Chasing your losses when trading on Betfair? Here's what that spiral leads to, and how to tackle it?
Lost a trade on Betfair recently and then its left you feeling out of control? You might have even blown your trading bank? This is the post for you.
You have just lost on a trade on Betfair, you feel terrible why did it lose? Why does this keep happening? Then smack right in the stomach you get that daunting feeling that you have lost money again while trading on Betfair and the next stage is always the worst its that out of control panic that forces you to find the next available market that you think you have an angle on to get the losses back….. after what feels like no time at all you have gone full tilt and now you have spiralled….
It is a feeling that all traders on Betfair have had, one that we know we shouldn't but right there at that moment we are powerless to resist we have to win that money back, we cannot lose….
Let me start out by saying that the pros in any industry that involves money know that losses are going to happen and over the course of this blog post I am going to give some practical advice on how to combat this.
At this stage you think the trading gods are against you, don’t you? It’s frustrating, the team you backed played well why didn’t they score? Then the next one did the same? Why were there no goals? Or why did that horse make that move at that time?! Then comes to the downswing and the losses get chased faster than Harry Kane chasing down a golden boot competition….. Trading has a huge element of psychological triggers and working through what triggers affect you will save you a lot of time, heartache and also money.
When I think about chasing losses and how daunting it can be to avoid this we have to be prepared and think about the world around us which is deeper than you thought, the first thing to think about is the external triggers that might impact your trading:
- Are you stressed from work?
- Financial worries?
- Lack of sleep?
These won't cause you to chase the losses but they will have an impact on your thought process and they might be a driver behind why you want to trade and not want to take the loss. If you feel out of sorts before you even sit at the computer to trade you are setting yourself up for a tough trading session that might leave you frustrated before you start and lead to frustration when something goes wrong on the Betfair exchanges.
We want to make sure that these triggers aren’t going to affect your trading, so if you notice any of these walk away, do something else to unwind don’t think about trading for unwinding.
That pretty much covers how you will be feeling before trading which is vital to avoid chasing losses now we have to think about what is going to happen while we are trading that can cause us to chase those losses.
One of the ones I hear most is that people will back the scoreline or team/player that has taken the lead…. For example we have Real Madrid v Barcelona, your trade was going to be a back of Barcelona but against all odds Real Madrid have taken the lead, you have your back of Barcelona in the market and now sat in a loss, so I have heard countless times people backing the 1-0 in the correct score and scalping it, which has led to them not getting out and getting greedy because they have nearly got their loss back then BANG 2-0 now the dread gets a little deeper, now there’s 2 losing trades in the one game…. They cannot trade out of the 1-0 trade because the score is now 2-0 so that one has gone now what? They find another market to try and rescue the trade! My question in this situation is always why? Why find another trade on Betfair? If you had planned for what could go wrong, when it did you would have had a plan to execute and get out and move onto the next trade?
I have another example where I was chatting to a trader that asked me why I wait in tennis for both players to serve in the first set and game before entering? My response is because if both players hold the price won’t really have changed much, I’ll still have value but I will have some feedback on how the players have started. The trader replied with but what if you see your player go 2-0 up and a huge profit is missed? Well, you are first thinking about the gain, don’t think about the gain. What if the other situation happens and you are now 0-2 and sat staring at a loss? Then have a really stressful next 30 mins watching monitoring this trade without a clear head? If my player goes 2-0 up and I have missed profit, no worries my selection and thought the process is correct there is always another trade.
I have created a mini-course totally free I will share with you to start mastering your mind for trading, click at the bottom of th page to get access to all the videos taking you step by step to overcoming to main mentality trading issues.
How can you stop chasing the losses?
This is the hardest part! What can I say to you on this blog post that will stop you loading up on Betfair?!
I am going to give you what I think works and hopefully you agree and implement some to your trading on Betfair…..
I always harp on about data because data is the power it helps inform us, knowledge is also power. If you know what triggers you and what effects you and how its the first step in stopping the loss chasing and also to be a better trader - I am a fan of notes on trades, what went right, what went wrong, how did you feel at the start? How did you feel during? Did you execute the plan? Jotting down these few things can help massively when you look back and see where you were giving in to the triggers, you will then have a path of them which you can hopefully spot early and stop.
Following on from knowledge about you, knowledge around trading is also key. Know how the markets will move, how they will move with you and against you and what triggers cause those movements, I.e. if you are trading in tennis and a player is broken and price has moved x ticks in set one - if you know and understand this you can understand the markets and trades better and navigate around them and with them.
Stake sizing is also crucial here if you are going in with a larger stake than what you would usually do, think about why? If its a pre-race or pre-match trade where the market is a bit more stable as it is a while till the event and the risk is only 2/3 ticks ok but execute on that, don’t be staking massive stakes in play when you don’t normally and the bank can't handle it, stick to the % of the bank you usually do and be sensible with it. I have found that converting the bank to points helps a lot of people as they can just work on a 1 point or 2 points per trade and it takes the £ out of the equation.
If you have done all of those and you still can't control it, you have started to chase that loss and feel that out of control, daunting feeling…. Stand up away from the computer, close the positions and walk away, this will help you regain control of the situation and move away from the screen which has sucked you in. Stay away for as long as you feel you need, if that's 20 mins or an hour it really doesn’t matter, it is better that than to get pulled into trading in outer Mongolia at 3am!
Remember there’s a post mortem thread on the BTC forum as well available for all members to upload their trades which have gone wrong to discuss this as a group in a non-judgemental way so that we all get the learning.
If you only take one thing away from this blog post or series please let it be ‘ I don’t control how the market behaves, only how I behave within the market. I cannot be profitable all of the time. Over time my profitable trades will make up for this, but right now there will be times where I will have losses.’
This is the second blog post in the series of posts around this subject matter, I’ll give some examples that over my many years of trading I have seen and give some good examples - to get all of these blog posts & the Betfair trading mentality video series click the link at the bottom of the page.