What is it that separates successful traders from those who LOSE?
In most cases it’s not what everybody expects, but it’s really quite clear cut.
In this article, we’re going to take a look at five facts every trader must know if they are to succeed on any kind of level, let alone reach the dizzy heights at the top.
Before we even hit the first point though, you need to make a decision to take action. This is where it all begins.
If you don’t make the right choice and you aren’t prepared to implement the changes, then you may as well stop reading now. It’s pointless.
Ready? Let’s get on with it…
First of all, you’re going to need to swallow a bitter pill.
We, as human beings, are typically programmed throughout life to believe that if you exchange your time, you will get money.
In some cases this is true, but if you want to be a good trader, you need to completely turn this way of thinking on its head. Traders do not get paid for the time that they are trading. Period.
If you begin your trading career expecting to earn a flat rate of income for your time, you’re destined to fail. Sure, you can work out your average earnings afterwards if it makes you feel much better. But if you start off from the position of, I want to earn £20, £50, £100 per hour – there’s an increased chance you won’t.
The reason for this is psychological. Your expectations impact the way you behave, which then shows itself within your results. To a leaner, it’s stressful and hard enough without having this additional pressure.
So, the first piece of advice is simple, even if it’s easier to say than do!
You need to look at trading as an investment, or even a game. Whatever you do though, don’t look at it as a job where you get paid an hourly rate.
Next up, you need to go into this trading malarkey with your eyes wide open.
The best traders always seek to do one thing; find a situation within the market that they can exploit. Due to significant bias. Meaning, the payoff is far greater than the potential risk. Of course, without the right strategies and approach, it’s not always as easy as it sounds.
However, one thing’s for sure; predicting the future is a myth.
Successful traders do not sit down and consistently predict what will happen, unless they have a time advantage. But I’m sure you’ll agree, that is still not predicting the future.
Where you find these specific biases isn’t always the easiest task. However, humans are creatures of habit, and so things like impatience and fear routinely express themselves throughout the betting markets.
This would be a starting block to think about…
If you’re a little bit lost, check out the Pre-Race Trading Guide.
Sure, it’s an extremely simple one, and a very boring one at that, too.
However, when you consider the amount of bets you’re likely to place on a betting exchange over the next couple of years, it makes sense to start with efficiency. Avoiding unnecessary charges is part of the game.
For betting traders, the two main things would of course be premium charge and generated commission. In most cases, we’re stuck with the generated commission side of things, unless you’re willing to use alternative exchanges.
However, think a little bit deeper. Does over trading unnecessarily generate additional commission that you didn’t need to pay? Of course it does. With the second point, premium charges, there’s a little bit more that could be done. If you’re unsure what I mean, you should probably check out this YouTube video here.
To run a parallel, avoiding charges within betting exchange trading is like the physical world:
Everybody has to pay tax and various commissions. However, it’s your job to ensure you pay no more than you have to. A clear difference from outright evasion, I’m sure you get the point.
Be efficient. It will pay you back in the long run.
Make the Money Work:
So, how do you turn a small benefit into a large one?
Assuming you don’t want to carry on working quite so hard forever, it would be best to make the money work for you.
This is also true for the outside world, but in terms of Betfair trading, why not reinvest, reuse, and use larger amounts of capital where possible within the betting markets?
Effectively, you’ll be compounding your profits, the complete opposite side of the fence to compounding your expenses of the previous point. The downside of this point would obviously be it’s not quite so easy to find larger opportunities to exploit within the market.
However, could you reuse the capital you’ve already gained from trading the markets to exploit the same opportunities more times over? Or even better, if you have the ability, automate those processes.
I have to admit, this has been one of the most challenging things for me to do within the exchange markets. In most cases, it makes just as much sense to reinvest the money made outside of the exchanges – scaling to very large stakes is tough.
You’re probably going to hate this, but I’ve saved the best point until last.
It’s most important shortly after you have found a strategy to extract some money from the betting markets. In a nutshell, don’t lose.
Aside from finding those biases and strategies in the first place, you should spend every single second and every single ounce of effort you possibly have in avoiding loses.
The saying that springs to mind would be;
“The quickest way to have more is to spend less”
See? I told you you wouldn’t like it. Nobody likes to hear this kind of thing. But the reality is, it’s one of the biggest factors to improving anybody’s financial situation – especially within the betting markets. Markets are cold, hard, and quite ruthless. If you allow them to, they’ll take everything they possibly can from you (and quickly).
When focusing your energy on not losing, the profits go a hell of a long way. You’ll soon see having the smallest edge can provide a significant financial return. Unfortunately for most new traders, this is where they go wrong.
When your making silly mistakes and those ‘maybe trades’ as I like to call them, you undermine your own bottom line profit. All the good you have done is lost in a sea of foolishness.
It’s simple: Work smart, it always beats working hard!