Mentality - How Do I Solve It?
Potentially, this is the biggest issue or hurdle when it comes to Betfair trading and one I get asked about time and time again; things like "I had a losing day so I went and upped my stakes to chase my losses"; or "I just cannot walk away from the screen". Another big one is "I was using bigger stakes because I have to build my bank" (more on bank building in an upcoming blog post).
There are a number of different things people ask and they are all related to how you feel and how you are reacting in the moment. I am sure right now you know of the book that holds legendary status for traders, the book helped me a lot. The book was Mark Douglas’s "Trading in the Zone". Don't worry if you have just heard of the book either ;)
He puts it down to 4 main points:
- Fear of losing
- Fear of missing out
- Fear of letting profit turn into a loss
- Fear of not being right
I think I’d slightly amend those and add a couple more to really hone that list for trading on Betfair:
- Fear of losing
- Fear of missing out
- Fear of letting profit turn into a loss
- Taking a selection in play when you didn’t plan too
- Fear of not having a big enough bank
- Overtrading
- Overstaking
I think a lot of people when they are trading get caught up in the emotions at that time. When you are trading if you take a second to think back over that list it might just help, don’t you think?
I’ll go into a bit here about, wait for it, emotions. I know most people hate talking about emotions but they play a huge part in whether or not you will be as successful as you could be when trading on the Betfair exchange.
One of the greatest traders on Wall Street said: "Emotional control is the most essential factor in playing the market". This rings true with trading - our emotions play a part in every decision we make, whether it’s the bigger questions of life or shall we trade this event.
Everybody reading this post will have a trade that they have let run instead of cutting their losses - I’ve done it myself. What we need to do with these experiences is learn from them, realise the error and do our utmost to not repeat it. Please, if you only take one nugget from this post let it be that perfect execution of our strategies can only improve the chances of success. There is no guarantee, there will be risks. What we are doing as traders is taking educated risks and there is a fine line between that and just playing at it and getting cocky because we have had a few trades come in and made good money. That is not realistic and doesn’t help your emotions.
We will never profit from every trade, cutting the losses and using stop losses are so important, just like the strategy itself. Make sure you plan the stop losses as well as the trade, the two go hand in hand and you are securing your own peace of mind because you are going into the trade knowing what you are trading and why, plus the most important part: the exit!
Remember its as important to manage yourself when trading as it is to manage the markets….
