Friday, 1 February 2008

Enhanced Trading Strategy

I’ve been putting some more thought in to the Trading strategy that I am going to adopt on Betfair. I thought I’d share these thoughts on here……

When I’ve been learning about trading, I’ve never quite understood why traders concentrate on favourites as much as what they do. I find it quite difficult to always know which way the favourite’s price will move, so in some circumstances, I would disregard the favourite and trade on other horses at a higher price.

I have noticed that the outsiders on Betfair usually tend to be over-priced when compared to traditional bookmaker’s prices and I always thought that this was an easy way to generate risk-free bets. What I hadn’t completely grasped is the small amount of hedged profit that these outsiders would generate.

Apologies if it sounds like I’ve missed the most obvious thing of all time here but I really did not make the connection between the odds of a selection and the ability to hedge for a guaranteed profit.

Below is a table I have quickly generated which shows things quite clearly:

Consequently, I have decided to change my intended trading strategy slightly. I now intend to trade on the favourites to try to generate a hedged profit pre-race. However, at the same time, assuming that time allows, I intend to try to generate risk-free bets on the higher priced runners.

Incidentally, I will try to link my Dutching technique into the attempt to generate risk-free bets so that I can minimise the risk of Dutching to a great extent. So, I will try to generate risk-free bets on horses that I have not Dutched in any particular race

As we get closer to the Go-Live date of this project in March, I aim to provide an example of my trading and Dutching technique to talk through how I intend to make this project generate the return I am looking for.

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