Betfair Exchange Trading - A Guide to Setting Targets
Have you ever set targets when trading on the Betfair Exchange? Do you wish to do so if you haven't done so before? Do you want Betfair trading targets and Betfair trading goals?
This guide should help you answer these questions!
Target setting is a big thing in our daily lives and society. Some people love to give themselves life goals and targets to reach as it helps them to stay motivated to pursue their ideal of the 'perfect life'.
Naturally, Betfair Traders will instictively want to use targets when trading. Whilst this is a good idea to a certain extent, it can also cause you big problems depending on how a trader reacts if they don't reach their target. I will get to the second part of that statement later on, but, let's just start with a simple guide to setting targets.
*If you are new to trading, you should paper trade to begin with and not use real money, always testing first. Target setting is for when you use real stakes, maybe 3-6 months into your trading journey. For more information on paper trading follow this article here: https://betfairtradingcommunity.com/en/blog/paper-trading-%E2%80%93-trader%E2%80%99s-best-friend
When we talk about targets and goals I think most people will have heard of SMART goals. The simplest way to set targets when trading on Betfair is to apply these principles. SMART goals are:
The reason SMART is so popular for creating targets and goals is that it is very easy to see how you are progressing. The targets created are usually very focussed.
In order to create an example of the kind of targets for Betfair trading that we can create another important element is to make it bankroll specific.
By that I mean that any target you create should be a percentage target that is tied to your bankroll amount.
So let's say you decide to aim for 2% profit a day on your bankroll and your Betfair trading bank is £1000, you are thus aiming to make £20 a day.
If you are using £20 stakes, that is essentially one stake of profit per day.
Seems fair enough right?
However, if your bankroll is £100 and you are targeting 20% profit a day (£20) you are aiming to make the same amount financially but you are aiming for 10 times the amount in percentage terms!
This would be a ridiculous risk, which would almost certainly bust your bankroll very quickly.
*I have written a guide to bankroll and bet staking here it is well worth a read for any serious traders: https://betfairtradingcommunity.com/en/blog/betfair-trading-bankroll-staking-strategy-how-much-do-you-need
Back to the target setting.
We have two things to consider before creating our Betfair trading goals.
1. Use of SMART goals
2. Making the targets relevant to our bankroll by using a percentage target rather than a financial figure.
The third and final decision to be made here is the length of time you want a target to last.
To do this I will rate the positives and negatives of various time periods and their effects when trading on the Betfair Exchange.
Positive - Short time frame allows you to track the target more regularly
Negative - It is harder to acheive a target every single day, missing the target regularly is a reality even for good traders, this can cause discipline issues
Positive - Allows for variance and luck to be less of a factor and as such gives a better picture of performance
Negative - If you get behind on your target early in the month it can be hard to recover and causes potential discipline issues
Positive - A good way of seeing the bigger picture of how your trading is going
Negative - A year is a long wait to compare your performance
As you can see there are positives and negatives to everything.
My personal favourite is monthly targets.
I think daily targets are too hard to live up to, two or three losing days in a row make it very tough on a Betfair trader, psychologically.
A year is too far of a target for me, like a usual working salary I like to see my Betfair trading results in monthly amounts!
OK so we now have three major criteria to set our targets:
1. SMART Goals
2. Bankroll Percentage Relevant
3. Time Length
So let's end this guide with a Betfair trading target example based on the criteria above:
A popular target for a lot of wannabe professional Betfair traders is 3% a day on bankroll. The reason for this is people like the idea of almost doubling the bank each month, so that means a 90% or 93% profit if the target is hit every day.
I actually think this is too high, so I am going to plump for something a little more defensive and realistic a simple 30% per month increase (1% a day average).
Let's equate this with our set criteria and see if it is a good target.
30% Profit a month Target-
- Specific - It does what is says on the tin, so if we have a £1000 bankroll £300 a month profit target is not outlandish.
- Measurable - It's a statistic so it is easy to measure
- Achievable - 1% a day when using 2% stakes to trade on Betfair is realistic
- Relevant - We want to make money trading, this target achieves that
- Time-Related - We have a monthly deadline
- Bankroll Percentage Relevant - We are not overreaching here, 1% is very possible and does not come with any huge risk
- Time Length - A month gives us a good chance to overcome variance and see if what we are doing is working
So here we can see that this target fits everything that we need it to. Try it with your own, it doesn't have to be the same target as the example above but just make sure it fits all of the criteria!
I mentioned earlier that there is a big negative associated with target setting and that is that it can put undue pressure on a Betfair trader. This can lead to a loss of discipline as traders sometimes try to 'chase' their losses.
Traders will put on a higher stake trade each time to try and recover their day or month and still hit their Betfair trading target. This is financial suicide.
If you ever find yourself doing this then refer back to the link for Bankroll Management in this post!
One simple message, targets are a guide, they are not life or death. If you miss your target do not worry too much, just learn from it and see how you could have done better and apply that to your next target.