Welcome to Football Trading – The Yoda Lessons!
This is part 4 of the 5 part blog series where I will be covering some of the BIGGEST lessons that newbies must learn from football trading if they want to succeed in the long term.
Each blog post will be released here every day until Friday so be sure to check back on the blog for the latest post!
A huge lesson to learn early on in your football trading journey is the importance of understanding the relationship between your strike-rate and your risk-reward ratio.
You could have a high strike-rate and be profitable and you could have a low strike-rate and be profitable too.
As long as your strike-rate BEATS the risk-reward ratio.
If my strike-rate is 60% and I am risking £100 to win £100 on every trade then I can expect to be in profit to the tune of £2000 for every 100 trades that I do.
It is your job as a football trader to ensure your strike-rate is profitable. You need to keep sharp and make wise decisions. This was covered in lesson #1 in case you missed it.
With a high strike rate strategy you are going to have lots of small wins and the odd BIG loss.
With a low strike-rate strategy it is the opposite where you have small losses and the odd BIG win.
People will argue among themselves till the cows come home about which is the best approach but here is the REAL answer..
It doesn’t matter.
Yes, you heard me right.
Risk-reward ratio doesn’t matter, as long as the net result at the end = PROFIT!
But many newbies often have trouble getting their heads around this…
If they try a high strike rate method many get scared as soon as that big loss happens and give up.
If they try a low strike rate method they usually can’t handle all the small losses that you have to endure before the big win arrives so they give up on that too. (Go back to Lesson #3 to see the Cycle of doom).
If you understand the expected risk-reward ratio and expected strike-rate of any trade before you get involved then you will find life much easier when having to endure the inevitable frustrations and you will be much more inclined to let the best trades come to you.
Personally, I really like to lay short price teams in football matches when I sense there could be a comeback on the cards.
I sometimes share the winning results on social media also which gives some people the impression that I just made that one trade and struck gold.
In reality there were lots of tiny losses along the way until I hit that big winner.
I might lose £30 here, £60 there, £50 elsewhere till hit a win like the one below from a risk of just £50.
Sometimes I might even lose 10 in a row but if trade 11 puts me in profit then does it matter that I lost those previous trades?
The average newbie definitely can not handle 10 losing trades in a row. I think I read a study that proved that 4 losing bets in a row and the average newbie gives up. Sounds accurate from my real life experience teaching others.
Finally, the most important thing to think about regarding risk-reward ratio is what YOU feel most comfortable with.
There are some who need the high strike-rate so they can keep up their confidence.
There are some who are more patient and don’t mind sitting through the small losses waiting for that big win.
Everyone is different. Especially at the start of the journey.
So when choosing which strategy you want to take for a 100 trade trial (like mentioned in Lesson #3) you should probably ask yourself honestly how you would react depending how the risk-reward ratio is.
As mentioned you should probably choose what you are most comfortable with right now and stick to that.
With time and experience you can eventually try the other methods and what seems difficult now will seem much easier in the future.
Anyway, in Lesson #5 tomorrow I will be explaining why your bank size can be a problem in more ways than one. Whether it is big or small this might apply to many!
See you tomorrow!
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