Hammers,

Personally I avoided Northerly as I was not sure what was going to happen - I thought it would drift a bit but wasn't sure so left it alone (I didn't want to back it at that price but thought it would probably win so didn't feel confident laying it either).

With the Grand City example I was 95% sure it would firm. The reasoning behind this is simple - on TABCORP it was sitting firmly on around $2.60-$2.70, similarly on IAS it was showing $3.00 (slightly firmer than the opening IAS price). I was therefore very confident that the 3.85 on offer on Betfair would not drift and would almost certainly shorten to the $3.50-$3.70 price range, possibly even shorter. Therefore I put the large bet on and waited for it to firm and then layed off the excess to get the bet size I actually wanted at a substantial premium.

As you point out you can never be sure that a horse is going to firm - you are at the mercy of the market - but as a general observation if Betfair price is way above TAB/Bookies then it is more likely that it will firm than drift - if you can get it right more often than you get it wrong you will make money. As to holding $1000 bet I would not have done that - if it had started to drift I would have sold the excess at say $4.00 and just taken the loss. I must admit the backing/laying equation is a lot more like the stock market than the horse racing game we are used to - you have to try to anticipate market movement but I don't think it is as hard as the stock market - you can get some great indications from the prices on TAB/IAS before making your move.