Monday, Oct. 20, 2014

Profitable Trading Strategies

Betfair Trading StrategiesThis is a short series of profitable trading strategies. Completely different to the analytical approach of assessing weight of money and studying price/volume charts (not that there is anything wrong with this method at all).

I will cover several methods, all of which I’ve used, although there are many other strategies out there involving everything ranging from horse racing to cricket and even Big Brother! I’m sorry if you find my explanations patronising, but this is written for rookie traders and punters to follow as well as those already fluent with many of the basic concepts involved with trading.

As well as providing strategies you can use to make money on now, I hope the article also gives you the knowledge to go and create your own methods for your own specific needs. After all, individual study is the only way a punter/trader can ever learn to stand on their own two feet.


Part 1:

Strategy 1: Laying the draw in football

My personal favourite of all the listed strategies, mainly because, if you apply this tactic to the correct type of match, you are almost guaranteed to profit 100% of the time. I’ll explain what I mean by ‘the correct type of match’ later. For now, here is a summary of what the system involves.

The concept is simple - when a goal is scored in a football match, the prices of all the match outcomes (home win, away win or draw) changes. How it changes depends on many factors such as which team scores the goal and the time of the goal. In this strategy we are trying to lay the draw prior to kick-off, with the aim of backing it at a higher price, once the first goal is scored, therefore securing a tidy profit.

For example, say Liverpool are playing at home to Portsmouth. Liverpool, odds-on at 1.45 are expected to win the game and should score the first goal. In this event the price of the draw (7.20) would drift out, and you would then back the draw at the new price, giving yourself a free bet or equal profits whatever the outcome, depending on how you choose to play it.

This on its own however, is fundamentally flawed, for two main reasons. Can you think why?

If you came to the conclusion that either the underdog, so Portsmouth in the previous example, might score first or the game could finish 0-0, commend yourself. Obviously, should the unfancied side score first, the draw odds you steam, leaving you in a nasty position. Similarly, if no goal was scored, the price of the draw you continue to steam, further and further inwards, leaving you out of pocket.

The good news, however, is that both of these problems can be rectified leaving us with the perfect strategy (or at least I’ve never lost money this way after using it many times to make money). I discuss how we nullify the risk of the 0-0 and the underdog scoring in the next section. For now, I leave you asking if you can think of what the solutions are? It’s not a brain teaser, the answers are straight-forward and this is just a simple exercise to help you solve your own problems when/if you create strategies like this on your own.


Part 2:

Strategy 1: Laying the draw in football (continued)

Do you think you have the solution to the problem we had earlier on in ‘Part 1’? Congratulations if you came up with the idea to back the 0-0 so that, if it wins, it covers the liability of your lay in the correct scores market, to eliminate the chance that the game could finish scoreless, and potentially penniless.

Equal congratulations if you were able to think of only choosing games where the two teams had a relatively equal chance of winning, to eradicate the possibility of an unfancied underdog like Sunderland scoring against one of the footballing giants like Manchester United.

Simply add these new filters to the previous version of the lay-the-draw theory discussed in ‘Part 1’ and you create a no lose situation for yourself.

Below is a real example of the type of game you should looking for and one that I put money on. It occurred during the 2006 World Cup. In a quarter-final match, an impressive looking Argentina were drawn to play host nation, Germany. Many people predicted the winners of this game would win the tournament, and the odds represented the game would be a tight affair. Germany were slightly favourites at 2.80, the draw was available at 3.15 and Argentina were also available to back at 3.15. The fact that the odds suggested the game would be close meant that there was no real underdog, meaning, regardless of which country scored the first goal, the price of the draw would still shoot up afterwards, to be backed at a higher price.

Confident I had created a no-lose situation, the draw was layed for a £465, giving a liability just under £1000 and, to cover my loss in the event of a 0-0, I backed the 0-0 at for £120 11.0, to leave me with a tidy profit, of £140, if the score finished 0-0. (£1140 from the 0-0 win after 5% comm. take away the £1000 liability lost on the draw lay).

The game promptly started and I sat back waiting for the first goal. Argentina provided it and the price of the draw shot up immediately after the brief suspension that occurs once a goal is scored. I backed the draw at 6.50 with a stake of £250, knowing I’d just secured a nice profit, for doing very little.

As it turned out, the game was a great example of why discipline is so important. I could have been greedy and waited a while trying to get a higher price for the draw. This could have been disastrous for me, because, as it turned out the Germans equalised and the match ended 1-1 (with Germany going through on penalties). Consequently, the price of the draw dropped to odds-on and, had I not stuck to the rules strictly and secured my profits immediately after the first goal, I would have been down a lot of money!

In the end, my profit/loss figures from the game were as follows…

£1375 - £1000 = £375 (or £356.25 after comm.. on net winnings)
£356.25) - £120 = £236.25

PROFIT/LOSS = + £236.25

Not bad for less than an hours work!

With regards to where the figures from the calculations come from.

£1375 comes from winning the £250 back at odds of 6.5
£1000 comes from the liability of the £465 stake used to lay the draw
£120 comes from the stake used to back the 0-0
Final thoughts:

That completes the first strategy I will discuss in this mini series. I hope it was useful for you.

Before ending, however, here are a few bullet points of things you might also want to consider with this strategy, that I haven’t mentioned thus far.

- I always ensure with my 0-0 backing stake that, in the event of a 0-0, I will come out with a little bit of profit. An alternative to this is just to back the 0-0 to cover the liability of the draw lay and nothing more. In the likely event of that a goal is scored, you will make more money this way. I must emphasise, however, that, if you choose, like me, to ensure you’ll make profit on the game if the score ends 0-0 it’s important not to be too greedy with the profit you try and make. Firstly, the chance that the game will end 0-0 is slim, and secondly if you back the 0-0 with too high a stake, you may struggle to make profit overall on the draw trade, when a goal is scored.

- If possible, it’s always best to find games where goals are expected. These games often have high odds for the 0-0 scoreline. This means you can put less money to back your draw liability and should manage to lock in more profit when/if a goal is scored.

- If a bookie is offering a price in their ‘no goalscorer’ market that is roughly the same as the price on betfair for the 0-0, I’d advise you to back the bookie with the ‘no goalscorer’ instead. The reason is simple. When backing ‘no goalscorer’ own goals don’t apply. So, if the game finished 3-3, but all the goals were own goals, you’d still win your ‘no goalscorer’ bet! Many people don’t know this, but for most bookies it’s true. This means that, every so often, when you trade on a game that finishes 1-0 with an own goal scored, you can make massive, massive profits, because you win the ‘no goalscorer’ as well as making a successful trade. You may remember England’s opening game of the 2006 World Cup. It finished 1-0 to England and the Paraguay a defender nodded the ball into his own net! I used this strategy for that game and needless to say I made a small fortune. Don’t just back ‘no goalscorer’ for the sake of it, though. Make sure you’ve got good value by ensuring it’s a similar price to the 0-0 on betfair. If there is a massive difference, simply go with betfair and back the 0-0, instead.

- I’ve never had this happen to me in a game I was trading in before, luckily, but at some point you may trade a game with this strategy and find one team has a player sent off before a goal is scored.

Now, as I say, I’ve never encountered this, so I’m not sure how the market would react, but it’s possible, this could mean you make a loss, if the market goes against you. However, I would imagine, when a player gets sent of, the price of the draw increases. If this is the case, which it should be, I would advise you to trade the draw for a small profit, and also lay the 0-0 for a smaller price, ensuring a profit in that market, too.

To be unfortunate enough to encounter a loss, I’d imagine you’d have to be very unlucky and have someone sent off in the first minute, but, generally, after 5 minutes, the 0-0 price drifts in more and more, so you should be able to close both trades for the draw and the 0-0 and come out in profit, when someone is sent off.

If some gets sent off after the first goal, it’s not really a problem. By then you should have traded out and made your profit already. The good news, however, is this is the only event, I can think of, that could affect the trade negatively, and 99% of the time, you should still make a profit! J