Finding the best way to trade on Betfair is a difficult task indeed. Why? Because everyone has a very different way to approach the entry into a market. Technically there is no right or wrong way to trade on Betfair because at any given point your reason to enter a market will be different. However there are many ways to help you improve your trading skills.
Cut Your Losses
A great technique is to always minimize your loses. This is one of the most important, and continuous, methods to ensure long term profits. All traders, even the professionals, spent a lot of time talking about reducing loses on every trade. When you are wrong, you are wrong. Accept it and move on. We have all been in the position when you are staring at a big red loss but, instead of trading out, you sit and wait. The trade goes further against you and the end result is a huge loss.
Would you rather make a mistake and lose £10 or be so stubborn and undisciplined you lose £50? Cut your losses, then move on.
Never Over Stake
Be sure to control your stake amount. So many traders use far to large a stake when they first start trading. The best way to trade is to use roughly 2-5% of your bank. Essentially it comes down to the simple maths and psychology behind the trade. If you lose 2 out of 10 trades but – because you are over staking – when your trade goes against you, you lose over 40% of your bank, then you are in trouble.
However, if you are disciplined and smart during the other 8 out of 10 trades when you win the result will be different. You will always make mistakes, you will always have losing trades. The difference between a losing trader and a winning trader is the winning trader manages his losses better.
If you have a £1000 bank then losing £5/£10 in one trade is not going to hurt you too much, financially or emotionally. But, if you have a £1000 bank and you decide to jump in with £300 stakes and you lose £200 in one trade then that will cripple you!
When To Enter A Trade & Exit A Trade
The best way to approach the “When to enter a trade?” question is to remember this; Every trade is different! Look at these two screen shots below;
The first screen show was taken roughly 5 seconds before the second screenshot.
As you can see the price shoots down from 2.70 to 2.56 in just a matter of seconds due to a large bet/trade being placed. The beauty of horse race trading is this very fact. Every trade is different. A person who approached this market 5 seconds before this large £9,000 trade was placed would have approached this market very differently had the read this very same market 10 seconds later.
The truth is there is no best time to enter or exit the market, because no one knows what the market is going to do or which direction it is going to move. The true skill lies in reading the market and jumping in when the opportunity arises. The only true way to be able to accurately judge when to enter a market is experience and learning from your mistakes.
Our Final Opinion
At the end of the day the best way to trade on Betfair ultimately comes down to a few key points;
- reading the market
- cutting your losses
- letting your profits run
- learning from your mistakes
This article is of course BARELY scratching the surface. We have many more articles which delve into each of these topics in great detail. For those of you who are just starting out this will give you a small sample of what you are up against. The main point is to keep learning and keep practicing your trading.