The one lesson all Betfair sports traders should learn.
Often, I get asked about the “One thing” that I think has made my trading successful.
Although I get the feeling the person asking the question is waiting for a tip on executing a trade…
…My answer is always the same.
“Exiting a trade when it goes against you.”
I think the problem with trading is many people come across it after being a pure gambler.
Because of this, they are used to losing their whole stake and often when they start trading they have the same “mindset” and will often hold a losing position to the end.
This will mean they will lose far more of their stake (If not all of it) than they needed to.
I know because I used to do this myself and have talked with plenty of other traders who have done the same thing.
In fact, you will probably find the most common theme running between any group of successful traders is that they don’t wait around to exit a trade that goes against them.
Having read a number of books from successful traders you often find the same…
…”I lost my whole bank through not exiting a bad trade…It was when I made the decision to always trade out …that things changed“
When you make the decision to create a stop loss and not go beyond it no matter what you think…
…That’s when your trading will change.
You have probably heard this from “Non-Traders”.
“Not a lot of profit for such a big risk”.
This is exactly the mindset of a “Gambler” not a trader.
A gambler is thinking that if you make a trade with £50 and make just £3 then it is a crazy risk…
…And it would be if you are risking £50.
But as most successful Betfair traders will tell you:
“You are not risking £50 you are only risking (or should be only risking) £3 to £6 at the most.”
And sometimes the reward for a successful trade can be much higher than £3.
We are using £50 because we need volume to execute the trade, but we have no intention of losing it.
And this is where people who are new to trading (and some who have been trying to learn for a while) have the most difficulty.
They can not get used to just exiting a trade on Betfair and instead use excuses like…
“I know it will turn in a moment”
“It’s just a weird turn in the market it will come back to me”
“If I go in-play I am sure to make it up”
If you don’t recognise any of these from your own trading, then I suspect you will have others.
This is a lesson that I had to learn myself and I can assure you the moment you do it makes such a difference to your trading.
The great thing is the sooner you get out of a trade that has gone wrong the better chance you have of getting back into profit using the change in the market.
If you want an example of an extreme case of using the trading stop loss then watch the video below
Waiting to exit a Betfair trade gone wrong I think can be psychological as well and the more you lose the harder it gets to trade out.
The bigger the loss the more excuses you start creating to stay in and hope it turns around because you start to resign yourself to losing bigger loses.
If you are using software like “Geeks Toy” Or “Bet Angel” pro then you can set up a “Negative” trade option that is activated the moment you put in the first part of your trade.
If you use this then you will know that whatever happens you are forced to exit.
I suppose the next question is:
“What should I set by Betfair trade stop loss at?”
That will depend a lot on the type of trading you do.
Scalpers set theirs at “Scratch” or one or two ticks at the most…
Swing Traders will probably go for somewhere between 5 and 10 ticks depending on the prices they are trading at and the size of the “Swing” they are aiming for.
Just remember that when you are trading at prices of around 1.5 then the tick value is a lot less than when trading at 6.0 where a few ticks can soon add up to a lot of money.
I don’t believe you should set your stop loss based on:
“What you are comfortable losing”
I think it should be set to a value that will allow you to get back into profit quickly, so it is better to go less than more.
Just remember to be a successful trader you have to master losing as well as winning!