Peter Webb creates a £2,000 free bet on Betfair
Slightly tongue in cheek title based on the video I did with Betfair. But this trade was surprisingly similar.
However, I created this video to show you the trading values of such a trade.
If I post a small trade people often feel it’s not much profit. Post a bigger trade people wonder what it took to get it. So here are the key metrics laid out for you.
The fully hedged return was just under £300 on a £1000 stake but because we opened with a lay position we needed more in our account to be able to get the trade away. But the net result is we end up with a £2000 free bet / unhedged trade.
Ultimately this is a unique issue with trading, because you are placing a lay to open a trade you have to put up front the stake plus the potential liability. But of course you close your trade and that liability never comes in. But you need it there in the first place.
If you back first you don’t get this but this SHOULDN’T influence how you trade. Trade the best position you can but don’t let your P&L liability increase the stress of the trade. You are trading in both directions and a trade on either side is equally likely!
The reality is when trading that you only trade your initial stake, so you can forget your liability. On this example I’d only need to do this trade three times to get a total return that covered my entire stake.