Sports trading is a massive psychological battle. Of course, there are technicalities of reading charts and using software correctly. But mostly, success boils down to being mindful of your own trading process and routine.
Because of the psychological emphasis, most people don't even realise they are making mistakes so frequently.
Once you are actively trading, it can be hard to notice that you are literally throwing away money with such rookie mistakes. The buzz of the markets and the roar of the crowd can form perfect distractions from your own performance.
Here's a few of the most common mistakes that I see people make when trading on Betfair Exchange. You may be guilty of some more than others. Regardless of your mistake of choice, it's important to be aware of your own faults. Especially in this game.
Trading Under Pressure
Emotions and stress need to be dealt with before anything else. Forget all the fancy gadgets and chart patterns you've read about online. Without a clear head, you're destined to fail on the exchange.
Trading under pressure is the number one mistake made by traders of all abilities. Read any trading forum or chat group and you will see this problem reappear time and time again. Even some of the most profitable traders admit to trading under pressure from time to time. After all, we're all humans.
To avoid unnecessary stress when trading, there are a few things you should put into check.
- Always trade in a quiet, distraction free environment.
- Don't rely on trading as your main source of income unless you've been trading successfully for a few years.
- Try not to set monetary targets. You'll probably end up trading dangerously in order to meet them.
It's easily done. Over trading is a big problem, especially for new traders.
As you're learning the ropes and trying to work your way around different sports, you can find yourself trading markets that really don't have any value on offer. You might also find yourself trading too much within a single market.
One-click betting in third party software makes trading much faster but also much easier to mindlessly click around.
Before you enter any trade, make sure there is value on offer. Don't enter the market just to "see what happens". You might win every now and then but in the long run, you'll be wishing you hadn't bothered.
This is the opposite problem of over trading. It's often called "analysis paralysis" and some people are naturally more prone to this trading mistake than others.
Sports markets on Betfair Exchange can move incredibly fast in comparison with other markets such as FX or stocks. Not only that, but sports markets are only open for a finite amount of time. For example, a horse racing market will close forever once the winners have been decided.
This often leaves us with very little time to make trading decisions. Taking too long to make decisions can cause many missed opportunities. Whilst technically this is safer than over trading, you're not going to get very far if you don't make any trades at all!
Trading Without A Plan
If you're trading without a plan or a strategy, then what are you really doing? Are you just hoping that something good will happen?
Perhaps you "have a good feeling" about this market?
Regardless, it's a mistake that you shouldn't be making if you want to become a profitable trader. There's no need for a five-page business plan or anything overly complicated. Just a few notes about the trading opportunities you are looking out for, entry and exit requirements will suffice.
Many traders prefer the checklist approach. This is usually a checklist of conditions that need to be met before you enter a trade. For example:
- The favourite's odds are dropping.
- The second favourite is drifting.
- There's under five minutes left before the off.
The trick is to keep it short. You won't have time to run through a twelve point list before every trade. In the future, you should begin to do this in your head rather than physically ticking off a paper list.
Without a doubt, the most dangerous mistake is chasing losses. We've all been guilty of it at some point or another.
Chasing a loss usually happens when you've made a small loss and out of frustration, you make another trade with the hope of recovering the previous loss.
The problem is that we're making a trade in the "hope" of profit and not because there is a genuine opportunity at hand. Some days, you may finish in the red but if you only ever trade when there is a genuine opportunity, you should start to see profit overall.
One of the best ways to avoid chasing losses is to either use a trade checklist as mentioned above, or simply take a break when you're getting frustrated.
Using Inappropriate Stakes
Over-staking is often tied with chasing losses but it can often be a problem in itself.
The easiest way to overcome this is to use stakes that are proportionate to your bank. Some people choose to stake a certain percentage of their bank each time and generally, this is a good way of doing things.
After a few winning trades, there's a danger of becoming overconfident and trading staking beyond your means. Unfortunately, the market doesn't care how confident you are. It will do things at times that nobody can predict.
Not even the best traders can predict every move. In fact, most high-level traders don't have a clue what's happening the majority of the time. They just sit and wait for a sensible trade setup to present itself and of course, use appropriate bet sizes when they do.
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