If you are new to Betfair trading or still struggling to make money from it then it could be that you have your approach wrong. There are probably plenty of people who sit down in front of an event, open Betfair and then begin to trade on a “whim” without any sort of strategy or game plan.
Really you should be adopting the same approach the professionals would since this is a money making business and not some sort of video game!
I am not ashamed to admit that I did the same in my early days. I would watch a football match, open Betfair and then maybe decide on a team to back or lay without giving too much thought into what would happen next. Then a goal might go in, either in my favour or against me, and I would then not be totally sure about what to do next. Do I get out the market? Do I add another trade? Do I let it run longer?
Here is how you would execute a Betfair trade like a professional would:
Step 1: Spot An Opportunity
A professional sports trader will not enter a trade simply for the sake of it. He will lurk and wait till something develops and he has a good reason to get involved. Some new traders may see a big match on the TV and feel they need to find an angle so they can be involved. A professional will wait until something really screams out at him and he has good reason to get involved.
If it helps, before you enter any trade you should note (mentally) 3 reasons why you think the trade is a good thing. If you can not think of 3 good reasons then perhaps this is not a big enough opportunity and you should wait a little bit longer. For a newbie, this may sound boring to do but patience really is key!
Step 2: Decide On Back & Lay Points
You may be backing first or laying first but either way your aim is to exit the trade with a profit. Many new traders will spot an opportunity, then put money in the market and “see how it goes”. They might get into a position of profit and grab it instantly because they literally have no idea of how much profit they want to make and “profit is profit!”. I know because this was exactly what I did in the early days. Then, conversely, they will end up in a position of loss and only exit when the loss gets really bad. If you do not decide on your back and lay points before a trade you will end up like a rabbit in headlights and the markets will beat you.
A professional trader will do something along the lines of, “I am going to Back @ 2 and then aim to lay @ 1.50 for a 50 tick profit.”
Step 3: Decide On Stop Loss Exit Strategy
It is all well and good to know how much money you want to try and make but you need to have a plan for when it goes wrong. If your average losses amount to more then your average wins then you are going to need a huge strike rate to make a profit or you will be losing money in the long term. The newbie traders might go into a trade with an aim of 50 ticks profit but then if the trade goes against them they will not account for how much of a loss they are prepared to take.
In this case, our professional trader decides that he will risk a 50 tick loss in order to try and win the 50 ticks he is trying to gain. So he decides he will exit the market if the price drifts from 2 to 2.50.
Step 4: Decide On Money Risk
Most professionals will not risk more then 3-4% of their trading bank per trade. Many newbie traders will not even think about this and may use the same stakes regardless of the potential danger of the trade. For example, a 50 tick loss is going to be much bigger then a 10 tick loss and you should account for this when you enter the market.
In this case our professional trader is trading with a bank of £1000 and does not want to risk more then 4% in this trade which is £40. So, this means he could probably use a £200 stake on this trade as if he was to Back @ 2 and then exit @ 2.50 the loss would be £40. Then our trader would stand to make £66 profit if he completed his profitable trade from 2 down to 1.50 and greened up.
Step 5: Have A Plan For Everything
Not every trade will be as simple as outlined above, especially if trading in-play. In Football a goal can cause havoc with the markets, or an unexpected break point can see crazy swings in Tennis and this might actually go past your stop loss point.
A new trader might enter a trade and not decide on what they will do if something unexpected happens. They will then end up like a rabbit in headlights as the trade gets further and further away from them.
A professional trader will anticipate these events and plan for them. For example, in the earlier trade example, if this was on the Under 2.5 Goals market on football then a goal being scored could mean he actually has to exit the market @ 4.2 rather then @ 2.50 like he planned.This would mean he should lower his potential risk and so lower his stakes accordingly.