Peter Webb is the founder of top sports trading software Bet Angel. If you do any form of sports trading and you haven’t heard of Peter Webb then you have probably had your head buried in the sand for the past ten years. One of the longest serving traders on Betfair and the man behind the Bet Angel software that none of us can be without.
He did take some time to catch up with me and reveal his views and a few secrets about Sports Trading that are well worth reading. Boil the kettle first, its very riveting…
Hello Peter, Thanks for taking some time away from the screens to talk to us.
We always like to get a bit of background firstly, so why don’t you explain what you were doing before you discovered Betfair?
My Dad got me into sports and numbers when he handed me a football pools coupon when I was very young. I set about trying to understand what would make a draw happen. I would tip tap away on a home computer analysing reams of data to try and find an edge and eventually used that knowledge to win the pools. My best win sits on the wall in my office as a reminder of where it all started.
I didn’t do much in the gambling arena back then as, I was too young, and I also realised it was almost impossible to beat the bookie. So I pursued a career in IT, my big passion when I was young, and started speculating in financial markets. I gradually rose to more senior positions in consumer technology companies working with them to bring products to market in Europe, but I had always wanted to go and do my own thing. I worked and saved hard thinking I would probably do something in financial markets, which had grown to become a much bigger part of my life, but then betting exchanges came along and changed everything!
Then at what point did you discover Betfair and decide to go full time?
I was one of Betfair’s first ever customers way back in June 2000. I actually heard about the concept a year or so before launch, so I was quite keen to give it a run out when in launched. I had loads of ideas buzzing around my head based on the work I had done years before in football and more recently on financials. I didn’t go full time immediately as there wasn’t enough going on and I hadn’t really considered back then that it would merit it. But as time went on and activity on the exchanges grew I realised that it was a viable option.
What are the main sports that you trade on Betfair these days?
I tend to do most activity on the big three sports, Horse Racing, Football & Tennis. I’ll also look at stuff on just about any sport where there is adequate liquidity and time. I mess around on Greyhounds a lot if I have time. If you start using bigger stakes you inevitably can’t work in niche markets and have to go where the money is.
From looking at the p&l records on your blog, it looks like you trade race after race. Is that right? Do you plan your strategies ahead or just take each market as it comes?
A bit of both; I’ve studied markets so in-depth that I can estimate what is likely to happen hours in advance, how much money will be matched, when, how and so on. But it’s only when true liquidity arrives late on that it will really take shape, so understanding both is useful.
People often feel the markets are chaotic and unpredictable but most markets, in my experience, exhibit fairly well defined structure.
Am I right in thinking that you had zero knowledge of horse racing when you first started? Is it even needed for horse racing trading?
That is correct; I arrived with no prior knowledge. But when I saw the amount of money being matched on racing, I thought I had better take a look.
The problem I had was that I had no knowledge whatsoever on racing. However I did the same thing I have done with everything else and just messed around at random before starting to break down each key element in the market and use that knowledge to improve any upside and limit or strike out mistakes
You can deploy a number of strategies that don’t require underlying knowledge in most markets. But if you want to get to higher levels it’s usually helpful to really understand the sport.
So, for you, technical analysis is the key to trading these markets?
Not really. Understanding a market is all about breaking it down to its absolute basics and rebuilding the model back up to form decisions. If you know why something happens in a market you can start to position yourself ahead of it.
Do you also think that using large stakes can help you to manipulate markets?
Yes. But I don’t play the manipulation game. Putting aside the ethics of doing it, you would also expose yourself to the market. It’s quite easy to spot something that is being manipulated so that makes it very easy to push against a manipulator. Your best scenario is to be active in a manner that nobody can immediately work out what you are doing. That way you retain control of your position. It’s like a game of poker; you want to keep your cards close to your chest. If you were playing Poker and showed everybody your hand you wouldn’t last long.
What makes you decide if a race is suitable for scalping as opposed to finding a swing trade?
There are many factors and they can’t be described in one sentence. But it is possible to work out many things about a market well in advance.
Just who is the mysterious bomber who keeps throwing crazy money in the pre-race horse markets? What is his game?
It looks like a wealthy individual trying to throw away cash! From a trading perspective, as I mentioned above, if you expose yourself to the market then you will be exploited. When this person appears on the scene I suspect many people change strategy to take advantage. The big backer must be losing money, even if it is a hedging strategy. There are better ways to back using large amounts of money.
I noticed on your blog that you love catching 1000-1 winners (who doesnt!). How often do you ever get them and do you think you are in profit with them in the long term?
If you can squeak some money out of the market anyway, then backing big priced winners at the right time can produce an excellent payoff in the very long term. You have to lose very often to pull it off and this doesn’t sit well with a lot of people, but there is a propensity in the market for people to lay at large odds too quickly on the basis something can’t happen. You don’t pick up many in a year but you don’t need many for it to achieve a payoff. It’s a fantastic feeling when one comes in.
When you trade a football match before kick off, how early do you get into the market? Do you use the same type of indicators you use for horse racing or have a different approach to this sport?
It’s driven by liquidity but generally I’ll do something one to two hours before the start of the match. Similar strategies can be applied across different sports as long as you pick the right one and deploy it at the right time.
When trading Tennis, do you trade based on players in-play performance or scalping in between points?
I don’t think you can reasonably get an edge on a point by point basis when people are courtsiding at a tournament. Therefore you have to take sensible positions, at the right time with measurable downside and upside potential. This is why we created Tennis Trader, to give you heads on where that is.
It is possible to pinpoint not only if one player is in the ascendancy, but when is a sensible time to get involved. If you go out and play Tennis you will quickly realise when players have a strong incentive to play defensively or aggressively. If you couple this with times when the upside is favourable you will do OK.
What is your view on Courtsiders in Tennis? Do you have any idea how they are doing it? Not with Bet Angel surely?
Clock beating has been going on for ages. There is a strong incentive to take advantage of the time difference between live events and what everybody else can see. I imagine a lot of these guys have worked hard to get an edge and to try and retain it. I’m doing a post on this on the blog soon, keep your eyes open for it.
I read recently that you are responsible for the huge liquidity in the X Factor markets. Do you think you are almost the “market maker” in that event?
No, most of my participation in the market occurs only when there is a clear opportunity. There was last year, but not so much this year. I always need a clear reason to participate in a market and if one doesn’t exist I will pass it over.
The X-Factor market is quite a new fascination for most. How much of the money do you think is coming from those with inside knowledge?
My advice on reality TV shows is that you have to think like the producer and judges. What makes good TV, what makes commercial sense? That is how the market is steered. Unfortunately there is no definitive way to price these markets, so trying to model it somehow will fail. So you have to think in a different frame. You also have to be objective, which means keeping up with the show, but not getting emotive about the participants. I’ve always been a bit suspicious of these markets and it was no surprise to see the revelations that some insiders where betting heavily on these events in the past. I can’t comment on what procedures are in place to stop that now, but I think they all want to be seen to not let that influence them in any way.
It is obvious that you are the exception to the rule when it comes to Betfair trading, but how much is a realistic amount for a full time professional to make these days? With or without the premium charges…
That’s really an impossible question to answer as no one is guaranteed anything. However, you can see from some of the metrics that the potential is always there.
In just racing alone there are over 10,000 races a year and if you throw in football and Tennis you could probably double the number of potential markets you could have a go at. If you had a starting bank of £1000 and managed to turn just 0.5% on that per market on average, you would earn £5. It’s quite easy to do the maths from there.
Lots of people will argue the markets are very efficient, which I agree with, but that can actually be a huge advantage as well, if you think hard enough about it.
Around 2004 was when you developed Bet Angel. What made you decide to get involved with creating software?
Back then there was little software on the market. All it would do was place a bet with one click and hedge, and that was it. I wanted to do so much more and bring some experience from financial markets to the table. After banging on everybody’s door repeatedly; in true pioneering style, I realised the only way it was going to happen was if I rolled up my sleeves and did it myself.
Since then we keep on innovating to move the industry forward. Before Bet Angel there were no fill or kill orders or any of the other plethora of features people take for granted nowadays. A lot of which probably first originated from our work or others around the same time. It’s easy to forget how far the industry has come on since then. Even Betfair have taken early features we had in Bet Angel, like ‘keep bets’.
What are the main advantages Bet Angel has over other software?
Aside from all the features is has, which should expand the scope and depth or your activity in the markets, you should always know that I will be using it, every day.
A key factor in the development of Bet Angel is that I am utterly reliant on it for my own activity. I eat my own dog food as they say! If we let that slip my trading would be toast, as it is I’m in year 12 and as strong as ever. I couldn’t have achieved what I have without it.
We have a very large number of long term large scale customers, so it’s always been critical that not only does it have the right tools but that is does the right thing as well. We are always very focused on trying to maximise the potential of our users not only in the tools at the front end but what goes on at the back end as well.
You can see this thinking in the way we set up the communication tool and the API and non API connection modes. Every user has slightly different needs and dependencies on what is important to them, so being able to modify the software behaviour to take advantage of that is very useful.
Are their any new features that you would like to talk about in particular?
There are so many features it’s difficult to do them all justice at that same time. But on top of all the standard stuff you would expect, you may want to look at the Excel spreadsheet integration which is very powerful, the recently launch automation tool which can work with you in a market or quietly in the background on another market while you do your own thing, and the custom columns in the one-click area.
If you want to learn how odds move in Tennis and Football check out the Tennis trader and Soccer Mystic tools as well.
Rather than listing all the features, the best way to experience Bet Angel is to take out a free trial, visit http://try.betangel.com
What is your view on the new Premium Charge that was introduced by Betfair in July 2011? Taking away 40% of profits from big earners such as yourself. Is this the end of your time on Betfair?
I wish I was only on 40%, I’m on 60%+
My first thought on hearing the charge was disbelief, but once I’d taken it in I went through a quiet cathartic period. I realised at 60% there was no way to beat my previous year’s total net of commission so I just stopped trying and got a bit of my life back. I’ve worked so hard since I joined I’d been guilty of not taking enough time off so it was nice to do that.
The net effect of the charge is that it will take me 25 years to do what I just did in 10. So it boils down to whether I can increase my activity. I think this is unlikely given the rate of growth I currently see. So it will force me to change a few things.
I tend to pick and choose what I do now as a result, it’s not worth me doing some things anymore .It’s also made me want to automate my activity on Betfair and exploit opportunities in the market as this is less overhead to me. Pretty much the opposite of what Betfair would want I should imagine! A lot of prior activity was definitely 100% net accretive to the exchange. So the PC seems like a bit of a strategic error in my case.
Of course, for new users who are not facing similar charges, you have a limit of £250k before you pay the PC so there is still plenty of room left for you. I imagine lots of people would happily want £250k. If you know the right strategies you can now accrue that 2.5 times faster than I can using exactly the same strategy.
While the 60% was a shock it’s nice to get recognition that you are among a very small elite group of users.;)
Can you understand why Betfair have decided to do this?
I can see the logic at one end. There are individuals exploiting the exchange by making money at very little risk. People trying to beat the in-play delay or using ‘exceptional’ knowledge have an unfair advantage. That is sucking money out of the system. So it makes sense for them to pay back into the system.
Unfortunately the charge is poorly targeted and people that add value to the exchange are getting hurt as bad, especially those that trade manually or have been around for the longest, the most loyal customers.
If the charge really affected so few customers, you would have thought Betfair would have taken the opportunity to speak to them or do some post charge discussion for those users. Instead they have thrown the baby out with the bathwater. A lot of those affected are clever, intelligent people, with resources; so it’s naive to assume that won’t make a difference to their business or the markets in the long term.
How has trading been on Betdaq recently? Do you think this will be a viable alternative?
It’s getting better and better. I’ve been dropping hints on the blog on how Betdaq has been improving in the last year and it got a real kick when Betfair introduce the 60% charge. I’m on Betdaq regularly now and hadn’t conceived that would be the case a year ago. It’s not suitable for all styles and all sports at the moment and is some way behind Betfair, but it’s getting better. I think it makes sense for people to use both exchanges as active competition in any market can only a good thing.
We’ve had a free version of Bet Angel for Betdaq since 2008. You can download it at http://www.betdaqangel.com
So where do you see the future of sports trading lying? Can you see Betfair growing with the way things are going? Or can you see a new player entering the market soon?
The market is still exciting and offers plenty of opportunity, but it is pretty mature now. This is why you see the exchanges going for margin all of a sudden, it’s a sure sign of slowing growth.
The exchange provider market could do with more competition or invigoration to really get it moving again. It’s drifted away from the thing that really excited people. People don’t mind losing to other people who are cleverer than they are, but people dislike losing to a faceless corporation.
It will be interesting to see Betfair’s new CEO’s take on things. The exchange model is a great idea in its own right, but only if you push the exchange as the driver of growth and change.
What will you be doing in the future personally?
More of the same I expect, but I have to change focus. I have always been very busy on many fronts so each element rises to prominence depending on the suitability at any one time.
I still have plenty of interest in the exchanges because I really enjoy it and it’s very complimentary to other things I do, especially the timing of it. I’ve also spent half my working life analysing and working on sports markets, so I’d be foolish not to use that knowledge somehow. Bet Angel will continue to develop and the PC also means that I can pass on knowledge now that I can’t actually use myself, or is or more value to other; so I’ll probably do more on the education front.
I’ve been into financial markets for some time. They will most likely be an increasing part of my activities for many years to come, if they don’t collapse first! I’ve actually learnt an awful lot about short term trading from my activity on betting exchanges. I think the two are quite complimentary.
If you look at it, it was gambling that originally gave me the money and ideas to invest, which then gave me money and ideas to gamble, which has now given me money and ideas to invest. I guess that cycle will continue!!!
What advice would you give for somebody to succeed at sports trading?
Let the market be your slave and not your master.
The market is full of opportunities and potential all the time. Your role is to find them at the lowest risk. If you can’t, you are not obliged to do anything. It’s like batting at the crease in a game of cricket with no stumps. The only way you can get out is if somebody catches you out, so sometimes that involves doing nothing and letting the ball fly past. Even if you think it would have been a good shot, you don’t need to worry as another chance will be along in a minute.
Well, many thanks for taking time out to do this talk.
No problem, thank you for the invite!
Peter Webb is the founder of Bet Angel and one of Betfair’s biggest and longest serving customers.
Download a free trial at http://try.betangel.com
Betdaq Angel is available free of charge from http://www.betdaqangel.com
View some videos at http://www.betangel.tv
Read Peter’s daily thoughts on his blog at http://blog.betangel.com