01 The concept of trading / Betfair Education / 29 January 2008 / Leave a comment

Traders now account for a large numbers of bets and volume of trade on sports betting markets. For the average punter this means a full range of odds are available to both back and lay and in sufficient volumes for the biggest gamblers.

Traders also tend to push the over-round close to zero meaning that the book is close on perfect with little margin given away to the bookmaker.

Traders on exchanges make money by correctly predicting which way the odds on a horse are going to move. Everybody who keeps an eye on the betting market will know how often you see the price of a horse starting to drift or come in and how this pattern often persists till the off. It is due to these movements that traders make money.

If a trader felt a selection's price was too short in the market and would thus was going drift (get larger) they would lay at the low price and as it drifts to a higher price, back it. After these two successful bets a trader has a risk-free bet on that particular runner if it goes on to win and loses nothing if it doesn't.

This is because the trader has backed and laid at differing odds, netting the difference between the two bets. In addition to having a free bet on one runner it is possible to transfer some of the profit to other runners in the race. The result is you win regardless of the winner of the race!
Most traders never actually watch the race themselves they finish the race before the off and move seamlessly to the next race. This is because the result is not important to them. They have made their money and move on, this is discussed in Common mistakes of traders.