The trading range in fixed odds trading is formed by support and resistance levels that have been confirmed at least twice. During a ranging market where the price bounces in between a specific high and low price, a sports trader can either trust the range’s limits or wait for a breakout. A trading range is quite common in technical analysis, since it shows that the market is consolidating before developing a new trend. However in horse racing markets where most of the trading takes place in the last 10 minutes before the off, there’s not so much time available for a new trend. Simply put regarding Betfair trading, a trading range is one of the most reliable patterns of technical analysis. Here is an example of profitably trading the fixed odds in a ranging market.
The trading range of the specific horse’s fixed odds I am going to talk about is well defined in the graph. The fixed odds bounced twice at 4.00 and twice at 5.00 indicating a strong trading range. All I had to do is to place a back bet at 5.00 and wait for it to get matched. Yet Betfair trading isn’t that predictable. We really don’t know if the odds will climb back up to the high price of the trading range before bouncing once more at the low price. Thus, I actually placed two bets at the same time, one back bet at 5.00 (4.80 to be exact) and one lay bet at 4.10. Since it is impossible to predict which one would be matched first, you need to place simultaneous trades. In this instance it turned out that my back bet got matched first (red arrow). Ten minutes later the fixed odds had fallen down to the lower band of the trading range and my trade was complete (green arrow). Note that the exit point would have been in fact the entry point should the odds drop to that level before hitting the highest price. Here is the summary of my trading in this horse race, showing the described trades in yellow color and the greening up in red (neglect the scalping trades between 4.00 and 4.10):
The total profit was 63 euros. Did I risk €340 euros to make that money? Of course not. Technical analysis is great when it works but you are beginning to get doubtful the minute it fails. So, what would happen if the odds broke loose above 5.00 or dropped further below 4.00? I would trade out, minimizing the loss with a mental stop loss. Placing stop loss orders in Betfair trading isn’t possible like in stock trading, so being disciplined enough to execute the mental stop loss is quite important. In case the trading range collapsed, I would exit my original trade at 5.20 with a back bet. My loss would sum up to about 20-25 euros, which was my actual risk for this trade unless Betfair service was unexpectedly down (yes, it happens).
Horse racing markets are quite popular in Betfair fixed odds trading. Risk-averse traders usually begin trading those markets before the start of the races, given the fact that fixed odds’ fluctuations don’t depend on events taking place on the pitch, like in football trading. Therefore the odds movements don’t include sudden spikes or unexpected behavior. Trends are much more reliable since they are driven by news, rumors or expert picks being published online. That is why technical analysis can be much help when trading the fixed odds and especially when a trading range has been established.