Going Full Time on Betfair

No, not me! But as I didn't get round to trading yesterday I thought I'd take the time today to answer a question I get asked all the time. It's also one that pops up on the Betfair forums constantly so I'm hoping it's of interest. Basically it's the "going full time on Betfair" question. I often get asked if I've considered it and it seems every week someone on Betfair says they've been profitable for x number of months so shall they go full time? And is it really possible to make a living from Betfair?

Firstly yes. Of course it's possible to make a living from Betfair. My own results show that even messing around with £1k can provide consistent if small profits. Those playing with larger sums could - and do - make a lot more. But it's not that I want to concentrate on today. Instead I'm going to look at the decision making process and consequences of going full time. Afterall, just because something is possible it doesn't mean it's the right thing to do! The subject is something I've covered before in answers to questions in the various comments left on the blog but I thought it would be interesting to pull it all together in one place. And explain what my considerations would be if I were to go full time.

Existing life / Society's perceptions / Impact on close family

 Is what you have now really that bad? I mean do you really want become a full time gambler? Would it really be an improvement on the status quo? Just take a moment to consider how society views gamblers. No really. Just have a think about it. Maybe you remember the last time you laughed at the old git with nicotine stained fingers tossing away another losing slip in your local bookie? Or perhaps recall reading in a newspaper about a suicide caused by a failed gambler running up massive credit card debts in secret? OK. So that isn't you right? Fair enough. But rightly or wrongly these are the kind of images that help shape the general public's perception of gamblers. Mainstream society's view isn't a rosey one. Gamblers are losers. And this image will impact on you if you take the plunge.

Some examples. What will be the response if you try and get a mortgage and give your occupation as full time gambler? (I found it hard enough when I first started working for myself and didn't have two years of accounts!). Or maybe want some HP to buy a new car. What will your friends and family think? Or your wife / partner? Will they really be comfortable and happy if you jack in a job to gamble for a living? And what if you give up a job, don't make it and try to go back to standard employment. How are you going to explain that gap? Unless you lie can you think of any industry that will embrace a (failed) gambler more than someone who is equally competent but without the Walter Mitty belief that they can give up everything to make a living from betting on sports? You may as well tattoo the word Mug on your forehead before you get to the interview!

Ok. So it's all a bit doom and gloom. Deliberately so. But society's perception of gamblers is an important background consideration. Let's say you can get over that though. You'd rather make gambling your job than an enjoyable hobby. You have a supportive network of friends and family. Maybe you hate your job and want a change. Or don't have one to start with. You've made the decision to go full time. So what are the other issues you will face? 

Discipline and stress 

So we'll take it for granted that you've had the method and discipline to win constantly on Betfair and this has helped colour your decision to consider going full time. The question is can you maintain that discipline under conditions of increased stress? This is something I often ask myself when people query why I don't go full time. Sure I have a winning history on Betfair. And not one that just stretches back a few months. However, this winning history has been produced under circumstances where it doesn't really matter if I win or not. I'm lucky enough to work for myself from home, run my own gambling related business, and trading is my hobby. Make it my living and suddenly everything gets a little more stressful. The sums involved rise dramatically. Results suddenly count for more. I have to win. Because I have to pay the mortgage, find the money for a new bathroom, pay the bills. Some even have to pay for a wedding!


Now I'd like to think I would maintain my discipline. Not panic if I had a losing week. I've never really attached any real importance to results on a day by day basis preferring to take the longer term picture into account. But what if I lost two weeks in a row? And suddenly something big went wrong with the car. And a holiday still needed paying for. I wonder if I'd still have the discipline to stick to my money management rules. Or would I be tempted to chase in order to try and make the money I know I need? How would you react? Chase and get it wrong and you could wipe out. You wouldn't be the first or last. And then that's it. Game over. Thanks for playing. All your base are belong to us!

Of course, that's a doomsday scenario. The increased stress of having to win can be minimised through planning. Fail to prepare and prepare to fail and all that. Don't set daily targets. Look at the longer picture. A losing week shouldn't matter. Most importantly of all though if I ever went full time I'd want a considerable reserve of available funds incase things don't go to plan. This would take the pressure off me somewhat. Reduce the need for instant returns. And enable me to concentrate on the longer term big picture and hopefully maintain discipline as a result.

Betting / Trading can be boring 

It's true. Gambling isn't always the glamorous life it's cracked up to be! I get bored with it sometimes and I only trade part-time. The danger, of course, is boredom can lead to lack of discipline.

Perhaps more importantly though is the lifestyle change going full time can make. Although I haven't gone full time the point I'm getting at is something I have had experience of. Give up your job to sit infront of your tv and computer at home all day and you suddenly realise quite how much you appreciated the social interaction you got at work! I went from being a tabloid reporter, to a senior position in a leading online music PR company in the dot com boom that promoted some of the planet's biggest stars - with the endless invites and parties it entailed - to sitting at home with my laptop. Alone. Just like that. Overnight. I'll tell you now it was a shock. Sure I could still go out. But it was hard to adapt and get used to the change. I missed the daily chit chat, the gossip, the banter. The Christmas parties!! To put it simply, sitting home alone was bloody dull in comparison. And I started putting on weight!

Sure, there are answers to all these issues. You could chat with other full timers. Make extra effort to get out and interact. Make sure you excercise (vastly underrated when it comes to keeping a fit, clear and disciplined mind when trading), The point though is these are the kind of issues I'd anticipate if I was to go full time. It makes sense to plan for them in advance. It's all part of being prepared, organized and disciplined.

The future of exchanges, online gambling, in running betting and taxation
 
Every great empire has come to an end. Every new gadget becomes obsolete. The betting industry is no different. Remember the 90s when spread betting firms were the future of betting?! Exchanges replaced them. But it doesn't mean they will remain as popular for ever. And as popularity declines, so will liquidity, and with it your profit. Of course, I don't see an immediate decline. Exchanges are just such a fantastic idea. But would you risk your future on them? Are you really confident that what you do now would be possible in ten years? When, if you'd stuck at your job, you'd have had several promotions and pay rises? Which decision now looks best in the long run?

Something to consider. Last year millions of Americans played poker online daily. How many do today? 1% of that? Central government can kill an industry overnight if it chooses. And in the process wipe out your livelihood. Sure, the UK government is making encouraging noises on the betting industry. But policies can change. It took Labour less than a decade to switch from a policy of unilateral nuclear disarmament to embracing the nuclear deterrent. Now the question is not what to do with Trident but what to replace it with. Sure, in the UK at least, where the issue of government income from gaming revenue is settled, it's unlikely any turn around would cut off your livelihood. But when making life changing decision such as becoming a full time gambler such risks have to be considered.

There are two other issues that I think about when asked why I haven't gone full time. In running betting and taxation. I make my money as a trader from in running betting. I have a standard Sky set up and I use some trading software. Nothing out of the ordinary then. But it doesn't mean I don't worry about the future of in running betting. What if the Gambling Commission, or similar body, decided that because some people's pictures are delayed more than others they will level the field by banning in running betting? I'd be screwed! Now as unlikley as I think something like this happening is it doesn't mean it won't. And it doesn't mean I don't worry when UK newspapers run junk stories about people getting ripped off because shrewdies are beating the Betfair clock.


As for taxation on winnings - the subject is huge! And I don't intend to go through it all here. I've seen the Inland Revenue website, I have my accountant's advice and I follow it. But what's to say in a few years a distinction won't be made between say recreational and professional gamblers? With professional gamblers - however such a thing is defined - liable to pay income tax. Suddenly a large advantage of gambling for a living disappears. And you have to make a minimum of 30% - and more likely 40% more - just to keep your income level. And don't think you'll just glide under the radar either. If you disappear from view in the tax man's eyes you will get a letter asking what you are doing. Just check the relevant threads on the Betfair forums for proof!

Just because your profitable method works now...
 
...It doesn't mean it always will. I always give the same example for this. Because it's a good one. It involves a guy who was in the 0.7% of Betfair users who was making over £15k a year profit on exchange last time the figures were released. Relatively speaking he was a big winner. Betfair valued his business so much he had his own personal account manager. Life was good - until he lost the lot. And then ran up enormous debts maxing out credit cards in an effort to chase his losses. His mistake? Failing to adapt. His edge disappeared. He eventually realised. But couldn't replace it. So started betting blindly hoping for luck. He went from big winner to big loser to Gamblers Anonymous. All within a year or so.

Read The Story of Ster in his own words.

I read that page often. Because I know I've had edges in markets in the past that have been eroded. Fortunately I've so far managed to find replacements. But the time I don't is the time I'll stop winning anywhere near as consistently as I'm lucky enough to do so at present. Now I've no idea when that will be. If ever. But one thing I do know is it would make me think twice before giving everything up to become a full time gambler. I've seen my edges disappear in the past. I'd be negligent to think it won't happen again.

One more thought in this area. Going full time for me would mean a large increase in stakes. This wouldn't only have a psycological impact that would need addressing. But, of course, I'd want to actually check the methods I get away with using now would actually work with ten times the stake. It's obvious. But easy to overlook. And I can see now that some strategies wouldn't. 

Loss of benefits

Pretty straightforward this one. If, like me, you're self employed, or a full timer on Betfair, you don't get benefits such as proper sick pay, holiday pay or maternity pay. Nothing. A serious illness could be financially devastating and again illustrates the importance of having a healthy sum of money behind you before you start. As well as obviously making it a no brainer to have some kind of insurance in place for if you do fall ill. 

Conclusions 

Well, reading through all that it's both longer than I thought it would be (sorry!) and all a little negative too. I don't mean to put people off. There's plenty of people out there who are full time making large sums of money from Betfair and they have my respect and good wishes. Besides which we're all adults and are perfectly capable of making our own decisions anyway.

But as the going full time on Betfair question is asked so frequently I hope it's of some use that I've outlined some of the considerations I have been through when mulling the question over. I'm lucky in that I'm in an unusual position that would make it relatively easy for me to make the step but still I have resisted it. Those who do take it will need to be prepared, organised and disciplined. They'll need to cope with changes in their lifestyle, be happy with being viewed somewhat as an outsider, and hope factors out of their control, such as legislation, don't interfere adversely.

Which all leads me to believe that yes it is possible to go full time on Betfair and make a good living. Of course it is. A killing even. But I'm not sure it's something I'd want to do. And if I were to it is something I would approach with a relatively short time frame in mind. Get in. Make my money, invest it wisely as I go along, and get out. Or at least be ready to get out quickly if circumstances change. I don't know. Maybe I don't crave the title of "full timer" as many on Betfair seem to. Maybe I just don't have the bottle. Or feel I have too much to lose by trying it. But it just always seems to me that if you're winning with a hobby you need a pretty good reason not to just increase your stakes overtime in relation to your bank and continue with multiple income streams. And this is probably the route I'll take.

That said, the very best of luck to any of you that decide to go for it....

(This post, part of a series of classic posts, was first published before in 2007, shortly before Betfair introduced the Premium Charge. If you're thinking of going full time this is another consideration to take into account.

This is actually the most read post on the entire blog with hundreds of people each month still finding their way to it through search engines.)

Cutting Losses and Running Profits.

This is one of the big ones. One of trading's 10 commandments as it were. And although it's going to be like teaching many readers to suck eggs it's an important trading tip so I thought I'd document it on the blog.

The tip really can be defined as simply as this... Cut your losses and let your wins run.

The concept behind it is simple. When trading we're pretty much trying to maximise our profits while protecting our bankroll and losing as little of it as possible in the process. Of course, the concept, and the reality of having the discipline to actually do it, are two totally different things. Especially on the taking a loss side of the equation. When in a losing position the temptation is always there to just "hang on" until things turn round, no matter how experienced a trader may be.

There's no need to take my word for all of this though. Let me use an example. One regarding legendary Wall Street trader Jesse Livermore that can be found in the excellent Reminiscences of a Stock Operator. In the book by Edwin Lefevre, Livermore goes under the name Larry Livingstone and, early in his career, has this to say after turning a multi million dollar fortune into comparitively nothing while trading commodities:

"It seems incredible that knowing the game as well as I did and with an experience of 12 or 14 years of speculating in stocks and commoditites I did precisely the wrong thing.

"The cotton showed me a loss and I kept it. The wheat showed me a profit and I sold it out. It was an utterly foolish play....

"Of all speculative blunders there are few greater than trying to average a losing game.... Always sell what shows you a loss and keep what shows you a profit. That was so obviously the wise thing to do and was so well known to me that even now I marvel at myself for doing the reverse."

I can't really improve on that. It sums it all up about as well as it can be summed up! It's dynamite advice and easily transferable to sports trading on betting exchanges such as Betfair.

So that's the concept sorted. What about the practicalities? How do we go about implementing this trading strategy? Well let's take a basic look at each part of the tip - cutting losses and letting wins run.

Cutting losses

This really is as straightforward as planning. When we open a position we should know where we are going to close it if the market moves against us. The point at which to set that bail out price is a whole different subject but how we arrive at it doesn't matter for now. The important thing is there should be a bail out point.

This means we should never lose more than a set amount on a trade. Which helps protect our bankroll and leaves us plenty of money to get involved again. Essentially it stops us just staring blankly at a screen as the market price simply runs away from us leaving us facing growing losses. It keeps us in the game. And in control. While at the same time preventing that awful feeling we've all no doubt had where the price is running against us and we're just hoping "something happens" to turn it around so we can get out for a smaller loss or even break even. As the Jesse Livermore example shows though, and as some of my recent results show, knowing all this and putting it in practice are two totally different things. Having the discipline to actually implement the stop loss can be the hardest thing to do.

Letting wins run

This is the nice part! But also has its difficulties. As the temptation to take a profit, any profit, can be large. Long term though we will make far more if we let our profits run. Imagine how much just 5 extra ticks in each completed trade (open and closed) would make to your own trading over 50 trades. Or 500. Or 5,000.

While letting our wins run we are, of course, also trying to protect the profit we've already made. Give as little of it back as possible as it were. One way of doing this is to implement a trailing stop loss. For example, say we've backed something at 1.8 and the price is now 1.6. We might say to ourselves if the price hits 1.7 we'll cut the position drifting against us and take the ten point profit we still have at 1.7. If the price continues to drop however, say to 1.5 we might move our trailing stop to 1.6. And so on.

There's really so much more that can be said and discussed on this subject of cutting losses and letting profits run but in a nutshell that's it. Naturally we should weigh up all the circumstances involving each market we enter when considering exactly how to implement everything. I certainly alter my strategies depending on market conditions. For example, in the recent Twenty20 World cup I was still happy to let wins run but was far more willing to take a quick profit when it was available than I am in, say and ODI or test match. This was simply because of the increased volatility. Of course I was still cutting losses as usual. I guess the point is this. The trading strategy is a winner. But as with all strategies we need to consider how best to implement them in the markets we are getting involved with.

(This article, reproduced as part of a classic posts series, was first published in November 2007. The advice is as good today as it was then! And the Lefevre book is still well worth a read for anyone who hasn't got round to it.)

Help Yourself To Free Money

I'm not a fan of the free money threads on the Betfair forums as regular readers will know. But sometimes the betting exchange really does offer you free money and in this entry I'm going to outline how you can take advantage of it as a trading tip.

To be honest it's not the best trading tip to offer up. Bit of a cheat in fact. But as it happened twice the other day and I have screenshots of both examples I thought I'd blog about it while it is still fresh and relevant.

Sharp-eyed readers may have noticed that in the last week or so I have added a categories section to the right hand side bar. To keep up to date with all the tips I'll be publishing just click on the Trading Tips section there. At some point I'll also run through all my old blog entries and add any old entries that are relevant.

Help Yourself to Free Money

Ok. I've already said it's not the best tip. In fact it's snidey. Not as much as a trap bet. But all's fair in love and war. And besides, if someone is really so desperate to give their money away who says I can't take my share of it? I have in the past and I will continue to do so.

The tip is simple. And it is this........ Leave lays below the true market price.

Eh? I hear you asking after you've read that far for that piece of toss? Well bare with me. And take a look at this graph.... (click it for a larger image)


Anything stand out about this graph from the 1st test between India and Pakistan? Like the massive plunge in the draw price from the mid 2.1x range to 1.36?! What caused this? Well, it's simple. Someone or something (a rebellious bot?!) made a mistake. A bet was submitted to back the draw at a price at least as low as 1.36. For all we know it might have even been 1.01 but finally got fully filled at 1.36.

Now see the advantage of leaving a lay below the true market price? Yes. I've said it's snidey. But if people make mistakes I'm no saint. I'm going to take advantage. It's not as if people don't benefit from my stupid mistakes.

Call me fickle but I distinguish between this and a deliberate trap bet. In a trap bet the price might be 1.5 to lay and someone might ask 16 on the back side in a deliberate attempt to trick someone into laying them at stupid odds. Here there is no attempt to deceive. We're simply leaving a lay up and waiting for someone to make a mistake. And if they do we profit from it. They feel stupid. And learn from the mistake.

OK, I hear you say. But look at the sums involved. Peanuts were matched at the wrong prices. Well it is peanuts to some. But a profit is a profit. And much larger sums are matched during these mistakes too as this graph shows.... (click the graph for a larger image.)

Ok, this screenshot was taken immediately after the mistake so the price movements appear more spread out than if viewed in a longer time frame. That doesn't really matter though. The point is the New York Jets were playing the Dallas Cowboys. The Cowboys started at 1.1x and their price never got bigger. Yet someone has backed the Jets all the way down to 1.21. And this time it wasn't for peanuts. It took several thousand pounds to get the price that low. Nearly £4k was bet at evens alone. If you had layed that you could have immediately backed it back at 25+, or layed the Cowboys at 1.0x for a huge guaranteed profit. Leaving lays below the true market price suddenly seems a little more worthwhile now doesn't it?!

Alright I hear you ask. But how often do mistakes like this happen? Well, who knows. I guess you could use Betfair historical data to get a pretty good idea. But i'm happy to just know it works. As for these two examples? Well, they both happened last Thursday. I only looked in on a few markets. I wasn't looking for examples. They just cropped up while I was going about my normal trading business. Sure, to see two examples in a day in the 3 or 4 markets I looked in on might be a little unusual. But consider this - there are thousands of markets each day on Betfair. 

The irony is most people don't even realise these mistakes are being made. Why not? Because they use the traditional Betfair interface. Their odds refresh every 30 seconds unless they refresh them manually. The action is all done and dusted before they realise it even happened. Fast refreshing trading software makes it all too clear what is going on though. To such an extent that even if you haven't left a lay in at below the true market value you can very often pick off these mistake bets before the person who made it realises what they've done and cancels it.

So there you have it. You can do worse than leave a lay at below the true market odds. It ain't pretty or cultured. It's taking full advantage of the mistakes of others. And it works. Just be careful. Afterall, you don't want to get caught yourself if you are too slow to cancel and something happens in the event you are trading to make your price value! Of course, there's nothing to stop you just leaving the lay up even below that level in the hope...

(This post was first published in November 2007. The sniping / fat finger world has moved on an incredible amount since then  but this kind of strategy still picks up free ticks each month for me.)