02 Ten common mistakes made by traders / Betfair Education / 29 January 2008 / Leave a comment

You must make sure that you match the timescale of your prediction of the price's movement with the amount of time you hold your position.

A classic mistake is trading on the favourite's price three minutes before the race and you see that the price is being backed heavily and is thus shortening (decreasing). You think that this horse has a really good chance of winning so in addition to trading you decide to back it.

WRONG!!! If you do that you are basing a short term trading decision on a long term view of the price. The timescale of your prediction of the price, i.e. that the price will go down because the horse will win the race, is different from the intended timescale of your trade.

You intended to make a profit in a minute or less. Now unless you're going to hold the bet until the race has finished then you can't base trading decisions on where you think the price will be when the race has finished.