I remember reading a good post on the excellent Geeks Toy forum when I started looking into trading. With it being a bank holiday, and with some time on my hands, I decided to revisit it.
The post outlines the authors view on what is needed to trade successfully on Betfair. Six points were identified:
1. You must have an “edge”
2. You must fully understand simple trading patterns and the mathematics of trading
3. You must develop a trading plan and execute it flawlessly
4. You must lose before you can learn how to win
5. You must obliterate all character weaknesses that affect your trading
6. You must work harder than you imagine to achieve success
The full post can be found here: http://www.geekstoy.com/forum/showthread.php?t=2708.
I believe it is an excellent post and if you are thinking about starting to trade or a relatively new trader like myself, then I would highly recommend it.
At the moment, I am concentrating solely on pre-race horse racing markets. To be honest, I don’t yet know if I have an edge. I simply don’t have enough data or trades to make an informed judgement.
I believe I am more of a scalper than a swing trader. I find that scalping suits my personality, and I find it easier to carry out my trades this way, without doing anything too risky or stupid. I mainly look at the Weight of Money to decide whether I should enter the market or not. Whilst this is quite crude, as I am sure experienced and better traders will use a range of criteria’s, i.e. Chart Analysis, Book Percentages, and Wave Patterns etc. I find that by basing my judgement on the WOM figure I can make instant decisions about entry without thinking too much. Sometimes, it is better to jump on than miss the boat entirely. Only time will tell, if I have an edge and thus a profit in the long term, or if I am simply guessing in which case I am bound to fail.
Whilst it seems easy to understand that whether trading or simply betting, you need to win more than you lose, in order to achieve a profit. Saying it and doing it are very hard. It is only over the long term that you can categorise yourself as a winner or loser. Even then this could change over time. In trading, especially in scalping one or two ticks profit, it will be the percentage of times that I am right will influence whether I do well or not, and even more importantly managing the losses. It would be stupid of me if in the hunt for 1 tick profit, I let a trade go inplay and end up losing the entire stake. I must admit, this is one of the hardest bits of discipline that I have found hard to swallow. I have been guilty of trying to get just one more tick before the market has shown me the error of my ways!
When I started out, and after playing with the markets, I sat down and re-read the post above. It seemed like a good idea to write out a trading plan for myself, just a few points (3 main points for me), and I vowed to follow it to the letter. It had to be something easy that I could follow, and wouldn’t need too much analysing, and more importantly I would know when and where to enter and exit a trade before I clicked my mouse button.
I would describe my trading at the moment as a bit “robotic”. Whilst I am by no means perfect, I believe writing my own trading plan and trying to execute it over and over again has definitely helped me with my discipline, and making quick judgement calls. Even if I turn into a long term loser, I am sure that this will definitely delay the inevitable bank going bust, and as such the more experience I gain from trading Betfair, and watching the markets, the better I should get hopefully. As they say, practice makes perfect!
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