If you want a cheap bookie where you can place a bet at a good price, then a betting exchange is just the thing for you, but if you are prepared to put in a little effort to find out more you will discover they offer much more. Here we explore some of the opportunities that await slightly more sophisticated exchange bettors.

Overview
Trading
Creating books
Arbitrage
Betting exchange resources

Overview

Betting exchanges can be used on many different levels. If you want to simply place a bet as you would at any online bookie, but at a superior price you can do so. Whilst there are many additional features they are not obtrusive, and will not hamper you if you do not want to make use of them. However, should you choose to explore some of the features and make full use of them you will uncover a whole new dimension to your betting activities that was unimaginable in the pre exchange era.

Of the ‘conventional' betting exchanges, Betfair offers the most sophisticated and advanced features.If you take the time to familiarise yourself with everything Betfair has to offer then you will have no problems with any of the other betting exchanges. The November 2004 issue of Bet Exchange News contains the most comprehensive Betfair user guide that has been written. It is highly recommended reading and can be viewed free of charge in the archive here .

Trading

For anyone who is used to trading on the exchanges it is a very easy concept, however, for those who have yet to try it, it can be appear quite complicated and difficult to understand.

The odds in a betting market are a product of many factors and are changing constantly. If you can correctly predict the direction in which the odds are going to move betting exchanges enable you to profit from this insight in the same way that the futures markets enable city traders to profit from future movements in commodity prices. The method for doing this is very simple. If you expect a particular price to shorten then you back that outcome, and if you are right you then lay it at a shorter price to lock in a risk free profit. If you expect a price to drift (lengthen) then you do the opposite. Of course the gamble is that the price will move against you leaving you in a no win situation.

A new type of gambling has emerged out of the betting exchange revolution known as sports trading. A sports trader will be more interested in what is going to happen to a price in the short term than who is actually going to win the event as he will hope to have locked in his profit well before the winner is known. The most successful sports traders make very good livings indeed.

Trading, like most aspects of exchange betting is much simpler than it may at first seem. If you are a member of Betfair but are unclear about sports trading, you will find the use of a simple feature to be very enlightening. Go to any market in which you already have at least one bet matched. Then go the Settings option just above the market prices and tick the third box, which shows a separate future position as if unmatched bets were matched. Making sure you have the View p&l box ticked now try inputting a few dummy bets, experimenting with different stakes and odds and note the difference that each makes to your future profit and loss positions. In doing so you will soon get a very good feel how trading works.

Creating books

A bookmaker creates a book by offering odds on all outcomes in an event. Betting exchanges enable normal punters to do the same to the outrage of the bookmaking industry. If you want to do this there are tools on Betfair and some other exchanges helping you to calculate the potential profit you will make if all your bets are matched. However be warned, whilst this sounds great in theory, this is unlikely to prove a successful betting strategy as shrewd opponents will cherry pick those bets which offer them value, leaving you unable to get the other bets matched.

Arbitrage

Since internet betting took off ‘arbers' as they are known have been taking advantage of differences between different bookmakers to place combinations of bets which give them a small guaranteed profit regardless of outcome, or a free bet on the outcome they favour. Betting exchanges have added a new dimension to this due to the superior value that is often available, and because better still odds are available if you ask for them. They also do not take the same dim view of arbers that bookies have been known to. However, a word of caution, do not forget to take into consideration the cost of commission, which can have a particularly big impact if you are arbing between two different betting exchanges, or even two markets on the same betting exchange. A free introductory course to betting arbitrage can be downloaded from here .

Betting exchange resources