So there’s actually quite a strong link between matched betting and trading, and you may be interested to know that effectively, although it wasn’t called it then match. Betting was where I started. My trading career on bed fare please like and comment on. The video below that will allow me to produce better quality videos and more of them in the future, so yeah. If you were to transport yourself in a time machine and go right back to my very first few bets that I ever placed on a betting exchange.
They were effectively matched bets. What I was doing was going to bookmakers. They didn’t tend to do many offers back then, and of course they do now, which is why the whole match betting community has grown from there, but I would go to a bookmaker, preferably an obscure one, get really good odds off of them on a certain event And then I would go onto the exchange and lay it off on there.
Now, in the very early days of the exchange, people were just putting up odds, left right and center, so people didn’t really know the true value, and if he just did a little bit of work, it was quite possible that you could actually back at a bookmaker Up on the exchange and get your profit straight away, it was that easy. It was the proverbial printing of money back in in those early days. However, it wasn’t quite that because there was no money there, so you couldn’t do on any particular scale. It was a quid or two here and there and a couple of quid a tenner or whatever and very small margins, but very soon quite a few people started doing that. So the opportunity just to ARB immediately started to fall absolutely out of the mix and that’s what what I was doing.
I recognised arbitrage from other markets and the technical and synthetic arbitrage and outright bobbing and so on and so forth, and that was the very first thing that I did on exchanges I’ll just go to all the bookmakers find the best as possible and then lay it Off on the exchange or try and are Boff position on the exchange, but as with all things like that, you know the low-hanging fruit goes very quickly and suddenly it was getting quite competitive to be able to be able to do that. So I just advanced my strategy, a notch up and basically I would go and get the decent odds from a bookmaker and then I would just offer the position up on the exchange. So I’d basically say: okay.
What? But you know I’m gon na back something at fifteen. I want to lay something at fourteen in order to make a bit of money, so I would just go into the exchange and put the position on the exchange at the price at which I wanted. That’S one of the beautiful benefits of the exchanges is: if the price doesn’t exist, you ask for it, so that could be just a one ticket or it could be a few away and as the market wobbles, your order gets filled. So that’s what I started doing then I went from standard are being or much betting as people would recognize it nowadays to offering a price on the exchange in a profitable position, but I was still going around bookmakers searching for little opportunities wherever I could find them To put onto the exchange, so I was effectively a liquidity provided to the exchange and I cannot pretty much still out so yeah. I was doing that for a while and then one morning I just woke up, and you know I was spending a lot of time going to bookmakers to get offers to understand.
You know what price I should be putting on the exchange, and I just woke up one morning and thought why don’t I put both bets on the exchange and I thought wow, it’s ridiculous. It’S that could never work. It could never be that simple.
There’S no way, you know why. Why would somebody back at a worse price than they could lay out, and why would somebody later worst price they could back out bla bla bla, you know. Why would why would that happen? But the simple fact is that day I went on to the exchange and I put one order at higher odds than the lay order and then just sat and waited and then magically both of those positions got matched and it was like wow, and it was that Point at which the penny dropped and I suddenly realized in fact what I really should be doing and you know things accelerated from there. That was the moment that was the the pivot point at which I went from just doing it. Sort of you know messing around sort of you know hobby type style, to suddenly realise thing that I could do something a lot bigger and you know, let’s start pushing the boundaries and trying to figure out where we can go with this, and that is how trading Was born because I figured out that if I just put two positions on the exchange and waited for them to get matched, then you you evolved the strategy from there.
A lot of them were getting matched immediately anywhere. I knew nothing about racing, but by putting two positions on to the exchange, suddenly I was getting matched and you know you said anything all hold on a second. I’Ve discovered something here, I’m doing something a bit different but then very quickly.
Of course you evolve. You strategy so over the many many years you know when I first started it was: let’s just put two positions into the market. Now it’s a lot more complicated than that and there’s a lot more thought and depth that goes into it. So I’m anticipating and understand the way to micro.
Anyway, it’s a lot more detailed and complex than it ever was, but that’s a function of scale because if to go from here to a much much larger numbers, you have to start thinking outside the box. Sorry to use that word, but it’s true, you have to start thinking about clever all ways of doing things and how can you put more money through and you know, is there more than one way in which you can do stuff and so on and so forth? But there’s an important distinction here, because I got a message this week from somebody saying: I’m really interested in trading. I’Ve been matched betting freighters have built up a bit of a bank, but my concern with trading is that it seems to involve risk, and that is the big difference between match betting, which is pretty much risk, free or very low risk and trading when you’re actively Trading you’re, putting yourself in a position that could potentially profit, but you could also potentially lose money and it’s the balance between those profits and losses.
That really matter. So in the very very early days of my Betfair career, I was are being. I was effectively doing matched betting, but in order to be able to grow and put through larger amounts of money, then you start taking positions in advance of them getting matched and essentially that’s what trading is you’re, putting one position in the market you’re taking a view On, what’s going to happen to the odds and then you’re putting your closing position in at a point a little bit further up or somewhere else within the market, and by doing that, that’s how you affect of lis trade.
But you also have to accept that there is an element of risk within that, but one of the things that stops people from trading being effective traders is the inability to take risk or the taking too much risk. So you have to get that balance and trading and profiting from trading is effectively a balance of all of your profits. All of your losses and just making sure that your profits are slightly bigger than your losses, and you can do that in a number of ways. A strategy can help you achieve that or selecting a certain type of market, so you have a strategy that you want to deploy you test and it generally works, and then you start refining it by looking at individual selections within the market.
So if you have a strategy that generally works, but you plaster across 20 football matches, all those twenty football matches are very different, but some of them will work and some of them won’t. So if you have a strategy, it’s applying it to a certain market or a certain selection or a certain toss, a certain tennis player that creates the trading profitability just doing a generic strategy generically across generic markets in a generic way produces generic results, which is generally Breakeven so part of the trading process, which is very different from match. Betting is anticipating, roughly, where the odds are going to go or putting yourself in the potential to profit without too much downside. So yeah trading is very different from matched betting, but effectively trading evolved out of that model out of the are being stroke, matched betting model that was around and is still around, but it’s a very sort of different kettle of fish in terms of the amount of Risk that you have to take in order to get a profit and also the way that you actually manage, that is slightly different, probably to what you’ve been used to as well, but yeah effectively.
The two are sort of joined at the hip in terms of what they’re trying to achieve they achieve the same thing in terms of the result that you get at the end of that particular process, but they’re just achieved in slightly different ways. But, of course you know the markets on Betfair, the racing markets turn over about ten billion a year. So one of the big advantages of trading that you don’t get with match betting is the scale of it is much much bigger. Anyhow, I hope that that’s giving you a bit of insight into where I started, and you know my path was – were going from match. Betting strike arbitrage towards trading, and I imagine a lot of people also along that path.
But they are very distinct in terms of the way they likely to achieve it and with trading you’re going to have to take some risk and you are going to have to take some losses as well in order to be able to trade profitably. But hopefully that’s given you an oversight of that path, that process and where the differences are between, match betting and trading. You