Bots (short for robots) are basically automated software programs, designed by a human user, that automatically places bets on the betting exchanges based on certain criteria. Their main aim is usually to take any bets that offer value, for example when a book for a given event goes below 100% when backing, or above 100% when laying. In this case a bot would take the bets for all possible outcomes and guarantee a small profit, akin to bookmakers.
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Therefore done over many times over the course of a day, these bots can be very profitable for their owners. However, it should be noted that these bots are only be as successful as the user who programmed them. There have been many instances where certain market events have caused a bot to place bets that have ultimately cost the programmer an awful lot of money, and have ultimately had to be abandoned.
Bots of some description have been around for many years in the stock market, but they are becoming increasingly common on the exchanges. The sporting press here in Britain have increasingly reported on bots taking over the exchanges, and taking all the value from markets before the human users get a chance. A lot of this is simply hype, but it is true that it has definitely become harder for human users to find value bets. I have experienced this first-hand in the FTSE markets on Betfair during the last year in particular. It has made things slightly harder for us financial traders, but I should point out that there are still plenty of profits still to be made.
Also bots do have their advantages. For example, they can provide some much needed liquidity to otherwise quiet markets. They can also go wrong sometimes which can result in some extremely incorrect and generous odds for other users. However, I think it is true that their increasing presence is upsetting some traditional human users, and it remains to be seen what effect this will have on exchanges in the future. It’s unlikely that the exchanges themselves will ban automated bots simply because if they are profitable then obviously the exchanges will benefit in the way of commissions from all the profits that the bots make.
So how can human users fight back against these bots? Well simply outsmart them. Use your own knowledge to anticipate market moves before they happen. Often bots will leave bets in the system below fair value if laying or above the true value when backing. Arm yourself with all the tools you can to make successful trading decisions and beat them at their own game. For example, if you are trading the FTSE markets, use technical indicators, live data and news feeds, etc to anticipate market moves and take the bots’ bets before the market has actually moved and triggered the bot to move it’s prices.
To conclude I would say that ultimately bots are not good news for your average user, but like the stock markets they have become inevitable. Unless the exchanges ban them, which is very unlikely, people are simply going to have to accept their presence and let’s not forget that human users are always likely to make up the vast majority of any given market, and so there will always be plenty of profitable opportunities.
Jim Buccini is a former full-time Betfair trader who has produced a website detailing proven profit-generating tips and strategies. For more information click here:
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