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Put your hand up if you know what the following mean – Married Put, Protective Collar and Long Straddle? How about Iron Butterfly then? They are all terms used by option traders on the world’s financial markets – no place for the faint hearted.

What do two option traders from Sydney’s Northern Beaches do, when deciding to step out of the pressure cooker of the trading floor? Go drinking at the New Brighton in Manly for starters, but the real answer is they became punters.

Tom and Thomas (yes it makes it tricky to write!) turned their backs on the Australian Stock Exchange after a combined 25 years working in the mysterious world of financial markets.


For Thomas, it was time for a change, “I had also left the finance world and my main aim was to have a year off and spend time with my kids before they went to school. After a few months I got a bit bored – not with the kids! – so I sent Tom a message and said why don’t we look at this together.”

Why sports betting? “I like sport, I’m a big fan of watching sport myself, so Tom and I focused on sports betting because we are big fans of watching sport. That was the interest, but horse racing then appealed to us as there were lots of races a day, a big data set meaning lots of trading sessions – so we jumped into horse racing pretty early on.” Neither of them had much to do with punting.

Thomas had worked in a Tab outlet whilst at Uni and punted a little; Tom enjoyed his sport but was not a punter at all,

I literally had a bet on the Melbourne Cup and that was it. I’d never touched a form guide. My only connection to betting was that he was my mate! The key was we had worked in a similar environment – a market we could trade – which I feel is still what we do now.

Tom admits that he got hooked on the idea pretty quickly after receiving that text, “I came to it not as a punter I saw it as a frame of reference that this is a market and aspects of it look very familiar to me and I enjoyed working on them.

It looked like a way I could apply things. I’m a software developer by background so I was able to look at systems that I was interested in developing and with my trading experience I would be able to keep that going but not in the high stress environment of the financial world. A massive aspect I liked was that I could take my time.”

Back in the 2000’s when Thomas was working part time in that Tab he heard about Betfair. Little did he know all these years later that it would become such an integral part of his life, “The stock market is only opened for a short time whereas the real aspect of this (Betfair) is that it doesn’t close and there are so many markets to trade.

Betfair never sleeps which is terrific and that’s the real fun part of it. We didn’t have an interest in horse racing, but we worked out that’s what we were good at. We started on Australian racing and we now do all around the world – all forms of racing – dogs as well.”

Racing comprises 75% of their activity and they are still developing their own programs. It didn’t happen overnight. They didn’t open a Betfair account wave their option trading magic wand and watch the money roll in.

As Thomas saw it, “You start with an idea, you muck around with it till it gets more promising. You think, how can we do this better?

“On starting we thought we could kinda play similar strategies that we employ in the financial world into the sports betting world. Just plug it in and go for it and make money immediately. Not the case at all, horses and stocks don’t have much in common.”

Tom is passionate about developing programs and the challenge that the market place brings, “The thing I like about markets in general is that you have so many participants – people with different ideas all meeting together – so doing the technical side of developing trading systems really appeals. We build our own systems and that’s a big part of the challenge and enjoyment for us. We are currently trading as we are sitting here – the automation is an interesting part of the story.


We trade around the clock but we do go to bed at night! Many factors go into our model – its spits out prices and starts trading – blending prices with the market. The model does it we don’t have to do it. It’s highly automated but watching adds value and we watch as much as we can. Tom cracks the same joke every week – you see more when you are watching!”

Must be a nice buzz to wake up in the morning and see how the overseas session has gone!

To both of them, the frequency and consistent amount of races is very attractive, “You basically get a lot of chances during the day, get some feedback and go again.” Thomas continued, “We have an idea of what a horse is worth and if the market is a bit out of whack we see it as an opportunity – so if we make a horse 5/2 and its 7/2 we’d act.”

What if you made it 5/2 and it was 11/4?

“Well it would depend on the event or how confident we were. If it was a big horse race then the gap is a very big one but if it was something like a dog race in NZ then it might be a little too tight. If you feel like you’ve got a lot of information then you are much more confident, say, like the difference between an Australian Cup or a maiden at Ballina.”

So the bigger the race the bigger the bet?

It’s more what the market offers you but in general the big races tend to offer you more, but there could still be a colossal opportunity in a very small race.

Tom has a very competitive nature and enjoys that aspect of Betfair, “If one of the big syndicates is against what we like, it’s that competition of being against top people that is one of the real appeals. I get a lot of motivation from that, but understand I really respect the other people out there. It’s actually much more competitive then we thought going in.” Thomas adds, “We are from the finance world which is an exceptionally competitive environment. It’s very sharp – much much more efficient then we could have ever imagined.

It’s a big liquid market filled with very smart people and a lot of money changing hands. It’s a very mature market and to Betfair’s credit they have really developed it well. You have to accept that there are better people out there – a big ego can bring you undone – you need a huge amount of humility”


Both of them agree that their edge (a direct legacy of the finance markets) is discipline and the analytical approach to reviewing their action, “We brought that review discipline immediately to what we are doing – our core strength is our ability to review accurately and without emotion.

We are very data driven and analytical and like to think we are extremely thorough and consistent in the way we approach everything from the systems to the punting to whatever else we are working on.” They do admit to a bit of emotion when they watch the systems trade and cheer their horses on in the afternoon!

It’s important in reading this to be aware that what they both have been through is very similar to a lot of other start-ups in whatever business you choose. A lot of trial and error in the early days, months of no money and hours of work that didn’t work so to speak. “We are human, this is a very difficult pursuit. We find it difficult to know what we need to do to get to where we want to be in 12 month’s time.

There is no frame of reference, so we draw on past experiences. It’s not like there’s 10 people we know who are doing what we do so we can ask them questions and I struggle with that.” Thomas is honest in describing it as quite a lonely existence.

They are a two man band but have recently took a person onboard to assist with the IT/Tech side of things to help ease their work load, “As there is two of us we have to choose what we are going to work on and prioritisation is a really big problem. We are under a lot of time constraints and sometimes we definitely cut corners more then we would like; and even with the addition of a third person we aren’t where we want to be at this point in time.”

Is a goal to be the next “big syndicate”?

Thomas laughs, “I wish! We have different trade indicators to a lot of the big syndicates, but we are still learning – we are learning everything on the job. At the beginning my wife asked what % chance do you have of this working – we thought we were about a 10% chance of making it at the time.”

Tom interjects, “We had a lot of good fortune getting to this point. It seemed like at every point we needed to make money to get that mental confidence to keep going we just scraped through. It seemed like we had that bit of luck at just the right time. You think what you are doing is marginal and then you roll some new idea out and it works.”

Thomas stresses the importance of always trying new things, “If 90% of the things you try didn’t fail then you are not trying hard enough. We have a hit rate of about 10% on the things we try adding value to the operation. Most things you try shouldn’t work – you must respect the market. We had so many great ideas – we thought – that just didn’t work!”


Both Tom and Thomas acknowledge it’s been a long process of trying different things.

Like any start up company there are a lot of unknowns hiding in the shadows and they admit they were too confident in their pricing model. They decided to get less aggressive with their trading backing off a bit to take what they described as more ‘credit’. It’s a stock market phrase.

They started looking for better value so began trading less but at better prices. “We had no right to be as big as we were. We had to show more patience and to be honest we had got a bit ahead of ourselves. It was soon after that change that we had our first big week. It was about 12 months in and it was at this point that we came from a 10% chance of making it to a 33% chance of making it.”

In that is a good lesson for others looking to head down this path that some times a step back is really a step forward and that can only come with experience which is a key piece of advice that Thomas offers to those wanting to come in, “It’s a lot about perseverance.”

I’d highly recommend you find a partner that has complementary skills to you so you can cover enough areas to get off the ground. Also go and talk to people – go to Betfair functions. In the finance community you have events in the trading world where everyone goes but no one talks to each other – in the Betfair Community it’s the opposite everyone is extremely open making it is so beneficial.

They both agree they are enjoying life much more than five years ago. They are doing something they are passionate about and as Thomas laughs, “Invariably when we go for a beer with mates to watch the footy we end up in a corner of the pub the two of us talking about work so yes you have to be passionate!”

Who says horses and stocks don’t have much in common?

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