Intuition v’s Logic

If you follow me on Twitter or Facebook, you might have noticed an interesting BBC iPlayer link I shared recently—a ‘must-watch’ for anyone learning our game of trading. It was recommended by three different people within a couple of days, so I simply couldn’t ignore it.

The program does an excellent job of illustrating several principles I frequently discuss and provides some solid reasoning behind them. Over the next few posts, I’ll translate these insights into Betfair trading terms, echoing advice you may have already heard from me. If you haven’t watched it yet, I highly recommend it!

I believe that learning to manually trade on betting exchanges—or any market, for that matter—is more about understanding oneself than anything else. Grasping market behavior and having a suitable method of execution are crucial, but a trader must also comprehend their own underlying feelings, emotions, and thoughts that influence their market behavior.

Professor Daniel Kahneman’s example of New York cab drivers, mentioned in the documentary, directly parallels advice I’ve given regarding recognizing which trading situations best suit an individual. He explains the logical approach for cab drivers to work longer on rainy days when demand is higher, as opposed to sunny days when business is slower. However, many cab drivers do the opposite due to habitual decisions—working longer on sunny days to meet daily revenue targets and shorter on rainy days once targets are met, which is counterintuitive.

This scenario mirrors trading: understanding when to engage or avoid certain market conditions can significantly impact profitability. For instance, I find that low-quality Irish races often aren’t worth the effort, but other situations might suit different traders better.

For those looking to analyze which races or track conditions you perform best in, tools like My Bet Log allow you to review your results using an Excel spreadsheet downloaded directly from the Profit and Loss section of your account.

The key difference in my approach is treating each situation uniquely; I don’t approach every race the same. Learning to adapt and tailor your actions to each scenario is challenging but very rewarding. Those of you with the Guide know how I analyze races differently. Consider focusing on races where you excel and potentially increasing stakes there, while avoiding or lowering stakes in less favorable conditions.

With Cheltenham approaching, now is an excellent time to fine-tune your strategy, especially if you’re into scalping Betfair.