How to Trade the Melbourne Cup: Favourites rarely win and scalping is ideal strategy

• How to trade the Melbourne Cup
• Peter's expert guide based on key stats
• Favourites rarely thrive
• Scalping can help you get on top Down Under

Way back in 2006 I got out of my bed at 3am and made the short walk, in freezing temperatures, to my garage. There I had set up a den where I could focus on trading in relative warmth and comfort. The reason? To trade the Melbourne Cup.

The Melbourne Cup, which this year takes place on 1 November, is the premier race in Australia. It's billed as 'the race that stops the nation' and is the reason for a national holiday in the state of Victoria.

It's a big race for punters across the world and attracts plenty of attention.

Since I've been trading this famous race, the average turnover has reached £3-3.5m each year. That rivals anything you will find in UK racing and it's why I have tuned in each year despite the time difference.

The race itself is run over 3200m and it's generally a large field competitive race.

Not a race for favourites

If we are going to find some value, we can look at how the favourite has performed over the years.

Over the 17 years I've been gathering data on the race, the favourite has only won twice, and the average finishing position has been seventh.

This is not a race for favourites.

Digging through longer term records, we yield a winning favourite about 20% of the time. This suggests that you will only get value if you can back a winner at 5.04/1 or above.

Four and five-year-olds often thrive

The other notable trend is that the race tends to be won by four or five-year-olds. The last three-year-old to win the race was way back in 1941!

Of course, my preference is for trading the big race, as this has yielded a profit for me every year I've traded it, apart from when I was learning.

One of the key factors I need to trade successfully is liquidity.

Liquidity is the rate at which bets are being matched over a specific period in the market, and liquidity is typically very high at Flemington and consistent over a long period of time.

The reason that liquidity is so important is that, when trading, you want to be able to get matched quickly. That's important as if you make a mistake or want to exit a trade quickly you want somebody else to be able to take your position in a timely manner.

By offering a bet to the market you can do this at a minimal cost if liquidity is strong. That's what we expect to see at Flemington.

Slow price moves make scalping ideal strategy

Another important note to make about this market is that, because of the volume of bets matched and the typical price of the runners, the odds change slowly.

Scalping is a good trading strategy to use in this market. This means looking to profit from very short-term prices moves.

At the Flemingon meeting, we start with the Victoria Derby day on Saturday 30 October and the big race itself is on the Tuesday. We then have a quieter day on Thursday with the Oaks, before returning to some busy action the following Saturday (5 November) to round off the Melbourne Cup Carnival.

If you need support on Bet Angel during that time, my team and I will all be up trading it. So despite the unusual hours, we will be there if you need us.

But there is also a thread on the forum if you want to chat with other Bet Angel users who will be active on this busy week of racing Down Under.