Lay/Back trading, is essentially what sets the Betfair trader apart from a regular gambler; it is a very simple form of trading which will yield small but consistent profits on the Betfair Exchange.
A gambler, whether he is betting in a high street bookmaker or online with Betfair or any other online bookmaker place’s a bet for something to happen or not happen and then waits for the end of the event to see if he’s won.
The difference with lay/back trading or indeed scalping is that the ultimate outcome doesn’t have to influence whether you make money or not. In fact, quite often when I’ve done a lay/back trade, I stop watching the event; that’s if I was watching in the first place.
So, how do you lay/back trade? And. What are the secrets to lay/back trading?
Every lay/back trade starts with a lay bet, that is to say you are offering a fellow Betfair user odds on a market in an event. In the example below the event is the 2015 Golf Open Championship and the market I have entered into is the win market.
I’ve placed a lay on Rory Mclroy, meaning I am saying he is not going to win, when placing a lay the amount you put in your betslip is the amount you are letting your fellow Betfair user bet and your liability is determined by the odds at the time.
So I have asked for £20 and the odds are 5.8 which means I will owe 20 x 4.8 = £98 if I leave the bet and Rory Mclroy win’s the tournament. If he loses I will get the £20 minus the 5% Betfair commission on this occassion £1.
This particular lay/back strategy is called laying the favourite and is a popular method, because quite often you end up getting very good value from laying the favourite.
So in this instance you would want Mclroy to have a poor first day with plenty of dropped shots and him finishing a couple over par and someway down the leader board. If you did get such a dream start you might expect the odds to change like so.
As you can see in this hyperthetical situation above, if Mclroy’s odds were to rise to 11, that would mean I could now put on £10.80 on him winning, the exact opposite of what I did at the start of the day. So that would leave me in a situation whereby if Rory won I'd win £9.50 and if he didn't I'd win £8.74.
But as we know, stocks can go up as well as down! So Mclroy could have a right stormer on his first day and his odds plummet to around 2, in which case you might be looking at something like this.
So now because the odds are considerably less than the starting odds I would now have to put on £40 on Mclroy to win just to cut my potential £98 loss from my original lay, to £38 if Mclroy goes on and wins and £40 if anyone else wins.
Now remember this is a hyperthetical situation just so I can explain the mechanics and the theory behind a lay/back trade. If you did lay Mclroy in the Open, it would be because you were either betting on him doing his 2nd day yips thing or you had some reason to believe he was off his game.
Of course lay/back trading is just one side of a coin, the other side being back/lay trading whereby, you’ve guessed it! You back first, then lay later.
In the example below I’ve had some kind of nostalgic episode and I believe that Tiger Woods is going to have one last hurrah and win or at least come close to winning another Major, so I put £20 on at odds of 27 so this time my profit is £20 x 26 (27 is your return) = £520 minus 5% (£26) to leave £494 if Tiger win’s and £20 loss if anyone else win’s.
So now just like a traditional bet my liability is the amount I put on the bet, so let’s take this wild fantasy even further and suppose that Tiger storms up the leader board and end’s up 2 shots clear at the end of the first day having holed 2 birdies and an eagle in his last 3 (come on, this my fantasy let me have my fun).
His odds would now closely resemble this, I wouldn’t want to totally balance out in this scenario, because I’d be high on my own brilliance and in truth it would take a lot of Zen control to make sure I did the right thing and Traded Like A Vulcan.
Often in this scenario traders are tempted to just take their liability away or just add a small bit of green, but this is what I should do, I would have a cash out opportunity of about £150 on a Tiger win or loss and even if his second day started badly as long as he kept the lead for at least a few holes and stayed in contention, I’d be in a good position and I would be safe in the knowledge I’d get at least £135-£140 whatever happened.
So those are the basics of lay back trading find an event and a market within that event that suits your style and start experimenting.
The Zen Trader