I'd rather a Layer be!

IronyPirate (IP henceforth!) asks a few questions in his comment on my post about the morality of trading, with regard to value backing / laying and their respective relationships with punting over trading. They were largely rhetorical questions, but I've never let that stop me from having an opinion!

Like IP I've found that as I've matured as a trader when looking for in-play opportunities I'd rather a layer be.

When I first discovered Betfair it took me a long time to get my head around what laying something actually meant. The clues were there, even in the generic description of how Betfair and similar sites operate - i.e. they are Betting Exchanges. As a backer I offer to exchange my stake for your liability as a layer, and vice versa.

In my early days, trying to chase the price of a few nags up and down a ladder the lay was simply the thing I had to do in order to 'green up' my position. And something strange happened a lot and I doubt I'm alone in this....If I'd backed a horse and the odds started to drift I'd stick with the trade. If I'd laid a horse and it started to steam I'd get out with the speed of a scalded cat. How daft is that? Once I'd started to notice this phenomenon I also noticed that almost without exception the drifting horse I'd backed carried on drifting, whilst the steaming nag that I'd laid came back to or went out beyond my entry price.

I was letting backs run and cutting lays short because my basic mindset was that of someone whose only exposure to betting in any way, shape or form had been by making a choice and backing it. The idea of losing money because my 'selection' won was anathema to me. It went against the grain and against all my instincts. Strangely, I accepted that losing back bets was part and parcel of the choice made.

The Eureka moment came when I read (and I really wish I could remember where I read it!) that it is much easier to pick one from, say, ten, to lose than it was to pick one from ten to win! I then started to lay outcomes. The inevitable happened - you know, a long winning streak followed by an increase in stakes followed by the one winner which wiped out all previous gains and more. Ouch!

Being by nature a chap with a positive outlook on things I started to look more closely at what I was doing. And now you'll often find me entering what, on the face of it, look like suicidal lays. Man U 3-0 against West Brom, 44 minutes gone. Lay Any Unquoted. A team (preferably the Gooners!) 2-0 up at half time. Lay them. A game with a strong home favourite against mediocre opposition and at odds on... lay them.

The nice thing about trading rather than selecting an outcome and running with it is that you don't have to stick with the trade. Many more games that are 3-0 at half time end at that score or 3-1, 3-2 etc than go over four goals. Very often a team 2-0 up will concede a goal, giving the opportunity to cover your liability and let the trade run or to hedge completely. A home favourite might well go on and win the match, but there's a decent profit to be had at half time if it is still 0-0 or of course should the dogs nick a goal! By and large all these situations offer lays at odds on... so even if you left them alone you'd need less than a 50% strike rate to come out on top...

The key point is that in the CS example at 3-0 by laying AU you have 3-0, 3-1, 3-2 and 3-3 working for you and only a fourth goal to the leaders going against you. In the lay the favourites example the thing working on your side mainly is time decay...the odds will drift as time goes by. A goal to the dog is  a 'Brucie Bonus' in this situation. And many, many 2 goal leads (or higher!) evaporate - even those where you might be laying at 1.01 ... ask those who backed the Gooners at 0-4 against Newcastle a couple of years ago!

Which brings me to another point IP raised - the question of to what degree such actions are punting rather than trading. A tricky one to answer really. I suppose for me it's more a question of your intent after you've entered the position. I normally do something to minimise my exposure as time goes by if I can in the AU lay. I know this gives away profit and possibly value, but my records vindicate this course of action. So to me that's more of a trade than a punt because I have an exit planned. If I've laid at odds of less that 1.2 my instinct usually is to leave it more often than not so I guess that makes it a bit more of a punt.

One thing you can be assured of though... if I've laid something at low odds for a few hundred quid and it's come in, I'm not going to lose any sleep over the mental state of the backer!