Turning Advice into Profit Part 2 - Trading Out

Part 2 When and when not to trade out: (read part 1 here if you have not already!)

OK I could write a book on this subject. This will probably be it’s own series of blog posts in the future but for now I will do a single post.

Have you ever…

• Taken a loss only for your bet to win or get green later on

• Not taken a big green (profit) as the pick is nailed on only to lose your money

I’m pretty sure we all have, for ages in my early trading days I was probably the king of these mistakes.

To be fair, there are times you make these trading decisions correctly, for example when you hit a stop loss or when something significant happens to your pick (player sent off, QB gets injured during game etc). However, many times these decisions will have been made due to poor judgement.

Let me give you an example of the first common problem:

Somebody on BTC points out a great trading opportunity to lay a side at 2.0 but you were too late making the lay yourself and now the price is 5.0. You take it anyway because, hey, this guy is a great trader. The problem is the guy (or gal) trading has probably greened up or taken their liability out already but you now need the price to drift much further to make a similar profit, this is dangerous territory as you will have a larger liability due to worse price.

If the trade goes south you may have to get out at 2.0 or above, making a loss on a trade that even if you had not greened up at 5.0 would have been a scratch or a profit at 2.0 or above.

 What a painful loss to make on a profitable piece of advice!

Here is the second common error:

I take the lay at 2.0 but decide I want a big return so lay £1000. It is a large percentage of my bankroll (40%) but it is OK I am confident. The price starts coming in to 1.8, suddenly I start to panic, ‘Oh no I don’t actually want to lose £1k!’ So I take the loss now instead of taking the risk of losing a huge chunk of my bankroll on one bet.

However, in an alternate universe I like to call ‘disciplineland’ I decide to lay the same bet for £50, this is a good safe stake size as my bank is £2500. The price goes into 1.8 but I don’t panic, (why should I, I have staked sensibly to allow my room to manoeuvre) I believe in myself and will wait a while until price goes in my favour or is definitely heading south fast. Turns out I was right all along, the lay won easily and I greened up at 5.0.

In the first scenario I bet £1000 but lost around £100, double my sensible stake. In the second scenario I made around £30 a 60% increase on stake. That is a difference of £130 to my wallet one way or the other.

For some reason psychologically, we want to bet more than we are fully comfortable with. The more I bet the more I win right? Simple maths! Well not if you cannot handle the downturns in the same way you would using a sensible stake, as demonstrated above.

 So these are the two big mistakes traders make which you will want to avoid-

1. Missing entry price and taking a much worse one.

• Just don’t do it! Alternatively, if you miss entry but price is even better then by all means jump on, if poster still likes the trade!

2. Over-staking beyond comfort level and bottling it as a result.

• It is quite easy to place a £1000 trade when you have £2500 sitting in Betfair, what is less easy is sitting through the process of watching the market swing against you, potentially giving you a big loss when it all becomes too much to handle.

Here are other tips!

• Test a strategy for 3 months so you are confident in your trades

• Don’t get too emotional – if watching makes you make mistakes then look at scores

• Don’t take a loss early (unless there is a clear reason to) there is time to red out later

• Ask a member what you should do – they may reassure you or let you know to get out

• If you can’t do it yourself yet just follow the advice of the pros – enter and exit trades with them

• Take the big greens when you have them – they can quickly disappear!

If you need help with this issue talk to us in the group! We love to be asked about things so don’t be shy and your issue will help others going through the same thing, of which there will be many.