It’s common sense, think about it!

Right, as I mentioned earlier, I’d like to share some thoughts with you. You’ll likely understand that I’m not going to reveal my best strategies outright, but for those who are willing to contemplate and apply these ideas, opportunities may arise.

“Keep it simple, Stupid!” – Warren Buffet

It truly is that straightforward. From my experience trading on Betfair, I believe that most aspects of it come down to common sense, combined with precise execution, which regular readers will know I often emphasize.

You might already be disagreeing, but take a moment to consider: How much do you really know about the market and its influences? It’s probably more than you realize. It’s a good idea to jot down everything you know. After all, if you don’t understand what you’re observing, how can you expect to trade successfully? It seems like common sense, doesn’t it? And it is! Yet, it appears that many traders still struggle to grasp even the basics.

I’ve encountered people making significant profits who don’t fully comprehend the patterns in their trading. Sure, they do well because they’ve seen these patterns countless times, but not everyone truly understands them. Understanding what’s happening in any given moment can instill confidence and lead to flawless execution. As a famous sign once said during my military parachute training:

“Knowledge dispels fear”

You might be thinking, “This all sounds true, but how is it so simple to find an edge through common sense?” Well, maybe we should stop focusing on the big picture. It might be unrealistic to expect to find one super edge that works every time and produces significant profits. No two markets are ever the same for many reasons. Again, think about why that might be. If you can identify valid reasons, it has probably just enhanced your understanding a bit more.

So, the other evening, I was driving down the M40, and the traffic was horrendous. As it often is, I began to think about how such a situation is analogous to trading. Was there an edge that could speed up my journey?

Of course, you just need to analyze what’s happening and why to increase your chances of success, just like in trading. Some people switch lanes when one appears to be moving faster than the other, and this can sometimes work. However, it’s rather random, isn’t it? This is akin to what many traders do when they’re learning—constantly jumping in and out of trades, sometimes with success but often getting stuck. But if everyone is doing it, it’s unlikely to be the best approach, right? We need to tilt the odds in our favor each time. So, in my trading and in situations on the M40, I have a structured approach that I know will gain me ground in slow-moving traffic almost every time. The reason I know it works is because I understand why it works.

Here’s how: In slow-moving traffic with three lanes, approaching a junction to leave the motorway, I select the left-hand lane. It’s usually the fastest because cars ahead are leaving the motorway, while the other lanes are congested. Conversely, in slow-moving traffic with three lanes, approaching a junction to join the motorway, I select the right-hand lane. It tends to be the fastest because cars ahead are joining the motorway on the left, causing congestion in those lanes. See what I mean about it being common sense? It’s something that many people probably haven’t considered, much like the majority of those sitting in the wrong lanes at that time. It could have been worse; they could have been among those who didn’t even try!

If that’s not common sense, I don’t know what is! Trading in the markets is no different. It may not always work, but over time, the odds are in your favor.

So, what I’m saying is that the best edges I’ve found are derived from understanding what’s happening at a particular moment and why. Unfortunately, learning the “whys” can take time, but trading blindly is not the way to learn!

As an example of an edge, take a look at this graph: