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Trading Dangers – The perils of Trading

This page will discuss the perils of Trading. There is also a clickable video, below, explaining this article. 

If you’ve not much trading experience, you might be thinking … “What a weird picture” above. What do you mean by 7 steps forwards and 8 back? A person who has made over 100 trades will no doubt be able to relate already, but I’ll elaborate on this page, let me know your thoughts too, in comments below! 

Two main Trading perils

Not having the discipline to “Red Out” and take a loss Letting your trade go “in running” 

The above two perils are usually inter-linked. The most common problem that happens is this scenario here: Man called Fred spends all afternoon trading pre-Race, using scalping method, for example. 

His profits during the course of the afternoon have been as follows: 

+£2.78 

+£9.10 

+£0.34 

-£1.01 

+£2.78 

+£6.42 

-£0.19 

+£2.97 

+£13.12 

-£3.99 

+£2.11 

+£1.00 

+£0.39 

-£40.00 

As you can see, above, the guy has spent all afternoon – or maybe 3 or so hours Trading … Judging by the amount of races he or she has consecutively traded-on. Prior to the -£40.00 loss, the guy was in profit of +£35.82

Betfair Trading danger – big loss

You must be disciplined! 

However, in the final race [example] he was facing a losing trade. Instead of Redding-Out, for a -£15.01 loss, he let the Trade go “in running” and lost the entire £40.00 of his stake. Why did he not “Red-Out”? Well, probably because he was currently +£35.82, had spent over three hours acquiring that figure and did not wish to ‘put a dent in his profit’. Of course, all of this is fiction, but this is the most common story I hear. Myself too, I have made these exact mistakes before. This is why I say: Mindset is of utter importance in the psychology of Betfair Trading 

If Fred was disciplined, he would still have been +£20.81 if I had of accepted a losing trade of -£15.01, prior to losing his entire stake of -£40.00. 

Chasing 

This is mentioned in my “mindset matters” chapter. After Fred just lost his winnings – that spent him three hours to obtain – Fred now is -£4.28. Being -£4.28 isn’t much of a problem for most people, right? But not when you’ve spent three hours to obtain it and sat through 13 races! Some people, in the past, have been known to ‘chase their losses’ and be tempted to gamble – in order to re-Win the £35 they lost, then start off, as fresh, from where they left off on the previous race and carry on. DO NOT DO THIS! I have done this before many times, and it is the road to ruin! 

Pattern of destruction

You may have noticed that there is a pattern to these three behaviours I have given an example of here.The pattern all refers-back to Mindset, discipline and the ability to accept loss! 

Accepting that you will lose sometimes 

Get a picture on your desk, beside the PC with this written on it! Fred did not want to accept loss, when he let his trade go “in running”. By doing so, he lost his entire stake. By losing his entire stake – he has a chance that he may chase his losses, or at best be annoyed with himself anyway. If you have traded more than 50 races you will undoubtedly have experienced these feelings. If you have not, then take advice, because this will likely happen, or you will be tempted to do this. But, 80% of the time I “get away with it”.

Do not go in-running!

Indeed, the reason Fred was so tempted to let his whole stake, of £40.00 liability go “in running” was because he knows that [most of the time] these trades do get ‘taken’ in running and therefore Fred wins his intended trade; but this comes with a big price. Moral of the story:DO NOT GO IN RUNNING! 

May seem simple, if you are a newbie – you’re probably thinking ‘who would do that’? Well … get back to me after you have traded 50 races and tell me you weren’t tempted?! And if you were NOT, then your mindset is in the right place! 

This video below explains all of the above in a different analogy, using a character called “Fred” … I have been “Fred” many times … have you??? 

FURTHER READING below 

Strategies can be found in Caan’s Guides HERE. More Trading chat can be found here on the Betfair Trading page. 

Be Lucky