If you’re new to sports trading, you may have heard people talking about “backing and laying” or “trading markets” on the Betfair Exchange.
But what does that actually mean?
In this complete beginner’s guide, you’ll learn exactly what the Betfair Exchange is, how it works, how it differs from traditional bookmakers, and how you can start trading successfully.
What Is the Betfair Exchange?
The Betfair Exchange is an online betting marketplace where users bet against each other, rather than against a bookmaker.
Instead of setting the odds, Betfair allows users to create their own prices. Bets are matched between backers and layers, and Betfair earns a small commission on winning trades.
This creates a system similar to a financial trading exchange, where prices move based on supply and demand.
In Simple Terms
On the Betfair Exchange, you can:
Back an outcome (bet on it to win)
Lay an outcome (bet on it to lose)
Trade in and out of positions
Hedge profits or losses
Access better odds than bookmakers
This flexibility makes the Exchange ideal for sports traders and professional bettors.
How Does the Betfair Exchange Work?
To understand how exchange betting works, you need to learn the two main bet types.
Back Bets – Betting FOR Something
A back bet means you think an outcome will happen.
Example:
Back Arsenal to win
Odds: 2.00
Stake: £10
Profit if they win: £10
This works the same way as a normal bookmaker bet.
Lay Bets – Betting AGAINST Something
A lay bet means you think an outcome will not happen.
Example:
Lay Arsenal to win
Odds: 2.00
Stake: £10
If Arsenal do not win, you earn £10 (minus commission).
If they do win, you pay out the backer.
This ability to act like a bookmaker is what makes the Exchange unique.
How Bets Are Matched
Each market shows:
Blue prices (Back odds)
Pink prices (Lay odds)
When a back price matches a lay price, the bet is matched automatically.
If no one accepts your odds, your bet remains unmatched until someone does.
This works similarly to a stock exchange order book.
Market Depth and Liquidity Explained
What Is Market Depth?
Market depth shows how much money is available at each price level.
High depth means:
More stability
Less price movement
Better trading conditions
Low depth means:
Volatile prices
Harder to exit trades
Higher risk
What Is Liquidity?
Liquidity refers to how much money is traded in a market.
High-liquidity markets include:
Premier League football
Horse racing
Major tennis events
Low-liquidity markets include:
Lower leagues
Minor sports
Niche competitions
Higher liquidity makes trading easier and safer.
Betfair Commission Explained
Betfair does not profit from your losses.
Instead, it charges commission on net winnings per market.
Typical commission: 2%–5%
Example:
You win £100 in a market
Commission: 5%
You receive: £95
You only pay commission when you make a profit.
Betfair Exchange vs Traditional Bookmakers
Here’s how the Exchange compares to standard betting sites:
Feature | Betfair Exchange | Bookmakers |
|---|---|---|
Odds | User-generated | Bookmaker-set |
Lay Betting | Yes | No |
Trading | Yes | Limited |
Commission | On winnings | Built into odds |
Restrictions | Rare | Common |
Because there is no built-in margin, Exchange odds are usually better.
Common Betfair Exchange Terms
Understanding the language of exchange betting is essential.
Back – Bet for an outcome
Lay – Bet against an outcome
Unmatched – Waiting for a match
Liquidity – Market volume
Market Depth – Available money
BSP – Betfair Starting Price
Green Book – Equal profit on all outcomes
Red Book – Guaranteed loss
Learning these terms will speed up your progress.
Popular Betfair Exchange Trading Strategies
Here are three beginner-friendly strategies used by traders.
1. Back-to-Lay Strategy
This involves backing first and laying later at lower odds.
Example:
Back at 3.00
Odds fall to 2.00
Lay at 2.00
Lock in profit
Used widely in football and horse racing.
2. Lay-to-Back Strategy
This involves laying first and backing later at higher odds.
Example:
Lay at 2.00
Odds rise to 3.00
Back at 3.00
Secure profit
Often used when favourites are overvalued.
3. Scalping Strategy
Scalping focuses on small price movements.
Traders aim for:
Many small wins
Low exposure
High consistency
This requires discipline and fast execution.
Step-by-Step Football Trading Example
Let’s look at a real trading scenario.
Match: Liverpool vs Chelsea
Step 1 – Pre-Match
Back Liverpool at 2.40 with £50
Step 2 – In-Play
Liverpool score
Odds drop to 1.70
Step 3 – Trade Out
Lay Liverpool at 1.70 for £71
Result
You profit around £8 regardless of the result.
This is called “greening up”.
Risks of Using the Betfair Exchange
While powerful, exchange betting carries risk.
Common Beginner Mistakes
Trading low-liquidity markets
Overstaking
Chasing losses
Ignoring commission
Overtrading
Emotional decisions
Successful traders focus on risk management first.
Tips for Beginners
If you’re starting out, follow these rules:
Start with small stakes
Trade major markets
Focus on one sport
Keep records
Learn before scaling
Stay disciplined
Consistency beats excitement.
Frequently Asked Questions
Is the Betfair Exchange Legal?
Yes. Betfair is regulated and legal in many countries, including the UK.
Can You Make Money on Betfair?
Yes, but only with:
Education
Discipline
Risk management
Long-term mindset
Most profitable traders treat it like a business.
Is the Exchange Better Than Bookmakers?
For traders and serious bettors, yes. The Exchange offers better odds, flexibility, and fewer restrictions.
Do I Need Trading Software?
Not at first. Learn manual trading before using bots or automation.
Why Use the Betfair Exchange for Sports Trading?
The Betfair Exchange gives you:
Better odds
Lay betting
Trading opportunities
Hedging tools
Scalability
Professional-style markets
It is the foundation of modern sports trading.
Final Thoughts
The Betfair Exchange is more than a betting site — it is a financial-style marketplace for sports.
By learning how back and lay betting works, understanding liquidity, and using proven strategies, you can turn casual betting into structured trading.
Whether you’re a beginner or aspiring professional, mastering the Exchange is essential.