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Betfair is the world's largest betting exchange where hundreds of thousands of people place bets directly with each other. Betting with other people through Betfair removes the need for a bookmaker , allowing exchange users to bet directly with other exchange users at a price and amount that they both agree upon. All Betfair does is hold the money for every bet and then pays out the winner with the loser's money, taking a small percentage (from 2% to 5%) from the winning side. Betfair has no control over the prices and will not close or restrict winning accounts, like a normal bookmakers do, because their profits aren't affected by winning accounts in the same way a bookmaker's profits are. Betting against other people on Betfair, means that the bookmaker's profit margin is removed from the prices, and the profits are on average 20% better than the same prices offered by the bookmakers.

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BetFair Terms

Back, Lay and Trading on BetFair

Back: Backing an event , for example Barcelona-Chelsea , means placing a bet on a victory of a team. If the team you choose you lose your bet. Every bet that is matched on Betfair has at least 2 counterparties: the Layer and the Backer. A bet is matched when both the Layer and Backer agree on a price and this is full calculated by the system of Betfair.

Lay: Laying an event means placing a bet on a losing team. In this case if have the rule of bookmakers and if the team instead of lose win the match we must pay our bet plus the profit made by the backer that will be removed by our funds before laying .

Trading: Being able to Lay and Back on Betfair gave rise to a new aspect of gambling that never existed before: the ability to bet on the direction of a horse or team's price, instead of betting on the actual result of the race or match.

For instance, I want to bet that the price of the Favourite horse will go up. I Lay £100 @ 4.1 on the Favourite and then try to Back £100 @ 4.6 on the same horse. The price goes up and my Back gets matched @ 4.6.

In the above scenario, I have Layed and Backed the same amount of money on the same horse, but at slightly different prices, giving me a profit if the horse wins but no loss if the horse loses:

If Horse wins:
Back bet wins £100 x 4.6 = £460
Lay bet loses £100 x 4.1 = £410
Result = £460 - £410 = +£50 profit

If Horse loses:
Back bet loses £100
Lay bet wins £100
Result = £100 - £100 = 0

Prices on horses, especially in the last minutes before the start of the race, become very volatile, offering many opportunities to profit from price movements before the race starts.

In Play Trading: In Play Trading on Betfair is different from trading because it refers to trading the price of a horse or team while the race or match is actually running or playing.

When a race starts, Betfair suspends the market, cancels all unmatched bets and reclassifies the race market as In Play. Users can then place bets on the horses in the race as the race is running, up until the winner crosses the finish line.

In Play prices are much more volatile than prices are before the race starts because they are directly affected by each horse's performance during the race.

In Play traders watch the race or match unfolding and Lay and Back accordingly, trying to lock in profits by correctly reading what is happenning in the race or match.

Betfair's In Play markets allow skillful race readers to profit from Laying a tiring favourite midway through the race, or Backing a tennis player who gets off to a good start. Never before have gamblers had so many opportunities to make money in so many different ways from sporting events that until recently had a very limited number of betting products available on them.

Betfair imposes a 1 second delay on bets that are submitted into In Play horseracing markets, and a 5 second delay on bets that are submitted into In Play sports markets. This is to prevent people that are watching the event live from taking unfair advantage of the majority of people who view sports pictures that are delayed by a few seconds.

Hedging on Betfair : Hedging allows traders to lock in an equal profit regardless of whether the horse or team that they were trading on wins or not, allowing you to completely remove the outcome of the race or match from the equation.

For instance, in the example in Trading on Betfair, the trader Lays £100 @ 4.1 and Backs £100 @ 4.6, giving him a profit of £50 if the horse wins and no loss if the horse wins. That's great if the horse wins, but if it loses then you still haven't made any money, despite having made a profitable trade.

Hedging your £50 profit will make sure that you make the same profit whether the horse wins or loses. You can do this pressing the Hedge button on BetTrader which will divide your profit by the available to Lay price and will then Lay the result of that calculation to give you an equal profit whichever horse wins the race:

Press Hedge Button > £50 / 4.6 = Lay £10.86 on same horse

If Horse wins:
You make £50 (from Laying 4.1 and Backing 4.6)
You lose £39.13 (from Laying £10.86 @ 4.6)
Result = £50 - £39.13 = +£10.87 profit

If Horse loses:
You make £10.86 (from Laying £10.86)
Result = +£10.86 profit

By Hedging your £50 potential profit which you will make only if the horse wins, you can ensure a smaller, but guaranteed, profit whether the horse wins or loses. 


Good Luck with your bet !