroughly miserable too. I was a proper beginner back then, so I know exactly what pitfalls await any newcomer who dares to sit down in front of these fast-changing markets.
If you are someone who suffers from the old chestnut of “throwing good money after bad”, the racing markets can be an extremely dangerous place to be. With such huge amounts of money piling into these markets close to ‘the off’, you can have just about any size bet matched in the blink of an eye. That offers a lot of power, but also a lot of risk for the clumsy clicker or fat fingered one! If you have a lack of self-control or bad discipline generally (I did), you can click on a whim or due to a sudden rush of blood or a gambling urge, and before you even have time to think about what you are doing, say good bye to your hard-earned bankroll.
Taking a loss with a cool head is a learned skill. I don’t believe anyone who tries any form of trading can instantly just “accept” a loss without it hurting emotionally. That emotion leads to anger and a desire to fight back, to get “revenge” and ‘revenge trading’ never ever EVER works. I honestly don’t think anyone has tried to disprove this more than myself! Talk about bone-headed, and you’re talking about me! But I am not alone, it’s a human trait which we must all learn to cope with and control in ourselves. Some are definitely better equipped to control it than others, but for people like me who find it extremely hard to overcome, it’s the main obstacle to success in fast-paced arenas like the Betfair horse racing markets. Resisting that desire to ‘get back at the markets’ for taking your money, being able to stand up and walk AWAY from the screen after a losing trade, is one of the most important skills in successfully negotiating the wild and wonderful racing markets. That was definitely the biggest obstacle to my success anyway, and I can only speak from personal experience.
There are many ways to trade on Betfair when it comes to horse racing. I have tried most if not all methods. I now concentrate on just a few strategies which I find effective and profitable IF combined with a very disciplined mindset. I can’t state that last point strongly enough. Discipline is something you can’t buy in an eBook or even from a £5000 training seminar.
Your own level of personal discipline is a combination of your genetic makeup and your early life experiences. It’s completely personal and individual, you either have it by the bucket load or you don’t, and most people don’t. Therefore it can only come with hundreds of hours of practice, practice LOSING that is, not winning. We can all be great at winning, but being good at losing, and not letting losses change your approach to the next trade, is what separates a good trader from a bad one. A good trader can do ok with a bad method, a bad trader can’t do much with a good or bad method, except hold out until the next big loss comes along due to a mistake or lack of emotional control.
Some of the methods I use may be familiar to some readers, but just as with my approach to laying the draw, my personal take on the overall strategy is what makes it work for me, after a lot of time and money spent fine tuning it to reduce risks, cut out potential losses, and capitalise as much as possible when things work out nicely. This is what makes a method “mine”, something I can personally rely on, even though the overall basics might be well-known to many other Betfair traders. I have seen good methods win and lose depending on who was operating them, there is a huge lesson to be learned from that fact.
In my opinion there are two general types of trading strategies for horse racing:
- Shotgun Strategies (“systems”)
- Intuitive Strategies
The difference between the two is simple to understand. Shotgun strategies merely look for qualifying events, and they are all approached the same way, traded the same way in other words. Some shotgun type methods can become more intuitive as a trader tunes them for a better strike rate, thus improving and personalising the strategy for his or her own needs and objectives.
An obvious example of this is my Lay The Draw football strategy. Laying the draw in football matches is one of the oldest and best-known football trading methods of them all. Some love it, some hate it. Some earn big money with it, some are adamant that it “doesn’t work”. The human mind is so varied isn’t it! But I don’t do it the same way as most, and this is why I can use it regularly, daily when the footie season is in full swing. The shotgun approach didn’t work for me (even though I know it can for others), this approach simply looks for qualifying games based on the odds (home odds-on favourite, draw priced 3.5-5.5, for example), and the trader just lays the draw the same way, with the same stake, in each and every qualifying game, hoping for a long term edge where these types of games usually see an early (enough) goal from the home team.
Back testing against football stats databases show that this can work well, but can also fail, seasonal changes in various leagues or teams can be enough to make it break even or worse, and that was never the type of approach I wanted to take in my trading. So I spent time (years) working out all the ways I could avoid a losing trade, and incorporating that protection into my analysis and trade selection criteria. This quickly became the difference between losing money and making money, and it’s also why I didn’t publish my own personal method for a long time! I felt quite protective of it, after all it was MY time and effort (and money!) which paid for my learning and tuning to hone it into something I was fully happy with.
Where horse racing is concerned, an example of a shotgun method might be the Lay All strategy. A short explanation of this method is to take qualifying races and lay all (or ‘lay the field‘ as it’s also known) for a fixed stake every time.
The basic shotgun approach can work but if you want more, you need to do more. So fine tuning is always where the real edge can be sharpened, making the whole thing more effective.
The idea is that you want a minimum of two horses matched (laid), three ideally, as only one can win so any lay bets matched on any horse which doesn’t win delivers a profit.
Learning to filter more and more, reducing risks of losing trades and spotting the likely winning ones, is where an ok method can become a good method. As you can probably tell, I was always more interested in a personalised approach to all of my trading, where I could learn a skill that would stay with me for life once I had it cracked. This means that every click is at my discretion, there is no “system” to tell me when to click or when to trade, and no system to blame if things don’t work out.
I wanted methods where I would sit and take a personal view, and trade that view. Approaching the markets like this allows a more fluid process, where I can change my mind at any point, walk away, or dive in depending on what I see happening in the markets in front of me, whether that be on the TV (racing channel) or on the trading software charts. Just as with the football methods I use, this takes a long time, a lot of money, and a huge amount of patience too.
The first intuitive strategy I mastered was ‘Scalping’. Just like scalping in the FX markets (or any other fast-moving market), this process looks for a very quick entry and exit where you can ‘safely’ steal a tick or two. It’s the opposite of “trend trading”, where you would be looking for big moves about to happen, and take a ride on the curve during that move, holding onto the trade for as long as possible until you are sure the move has finished. With horses, or more specifically with the enormous liquidity and volume in the horse racing markets, scalping is something most sensible people can have a go at without much risk to worry about.
Obviously you need races with plenty of volume, some Irish races can be low on liquidity. You want to be working in the last 10-15 minutes or so before the off usually, at least when learning anyway. This will mean you can get fast “fills” (orders matched), so getting in and out doens’t take too long. Then all you have to do (he says!) is learn how to make sure you make a green tick, and not a red one, most of the time anyway. What you need is either a very stable market where nothing is really happening but money is still flowing through, or you need a trend where you get in on the right side and immediately take a tick the other side as it moves through your exit price.
Scalping horses is enjoyable and relatively easy, but just as I said at the start, the horse racing markets can be frustrating and costly if you get things wrong. So even though scalping is seen by many traders as a “low risk” strategy, it can quickly burn you if you are overstaking or not aware of the indications that something is about to change drastically in the market you’re trading. There is nothing worse than putting a very large stake into the market and just as you click you see a huge bet from a bookie or similar which drops the market several ticks against you! It takes a lot of practice, and as always, a large amount of discipline to GET OUT the second something goes wrong, even if that means taking 2 or 3 ticks loss to get out QUICKLY. And it’s important to do so, as large bets dropped into the market often have the effect of starting a trend (sustained move) in the price, in fact that’s often the intention of some of the biggest bets thrown into the ladders.
Speed is everything with scalping, and it’s a numbers game. You want more winners than losers of course. Assuming you are in for a tick, and out for a tick (red or green), you just have to get a better than 50% strike rate and you are making money. For anyone thinking of trying this method, I would always recommend using £2 STAKES to begin with, and for as long as necessary, until you’re confident and profitable.
The method seeks to take one tick out of the market whenever a safe opportunity presents itself to do so. This will usually be in extremely stable markets where money is flowing through but the prices are not moving up or down. However it can be done (after plenty of practice) on markets which are not stable, and perhaps are actually trending in either direction. As long as you fire in your entry and exit trades in the right order and at the right second, many markets can be scalped. It does get more risky with trending or volatile markets though, so they are not ones to learn on. Even on a stable market, if there is lots of liquidity (flow of money filling orders) you can sometimes have 5 or even 10 scalping trades in a matter of minutes in the same market.
While practicing with this method you can learn a lot about the racing markets in general, and make a few quid too. Using trading software means that you can set your tick size (money per tick) to a nice comfortable level and this means you don’t have to worry about playing with your settings while trading, you just hit the back and lay buttons on the ladders, super fast, low risk, enjoyable trading. Don’t mistake this for “easy”, nothing about racing trading is truly easy, but there is easier stuff and harder stuff, and I would definitely call scalping one of the easier ways.
You won’t make large individual profits with this method, but that’s not the point of it. The point is to make regular small amounts as SAFELY as possible. Scalping before the off is probably the most sensible first step anyone should take when they start trying to trade the horse racing markets. The longer your money is in a racing market, the more risk you face. This is especially true as you get into the last 5 minutes before the off. So the fastest entry/exit times are the best, always. Scalping takes some intuition and a lot of practice to do well. I have applied the same approach to football markets before kick off and even in tennis and other events too, as it’s a method which lends itself to any market so long as its stable enough, or sometimes even moving but in a slow but consistent direction where you can pinch a tick or two in a very short ‘risk window’.
The longer you spend staring at the ladders, the better you will become at spotting the safest times to “nick a tick”. You will learn the various little tricks like spotting prices on the ladder where the queue of money is very small, and you can stick an order in there and sit back and wait for the market to come to that price, quickly taking the opposite side before it takes your original order. The majority of the risk is avoided if you are LIGHTNING fast at exiting a trade. So if I back at 2.42, I am hovering my mouse pointer over the lay side of 2.42 ready to “Scratch” or take a matching bet to get out for break even. Reflexes are everything, so being as prepared as possible to scratch out is one of the keys to surviving with this method. If for ANY reason you feel it’s not looking good, just scratch it, there are a thousand more opportunities so this method is one of those you dump instantly for any reason, even if that’s just a “bad feeling” which is really the start of your own intuition learning curve happening, so listen to it!
Scalping offers newbie traders a few baby steps into the racing markets as well as others, and this is the reason I have mentioned it. Many people ask me “how to get into racing trading” and scalping is often my answer. The risks are small (just like the returns, that’s trading folks!) but the self-control and intuition you gain is extremely valuable for all future trading in these markets, so it’s definitely not something I look down on.
Back To Lay
This is a fantastic trading strategy which blows most others out of the water in terms of rewards and ability level needed. It is “easy” compared to most racing methods, as not much intuition is needed but (and it’s a big BUT) you need nerves of steel and reactions like Bruce Lee.
Why? Because this is an “In Play” trading method, which means the markets are jumping wildly all over the place during the race, so you have to know exactly what your PLAN is before you get involved. You don’t want to try making decisions ‘on the fly’ after the race sets off.
The most sensible approach is to know what you are doing before the race runs, so you have no thinking to do, thinking is deadly when the horses are hammering down the home straight! You should be well out by then either grinning about your green numbers, or tutting at the relatively small loss you made if it was a losing trade.
The idea of this method is to do some research and find horses which are “confirmed front runners”. You want a horse which bolts from the stalls and runs off into the sunset every time it runs. Some horses, in fact some jockeys and trainers too, prefer to run from the front in all races they are involved in. Mark Johnston is a well-known Yorkshire-based race horse trainer, and his horses are well-known to the Back To Lay traders as they regularly run from the front. This isn’t reason enough to trade one, but it’s a good indication to look further at the horse.
When you find a regular front runner, you are aiming to back it before the off, and lay the bet off (trade out) during the race or “in running”. The logic is simple. The horse has a price to win the race before the race goes off. The chances/odds are based on them all starting from a level line, or stalls in many cases. But once one horse shoots out to the front, ideally gaining an “uncontested lead” (out on his own with no other horses alongside to impede his progress), that horse’s price will obviously shorten. So you backed at say 3.0, but when he is 10 lengths ahead in the first 5 seconds of the race, he could well have shortened to more like 2.0, sometimes lower. You then click to lay off your bet, and green up (software required), usually bagging a tasty green. If the horse doesn’t do what we hoped, or doesn’t get a good lead quickly, you are OUT even more quickly for a loss or quite often a break even (even a green sometimes).
This strategy can be very profitable. It is also extremely simple to do when compared to the ‘rocket science’ required to master the pre-race trading style. It’s probably the fastest way to make money trading horses as far as the time you are involved in the markets with your hard earned dosh at risk. Nearly all of my back to lays last less than 10 seconds, most less than even 5 seconds.
The risk/reward ratio is superb compared to almost any other trading method in any market that I have ever come across. For a paltry £10 or £20 stake, you can often net £5 green. That’s a massive return for such a small risk. But don’t aim for that kind of return, just let what happens happen, and get out the second your horse has made a nice clear lead, as prices can quickly change especially if the horse isn’t strongly fancied to be capable of winning. You also want to watch for the whipsaw which sometimes happens when many traders are exiting their back to lay trade, obviously they are all then laying the horse, so the odds can quickly go back up, above the starting price, be warned!
Which leads me to one of the biggest risks of this method – GREED. All trading has this risk, but this method is far more susceptible to it than the others. Why? Because the race is running, adrenaline is high, and YOUR horse (the one you backed) is leading the race! Can you imagine closing your back bet on a horse which is leading a race, perhaps you are looking at a £200 green if he wins, and currently, he IS winning! This is where ultra discipline is needed. Remember the TRADE (not gamble) is about profiting from the early lead, we don’t give a damn who wins the race. Yes it’s a tad annoying when (as quite often happens) your horse leads, and leads, and leads, and wins! But believe me if you start thinking about holding on longer and longer, you will start losing your stake every time, and quickly the method will cease to be profitable for you. You are in it for the first piece of action in the race, the horse hopefully bolts from the stalls, leads for a short period, and you are out with your profits banked nice and safely.
If I had to choose just ONE method to teach someone with no experience of racing trading, this would be the method I choose. Does this mean it can’t go wrong? Ha, of course not. I had one a little while ago where the horse was a nailed on front runner, it had front run all of its last ten races in a row. So I backed it quite heavily and the dumb donkey threw the rider off as they came out of the stalls, it was that keen to get away fast!!! Stake Lost, in a split second! It didn’t take many trades to make it back though, thanks to the great RvR of this strategy, but it was still painful and I spent a while cursing at the jockey for not getting a grip, literally!
The main risk of this method is a TOTAL loss of stake as sometimes you just can’t exit or there is no point exiting if your horse gets a bad start and its odds shoot to 1000-1. So you shouldn’t need me to tell you…… Stake what you CAN AFFORD TO LOSE, divided by 20! In other words, if your trading bank is £100 and you CAN afford to lose that money (if not, what the hell are you doing trading with it?) then back front runners with a stake of £5 only. This is simple money management and will protect from any unlucky streaks of horses falling over out of the stalls and many other unforeseen events. Approach it carefully and you can do extremely well, growing your bank very fast with this method. Remember, I said “approach it carefully”! Leave your greed at the door!
This is something which really needs a large eBook all to itself, and that is something I plan to do soon. (Edit: It’s done as of Jan 2019) I can’t explain it well enough here to do it justice, but it is without doubt one of the most (if not the most) profitable way to trade the Betfair horse racing markets. But boy does it take time to learn. It invites just about every psychological risk which exists in trading.
Trading trends in the pre-race markets takes a HUGE amount of practice to master. It also takes far more discipline and self-control than any other method, so it’s definitely a big challenge to the average novice trader. These markets can be fairly unforgiving, perhaps sometimes even a brutal place to trade, especially in the last 5 minutes before the horses run.
Trend trading also needs a fairly advanced set up. You can’t just use the Betfair website in your browser like you can with some methods. You need software, you need live video feeds running, and you need the racing channel on the TV so you can hear commentary, good and bad reports about horses, jockeys, weather, ground, trainers etc.
As already mentioned, my ebook is now finally published on this topic. Ok it was nearly 2 years later than expected, but I still think it was worth the wait and I am glad I didn’t rush it. At over 460 pages long, it’s a huge task even just to read it, let alone read it several times (which is strongly advised), let alone start to practice with the methods I explain! There is no short-cut, not if you want to be profitable anyway. (I assume you do!)
The pre-race markets are extremely complex and certainly not as easy to trade as most stocks and commodities are (in my view anyway). As far as I am concerned anyone who just wanders into the pre-race markets without a great deal of foundational knowledge, understanding all the complexities of market dynamics, price behaviour and influences, and about 100 other things, it’s just suicidal if you ask me. It’s not something to learn ‘on the side’ or as a weekend ‘hobby’. It’s an entire lifestyle and career change, and therefore if you give it the respect it deserves, you’ll be well-rewarded. If you don’t, if you try to just guess your way into it, you won’t be trading for very long. That much I can promise you!
Early Trend Trading
The method is basically a way of sussing out which horses are getting a lot of early money, a lot more than all other horses in their race, from the minute the bookies open in the morning. It incorporates information from some of the UK’s top tipsters (“top” meaning most popular, not meaning “best”!) which means punters reading the morning press will get a nudge in the right direction, and we can see that coming, which means we can predict fairly often that a horse is going to shorten in price throughout the day. In these cases we can back that horse in the morning as soon as our analysis is done, and often wait for several hours to lay it off nearer to the race time.
This is quite a different method to the others mentioned, and it’s a great one for beginners as it’s low stress, low adrenaline, and low risk if you monitor the trades or use automated stop losses via software. The strike rate is very good too. I will update this section in months to come as I am planning on coming up with a little ‘system’ people can use to find these, and hopefully give people a gentle way to lower themselves into the pre-race markets.
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hi Tim, is the “laying the draw book” still available to buy, kindly let me know as possible
Yes, click the link in the above article or click here to view the sales page.
Did you make progress with the software for early trend trading?
Will you be marketing it as a product for sale?
It’s in progress and yes I expect to be marketing it at some point this year, more testing needed to improve success rate, but so far pretty reliable
Did you ever get around to doing the e-book on “back to lay” the horses?
If so, how can I get a copy?Best wishes.
No its not produced yet but very soon hopefully.
(Edit – It’s now done)
Hi I have just bought football ebook which I think it is very good and doing one simple strategy on LTD. Thats something need to be focus on this one strategy. (Too many strategies is not good!) Also I am looking forward to get back to lay horse from you soon and I really want this for a long time. Thanks tim….
Hi Jono, thanks. Yes agreed, you can spread yourself too thin very easily with Betfair trading. I did it myself for a year or two and watched my success go down gradually. Laser focussed. Its called the “Zulu Principle” – worth Googling that, stock trader saying.
Thanks Tim. It was interesting to read about that! That made me realised now. Focus one strategy and also you say ‘Selectivity is key’ too. So far I only one or two bets a day and some nothing. So I have to follow my intuition when I feel positive with the statistic (On soccerway) then go for it. If I feel not sure, maybe take a bit of risk or something not right then don’t do it! Simple is that!