Every blog/story should have a beginning and this is mine.
“A bet exchange allows punters (gamblers) to bet at odds set and requested by other punters rather than by a bookmaker. Members can make both 'Back' bets (normal bets on a selection to win) and 'Lay' bets (bets on the opposite side of the Back, against the selection), thereby eliminating the traditional bookmaker.
Betfair uses decimal odds, which are easier to calculate with than fractional odds. Its bookmaking model brings together two counterparties with opposing views, and thus removes the need for a bookmaker's markup or overround. At the more fancied end of the market the odds offered on Betfair tend to be closer to the bookmakers' odds, whereas for a more speculative bet the odds available may be over 50% higher on Betfair, more accurately reflecting the bet's true chances of success. Betfair punters are able to offer odds based on their own opinion rather than on a set bookmakers' margin. Betfair charges a commission on all winning bets, which is set at 5% of the net winnings for most markets, although according to how much a client wagers on the site, it is possible to reduce the amount of commission paid to as low as 2%.” - taken from Wikipedia
With this knowledge I have been looking at ways at best exploiting this potential to make money (in safety and not just by gambling!) The leading tool in the market for doing this (in my opinion) is Bet Angel. I have just created an account and am going to document my progress be it good; or more likely at this stage bad! I am being very realistic about my chances as a complete novice and expect to lose more often than not. Hopefully by documenting what I have been through it will show that even as a novice you can still make money by trading and creating a margin. This is different to creating a complete arbitrage of the market, although you will still be able to do these if they occur on the market.
The market I will be looking at will prominently be horse racing, although I may at times look at other markets to see how they move. With horse racing we can make general assumptions such as “A horse will definitely win (assuming the race is not cancelled)” with this knowledge we can make sensible decisions before the off to try and make a little margin. Another feature with Bet Angel that really made my mind up to use it for this experiment is the greening up button. When some profit is made on a contending horse, and you don’t want to trade the market any longer you can press the greening up function and it will spread all the profit over each horse. This means that you will make some (it splits the amount of profit for one horse as equally as possible over all horses) profit no matter what. If you just had loss on the one horse it would do the same with loss but a smaller amount – this is good if you make a mess and just want to take a smaller hit for certain rather than gambling that you might make a bigger loss. As I post I will try and use pictures and text to describe what particular trading strategy I will use and how it faired. That way you can see the mistakes (or successes!) I make and maybe adapt these for yourself. J
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