When the trend is a friend, traders should be trading following that trend! Trend following is maybe the safest way to predict fixed odds movement in Betfair trading, especially in horse racing markets. I had witnessed huge drifters and jaw-dropping… dropping odds when I traded the fixed odds some years ago, that would make any stock chart pale in comparison. Yet, strong trends are still found in today’s horse racing markets at Betfair and I saved two candlestick charts of yesterday’s races for trend analysis.
The first two line graphs present the fixed odds movement of the two favorite horses of the same horse race (Windsor 15:50 GMT) as seen at Betfair. The graphs were captured seconds before the off.
Betfair trading at horse racing markets usually refers to the last 10 minutes before the start of the race. Those line graphs show the fixed odds’ trends since the first bet that was matched, many hours before that key time period. The actual trends that developed during the last 10 minutes include the downtrend of “Dutch Masterpiece” horse from 3.50 to 2.50 and the uptrend of “Equitania” horse from 4.0 all the way up to 6.0. Before that, the downtrend from 5.50 to 3.50 for the first horse was well established urging traders to follow the trend, while the forthcoming uptrend was well hidden in the second horse’s line graph.
Let’s see now the candlestick charts of Betangel during the last 10 minutes before the off.
Backing (that is selling short in terms of stock trading) Masterpiece’s fixed odds at 3.50 must have made a lot of sense, given the already known downtrend. Even risk-averse traders should have traded downwards when the long falling candlestick was printed in the Betangel chart. Alright, entry point was quite easy to spot, how about an exit strategy?
Trading out in Betfair trading can be tricky. One can pick round numbers that act very well as support and resistance levels, or set a profit target at 5 ticks and take the money no matter what, or else trade out as soon as a new high is printed in the last 2 candlesticks. The most profitable exit strategy would have been the last one, both in case of trading the favorite horse and “Equitania” (long trading – read here how stock trading is similar to Betfair trading).
Say you backed Dutch Masterpiece’s fixed odds at 3.25 by having completed the trend analysis above and you rake in profits. There was no indication to trade out sooner than 2.50 when a long white candlestick was finally made its way into the candlestick chart! If you invested €500 in this trade, you would show a profit of €375 accumulated on the favorite horse by a single trend-following trade! Greening up – that is dividing the profit to all possible results of a horse race by placing a lay bet, would secure €150 no matter the outcome of the horse race! 30% gain in a matter of 10 minutes. Try finding that gain in day trading stocks!
Unfortunately I wasn’t one of the lucky traders that followed this specific trend. On the contrary, I tried to go against the trend when fixed odds reached 3.00, as I expected a pullback due to the importance of the round number. However, the trend was so strong that after a mere 2-tick pullback, the downtrend resumed and I was left chasing the odds to trade out, willing to take the loss.
So, if you ever wonder who loses when you trade profitably, keep this story of mine in your mind! There will always be traders trading against the trend. Try not to be one of those, unless you have very good reasons to do so!