Liquidity, the Bigger Picture
The Changing Landscape of Exchange Liquidity
It’s no secret that many in the community are lamenting a fall in Betfair Exchange liquidity. Yes, the figures have shifted over the years, and yes, some structural changes—like the Paddy Power merger and sportsbook focus—played a part.
But is it all doom and gloom?
I remember when I first came across Horse Racing, it wasn’t the first market I traded on Betfair, it was well down the list initially.
I couldn’t believe how much was being matched, billions a year. My instinct is that I had to get involved. Wind forward 25 years and there are still billions being matched, if not at a level that it once was.
The Early Days: Liquidity Was Never Endless
Having tracked data since day one, I remember the early growth phase.
While people imagine it was a steep, endless climb, the reality is it stalled much earlier than most think. For years, it flatlined before any decline.
In other words, markets have always had cycles and each cycle has different solutions.
It’s very hard to find something that just generally works constantly without modification and different cycles present different opportunties.
Why the Industry’s Approach Matters—But Not as Much as You Do
Of course, Flutters post-merger focus on the sportsbook didn’t help, and affordability checks play a role it making it harder for people to get on with .
Yet, the biggest mistake is assuming a decline means the opportunity is gone. Many Billions are still matched annually—and last year, I had a fantastic run, winning every race at Cheltenham and setting records at the Grand National.
Generally speaking, high profile events did really well. But the smaller stuff, hasn’t been great in general. That feels more like a Racing issue, though obviously there are contributing factors.
The opportunity is there, you just have to seize it.
From a trading perspective liquidity has always been an issue
If you are betting, you are probably not using large amounts of money. Hundreds, maybe many thousands at the top end.
When betting you are likely to bet £10 to win £100, when trading you are often ‘betting’ £100 to £10. That’s the bottom line when trading. It sounds risky, but it isn’t. This is why some people find it hard to trade.
Using trading stakes of hundreds, is quite straight forward and surprisingly positive. Thousands is a little tricker, above that is pretty hard and always has been.
So there is a natural limit to trading day to day events, that has and always has been fairly similar.
OK, in the boom times you could use bigger stakes, but most of my career has been more about the number of markets I trade, rather than the volume.
The Recent Uptick: What No One Mentions
What’s missing from the conversation is that last year, standard horse racing markets began to grow again, potentially linked to factors like the introduction of the expert fee.
After early-year declines I saw a steady rise across even bog standard races throughout the year. This is something that continued this year.
I realise doom and gloom are often used as attention grabbing, eyeballers. But the reality is, the markets have already bottomed.
What Traders Need to Remember
Market cycles are inevitable. Your job isn’t to fix the industry’s approach or endlessly highlight the changes. It’s to work with what’s in front of you.
Of course, life would be better if a terrible three runner in the winter matched £10m a race, but that’s never looked on the cards. Even in the boom times.
Whether liquidity is booming or flat, those who adapt thrive. Focusing on problems can provide a useful off ramp for some. But if you are active and in the market your role is to find opportunties.
The exchange isn’t done—far from it. The question is, are you ready to leverage what’s next?