/ / How Important Is LIQUIDITY To Betfair Trading?

How Important Is LIQUIDITY To Betfair Trading?

betfair liquidityLiquidity! Does it really matter?

Of course it does!

Something that is very important to trading on Betfair but is not covered enough is the importance of the presence of liquidity in the market you are trading. A big mistake I see many novices make is getting involved in markets where the liquidity is poor which leaves them in a whole heap of difficulty. Therefore, it is important to understand you should only ever be getting involved in the high liquidity markets on Betfair.

Just what is a “high liquidity” market?

The most simple way to describe a “high liquidity” market is a market with lots of money being matched within it. Markets that have had above a 5 figure mark matched on them can usually be marked down as being highly liquid.

However, that is not all you should keep in mind.

What really makes a Betfair market a “high liquidity” market is the ability to get your bets/orders matched at a high speed and at the prices you want. Therefore, you are really thinking about a market with a high amount of interest and turnover. If you are confident of getting your money fully matched at the price you enter at then you are probably in a high liquidity market.

How do you identify a low-liquidity market?

There are various tell-tale signs that the market you are looking at is low on liquidity.

The Amount Matched – In the top right corner of the market you will see the overall amount of money matched on the market so far. This should be the first thing you look at and if you are seeing amounts in the single, double, triple, four figure range then this market is pretty low on liquidity. This does not mean you can not trade it at all but just that you should probably adapt your stakes and trade with caution.

Gaps In Prices – If you are looking at prices and you can see that there is, for example, 1.50 to back but 1.70 to lay then this is a pretty clear sign you are in a low liquidity market. You ideally want markets where you see 1.50 to back and 1.51 to lay with no gaps in prices at all.

Large Amounts Waiting To Be Matched – Then look at the prices on Betfair and the money underneat those prices. If you are seeing more then 4 figures waiting to be matched in each box then this is a high liquidity market. If you are seeing small amounts then steer clear.

For example:

liquidity high

Above you can see an example of an event that shows all the signs of being HIGH LIQUIDITY. This match is in the Champions League which is one of the most popular sporting events on the planet and there is £424k matched several hours before it even kicks off.

Then you can see the prices have no gaps between them and underneath you can see HUGE amounts of money waiting to be matched (and taken 😉 ).

In Contrast…

liquidity low

The above market is happening on the same evening as the Madrid derby and this is a clear example of a LOW LIQUIDITY match which is not conducive to trading.

You can see only £5k has been matched so far, there are gaps in the prices and there are small money amounts in the boxes. Note the £10 available @ 2.72 to lay!

With time, it will get easier to instantly identify a low or high liquidity market and this should help you avoid the potential banana skins.

But why should you avoid low liquidity markets?

Markets with low liquidity should be avoided for a variety of reasons:

It is hard to make money, where there is no money – Depending on your Betfair ambitions, there is probably not enough money in the market for it to be something worth concentrating on in the long term. For example, it might be easy to dominate the market with £100 stakes and make double digit profits but in the longer term there is no room to scale into. A tennis market might have millions of pounds turned over on every match which means your room to scale into the market is pretty high and you can use 5-6 figure stakes if you wished, but that Turkish volleyball market (for example!) probably won’t be able to handle such big stakes.

Forced to take bad value – When trading a low liquidity market things can be great if it goes well as it can be easy to get better value prices then normal when going into the market. However, if the market goes against you and you need to get out in a rush then you can be forced to take some pretty bad prices. This can really eat into your profit margin.

Think about it – If there is lots of money in the market it means there are lots of people involved. When lots of people are all involved in something it should make it plainly obvious that some of these people will be making some serious money from it. Therefore, this is clearly a market you should be interested in more then the obscure ones.

So where do I find the best markets for liquidity?

betfair liquidity 1The best way is to use your sporting common sense.

If there is a sports event that is likely to gather lots of interest then it is usually going to be pretty liquid for trading on Betfair. A Premier League football match is always going to have money flowing through it, whilst a match from the Bulgarian second division probably won’t have so much money in it and should be avoided for trading. Markets like Tennis and Cricket are usually bristling with liquidity as the big courtside players take each other on, this does not mean it is impossible to get a piece of the pie yourself though!

Events that gather lots of public interest will usually be quite liquid and this is the reason why the market on the Eurovision Song Contest and the X-Factor TV show is such a strong one.

But you should also be aware that just because an event is popular does not mean ALL markets within the event will be full of money also. For example, in football markets like Match Odds, Over/Under 2.5 Goals and the Correct Score will be the most liquid but the more obscure markets will not be and should probably be avoided unless you know what you are doing.

My advice, go where the money is and stay away from the empty markets!

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