Inplay Trading Gut Feeling - To Stay in or Trade Out?
Following from last week's blog post about Betfair exchange trading using a 'gut feeling'. I was asked a great question on our Betfair Trading Community Youtube channel.
(The channel is here by the way incase you haven't subscribed to it yet): https://www.youtube.com/channel/UCA56xYPA0sMOevWP7J5EyBA
The question from Scott was:
'Interesting video, would be interested to hear about how you deal with gut feeling when you're in a trade?'
So today I will answer this!
There are a few things we must consider when acknowledging our 'gut feeling' whilst we are actively in a trade.
The first thing to do is work out whether our feeling comes from a place of bias or is a genuine one which we need to take more notice of.
How do we do this?
In my experience there are two main types of bias that effect our Betfair live trades whilst we are already trading inplay and people tend to be one or the other.
A natural positive outlook - The eternal optimist. A person who believes that their trade will win no matter what as there is always a chance of it turning around.
The constant negative outlook - The permanent pessimist. A person who always believes their trades will lose no matter what as it could always go wrong.
I am sure many people reading this will be able to relates to these character types. Especially the 'permanent pessimist' one.
Now if either of these are you, then you can probably ignore this line of thinking and carry on with your inplay trade.
Why would you exit or divert from your plan when you know your mind is just trying to make you think unrealistically about the trade?
Quite simply, you shouldn't!
Although, there is one exception to this rule.
If you are feeling the opposite way to your usual mindset this is a huge red flag!
So let's say I am an eternal optimist when trading, I'm constantly fighting against the fact my mind believes every trade will win.
However, I have just entered a trade and am now feeling negative, as if the trade will lose.
This is a big warning sign that you should probably exit the trade - The fact you are an optimist in general but not on this occasion is possibly your brain's way of communicating that you should not be in this trade.
Once we eliminate bias from the equation we need to look at why our 'gut feeling' is telling us something during this inplay trade.
Has a major event happened since you entered the trade that means your plan may have gone out of the window? Like a red card in a football match, or a wicket in the cricket.
If so then yes you will need to evaluate your position and decide a new plan for the trade. If in any doubt about this there is a very simple answer.
Just exit the trade.
Too often Betfair traders stay in a trade after their plan has not come to light, only to see their position in the inplay trade get much worse.
So let's say you have eliminated the bias factor and there have not been any major events since you entered the trade.
Your gut feeling is still telling you, however, to either exit or stay in longer.
How do you know whether or not to follow it?
I've said it before and I will say it again. Test, test and test!
Test how your 'gut feeling' is performing when trading inplay on the Betfair Exchange. After a couple of hundred results see if it really is telling you the right thing to do.
Make a note of what it tells you and if you had followed it would it have performed better than your original trading plan?
If so then there is nothing wrong with following it but if not just stick to the trading plan!
The brilliance of properly testing all of these 'gut feelings' you have is that if you are at all unsure of how to proceed, your results and research will give you the answers you need without you having to guess at it.
Hope you enjoyed reading this blog post, if you have any questions on anything please do not hesitate to ask me on the forum or email me: firstname.lastname@example.org