Pennies To Nothing

In a blatant and unabashed attempt to promote his latest best seller Programming for Betfair and doubtless increase the hit count on his Betfair Pro Trader blog, James posted a comment on my penny post yesterday.

As you confirmed elsewhere, you placed your £200 as an offer to be taken on the Betfair order book. Being 1p lays they are unlikely to be attempts at balancing someone's book. Actually, I recommend in my book (Programming for Betfair - available in all good Amazons) that people use 1p bets to test new bots, but only sparingly. Do it too much and Betfair will close your account. Do it once and the bot is tested.

Although a 1p bet appears to be risk free I am sure that Betfair notes the fractions of a penny in actual risk. Do this trick thousands of times and it all gets added together to create a real risk, but your account will be closed in addition to any loss incurred being taken.

Another sub £2 bet I employ is for bot baiting, placing 10p or 50p between large spreads to see where Betfair's and other bots are interested in taking volume. This gives me an idea of the current price range they are willing to trade at. Fundamental and technical trading are two different worlds. What appears to be odd behaviour to a fundamentalist such as yourself is perfectly rational to the technicians working in the same market.

A little light bot reading... http://www.betfairprotrader.co.uk/search/label/bots

PS I await my fee.

The part of this that I have a problem with is the middle paragraph: "Although a 1p bet appears to be risk free I am sure that Betfair notes the fractions of a penny in actual risk. Do this trick thousands of times and it all gets added together to create a real risk".

I don't think this is correct, or maybe I have misunderstood James. How does this become a real risk? How does it ever get added together?

From the settlement screenshot above, it is evident that the four components of my £200 bet were settled as four individual bets. 

Any fractions are not accumulated anywhere, they are lost because each bet is a unique bet with a unique reference number, settled independently, and thus three of the bets won me precisely nothing. 

In the unlikely event that my bet had lost, my loss would have been 3p, with the layer (presumably the same bot was responsible for all three bets) benefiting by this amount. 

My problem is not with penny bets, or bets of any size for that matter, (the same strategy will allow a 49p back at 1.01 to be taken with no risk to the layer).

My problem is that Betfair matches a bet where one party has nothing to lose, but a wager is defined as:

An agreement under which each bettor pledges a certain amount to the other depending on the outcome of an unsettled matter

By definition, you can't have a bet where one party is risking nothing! Perhaps Betfair do take action and closes accounts trying this, but this has been an issue for a long time and continues to be so. It might be cost effective for Betfair to make a small code change and put in an "if no risk then no bet" check rather than chase people after the fact.

PS I await my fee. When I receive it, I shall be only to happy to split it with James. There may be a small wait.

Programming for Betfair, a guide to creating applications for direct access to Betfair's exchange. A useful guide for those wishing to implement an algorithmic trading set up.

No previous programming experience is necessary to build the applications in the book. After completing the programming exercises the reader will have a powerful tool for gathering prices for database creation, strategy building and algorithmic trade placement using bots. Beginner programmers and experienced programmers have informed me that the book is easy to understand and that it has assisted them in creating algorithmic trading platforms.