It’s no secret, managing the downside is the key to low-risk Betfair trading. Yet so many struggle to do it…
Why take an unnecessary risk?
Consistent gains at reduced risk have always been my primary target.
Potential gains are secondary. Follow along as I explain…
A Distant Realization…
Back when I started trading Betfair I spent plenty of time reading alternative books, usually about stock market investing or day trading. One of the most useful ones was Jesse Livermore’s Reminiscences of a Stock Operator – linked on the recommended reads page here.
The book takes a logical and factual approach to trading, free from emotion and greed. Coupled with other thoughts around the 80/20 rule it was part of a drawn-out realization for me.
Below is an example:
Granted this is a good example and it doesn’t happen in every race, although similar but less profound instances do in the majority of markets. These situations are the 20% that really matter when it comes to low risk Betfair trading profits.
If we convert the odds to decimals:
4.0 > 3.5 > 3.25 > 3.0 > 2.38
That’s a huge move of over many tick increments. So here’s the point, as Jesse Livermore points out; you only need to catch part of the middle 30%. A few ticks will do at the right stake.
Monitoring traded volumes and alternative activity within the market gives us a clear indication of the momentum within a move. If it’s trending, it’s time to dip in and out of the market for a few small scalps at extremely low-risk (Betfair scalping explained here). If there’s no trending momentum, do nothing.
It really is that simple once you understand the market’s characteristics and limitations.
Stealing a slither from the middle section isn’t a hack, nor is it something that will ever change. Building strategies around solid fundamentals like this is important, much like fear and panic within the market.
They’ll never change, humans are at the core!