underlaying newbie question
I've been reading through various posts on underlaying and have a question which I can't find answered.
It is possible, when an event starts - for example golf - to take a bet a large odds on several outsiders.
For instance Colin Montgomery - his odds were 820 add the start of the Volvo tournament.
So here's the question:
If I take a small (and I mean small) bet at massive odds e.g. £3 at 820 my return would be £2460 were Colin to win.
As the tournament progresses the odds (hopefully) drop rather drastically.
Say for example Colin's odds drop as low as 50.
I want to lay my bet on Betfair so that I make a profit. My noddy lay calculator I've created would suggest that I lay £123.18 at odds of 20 and this will give me a guaranteed profit of £119.49 whether Colin (miraculously) wins or (more likely) loses.
The problem I have is that the risk of the lay and hence what I need in my Betfair account is £2340.51.
Does it make sense to limit the money required in my Betfair account by underlaying - if I lay £50 I'm still guaranteed a profit of £48.50 but only risk £950
Is this a good strategy or am I missing something?
Many thanks for any help you can give a struggling newbie....
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The more you underlay, the less your liability will be and so the less you will require in Betfair. How much you underlay by would depend on how much you could afford to fund your Betfair account with, but yes laying only £50 would work fine, would just mean a small profit on the lay side but a massive profit were he actually to win.
Is this a kind of bet you plan to make often? As if you want to back a few outsiders at long odds with a view to laying them off should their odds fall i.e. trading, you'd be better off doing the back bets on Betfair too, and therefore as you have guaranteed profit in your Betfair account were your selection to win, you could choose to fully lay in order to lock in equal profit, without needing hundreds/thousands in your Betfair account.
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aha - that's an excellent point - I've actually backed in BetDaq so can lay there as well (trying to get their free bets at the moment and make use of their 3% fees)
I'm guessing the same applies there to - I don't need the money in my account as the back bet has the profit against it.
If that's true then you've made me very happy!
Yes it will work in exactly the same way at Betdaq as Betfair, your only problem may be with this kind of event is the liquidity is poor, more so on Betdaq, where there is nothing available to lay on the higher odds selections, though this may change as the tournament draws to a close.
I'll keep my fingers crossed - many thanks for your help.
This kind of thing sounds like you're wanting to create your own 'book' on an event - quite a nice thing to do if you're going to be following the sport anyway or if you want to add a bit of interest / try and play the field as things progress OR also usefully if it's some kind of tournament where a lot of bookmakers are offering special offers on the same market (for example this is especially true with things like the World Cup or the English Premier League Outright markets, quite often you get a few books offering free bets on those markets).
There are various threads that have been posted in the past about creating your own book / trading on an event but for the life of me I can't find them now.
Generally though the idea is you back a number of different selections/players/teams etc in the same event 'outright' market, and then as time goes on you try and lay off each initial opening bet at a lower price so that you make a profit if that selection wins or make nothing if they don't win - all with the objective of creating a 'green' book (where you make a profit no matter who wins).
You can also trade on each selection though to increase the profitability of each selection / the book in general - so say you bet on Montgomery to win the golf £2@1000, they play a round, do very well and their price comes down to 600... you could then lay £2@600 so you'd make a tidy profit if Foo went on to win, otherwise you'd make no profit/loss if they lost (as mentioned above, in fact you only need £2 in total in your betfair account to do this, NOT ~£1200 as a single one off lay bet of £2@600 would cost you). THEN later on Montgomery carries on playing really badly in the next round, their price now goes back to 800... you decide to bet £2@800 again because you think they'll pick up again later on in the tournament (again your initial paltry £2 would allow you to do this since your last 'pair' of bets has effectively left you with the initial £2 to play with). Indeed later on they do play better and again their price comes back down to 400 so you lay another £2@400... so now you're back in a position where you make a huge profit if they win, otherwise no p/l if they lose.... and all with just £2 in your Betfair account.
It's a bit hard to explain why it works with just £2, but the key is that as long as you back first and then lay later at a lower price *on the same exchange that offsets backing against laying*, the potential win of the back stake is 'cancelled out' by the potential liability of the lay bet if you lose. There are some exchanges that don't 'offset' back bets against lay bets, but I know for sure Betfair and Betdaq both do (one definite example of an exchange that doesn't is Matchbook, not sure about Smarkets).
Anyway... with that Montgomery bet - say you've done that trading above and you've got a juicy profit in line if he wins but no p/l if he loses... finally at the end, he makes it to the final say... now his odds have plumetted to 5... you're now in a position where you can make a final hedging bet if you choose so that you make the same profit/loss no matter whether he wins or loses the tournament... you can calculate the hedging bet based on the size of the profit if he wins and the odds to lay, not sure but from memory I think you just divide the profit amount by the lay odds and that's your green/hedged profit - you can also do the same with a losing trade as well to 'lock in' a loss if you want to, though you back instead of lay to hedge it.
AND you can do that on lots of different players in that same market all at the same time. Can get slightly confusing so best to maybe try it with just a couple of small trades on say two players the first time, see if you can get a green book sorted.
Regards not risking too much of your exchange balance though: best way to do it if you don't want to accidentally lose a lot of money is to ring fence the money you don't want to lose by moving it off into a different wallet - ie the Games wallet on Betfair. Move all but £50 or whatever it is you are willing to risk out into the Games wallet and that way you can't lose that money no matter what happens (hah unless you lose it all on Games of course ).
Another idea is to try trading on a single selection on Betfair first... do it on a horse race though that's due to start in an hour (be careful not to pick a race that starts closer than 30 mins because the trading will be hectic as hell - with an hour out you have plenty of time to experiment). Try and get it so you back £2@2 (or somethign else fairly low odds so you can manage the risk better, longer odds == greater risk / bigger swings generally), then lay £email@example.com, then see how that looks in the betfair p&l indicator (to the left of the market it shows you in green/red what your p/l will be if your selection wins/loses). Also actually before you even place the bet, if you have 'display what if figure' enabled then when you enter the stake/odds in the betslip, the 'what if' figures will show up next to the market in green / red to show what happens if your bet wins loses.
An alternative to horses if you like football is to try trading on a football match that's 'in play'. As a general rule as time goes on and no goals are scored, a selection in an under/over market like 'under 3.5 goals' will come a. start out at a low price and b. come down in price quite quickly as long as no goals are scored. This gives you a chance to back a small amount £firstname.lastname@example.org or whatever, then after a minute or two you can lay £email@example.com and see the effect on the p&l 'what if' figure. Note though there is a risk that a goal is scored and the price will go out, in which case you may end up losing the £2 (but even then that gives you a chance to try laying £2@ a higher price to see what effect that has on the p&l what if figure.
Also another tip, whatever odds you're betting at, try and always back first before laying, that way the most you'll lose initially is the stake amount (ie backing £2@1000, if that lost you'd only lose your £2 stake... however if you laid £2@1000 then you'd lose the best part of £2k... bit of a daft example because you're not likely to lay at 1000 but generally the principal applies, always try and back first when you're starting out).
Anyway, lots of random tips there, hope it helps.
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Thanks for that - I've sort of been doing the experimentation you're suggesting. The problem I've had as Magnico said above is that the liquidity is poor. Colin's odds were indeed up and down but there was no chance of laying.
I'll have a go with the horses - always plenty of money on those and hence a good chance to experiment.
I've got another question regarding the tennis but I'll start a new thread for that....
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thanked for this post
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