Pre-race trading: the basics

Pre-race trading means opening a position before a race and closing it before the off, so the result of the race doesn't decide your profit. Price movement does. Horse racing suits it because UK and Irish markets trade heavily in the final minutes and prices move constantly.

How a trade works

You back at one price and lay at another (or the reverse). If the price moves your way, you close for a small profit on every outcome; if it moves against you, you close for a small loss, or you hold and hope. That last option is where most losses come from.

What moves prices

• Weight of money: large bets taking the available price.
• News: non-runners, going changes, jockey bookings, market support from the course.
• Liquidity arriving late: many races do most of their trading in the last 10 minutes, so early prices can be unrepresentative.

Rules worth setting before you start

• A maximum stake or liability per trade.
• A point at which you close a losing trade, decided in ticks before you enter.
• What happens to unmatched orders at the off.
• A daily loss limit you stop at.

None of this guarantees a profit. Many people who try exchange trading lose money, and commission takes a share of every winning market.

Tools for this