Structure, Selection and Stops – The 3 Keys To Successful Betfair Trading

• Author
• Recent Posts

Man of Mystery

I opened my Betfair account on 22nd April 2003. I was one of the first subscribers to BetTrader and was a founding partner of JuiceStorm.com on 17th February 2007.

Latest posts by Man of Mystery (see all)

• You Really Might Need To Change Or Fail As A Betfair Trader - June 9, 2023
• Many Betting Exchange Traders Trade Without A Stop Loss - June 9, 2023
• Survive Your First Month Betfair Trading Profitably - June 8, 2023

The selection on each trade is so important. But one of the most stupid comments I hear about Betfair Trading is “Betfair Trading is simple. All you need is a strategy with positive expectancy and the discipline to follow it.” That statement is so silly on so many levels that I just shake my head in disgust whenever hear it.

First of all – THERE ARE NO STRATEGIES. As I’ve said many times before there are only two trades in any market – continuation or mean reversion. What some Betfair Traders call strategies are simply structures. Any algo that has a logical rule set of IF A then do B is simply a Betfair Trading structure designed to superimpose order on an essentially chaotic and mostly random activity.

So no, my wonderful thousands of lines of code in my automated strategies – sorry structures – is NOT a strategy it’s just a STRUCTURE through which I choose to express my Betfair Trading. It doesn’t help, of course, that I have to refer to structures as strategies when discussing my preferred automated Betfair Trading application because they are called strategies within the application.

What turns that structure into a semblance of a strategy is SELECTION. Now I know that many automated Betfair Traders will start to tell me that they don’t select. No horse selection. No market selection. No price other than a general guide. Hedging only and no stops. Even if you do none of those things you are still making an implicit selection – you are basically betting on diversification which is a choice like any other.

Selection, of course, is the art of the trade. No matter how good your structure. Back in the day, it didn’t used to be. But no matter how well you’ve thought things through, selection is actually the difference between winning and losing. And selection does not come from a back test. It comes from experience. It comes from observation. It comes from that most “unscientific” of places – feeling the market. Feeling the market is no different from any other skill. You need to watch and watch and watch the screens and only then will you learn which price action to avoid and which to attack.

One key thing all my strategies do is to use wide stops. Actually, usually, hedging which has a similar effect. This is yet another Betfair Trading “rule” shattered to bits. Right after ” you gotta have a strategy” meme the second stupidest thing that gurus tell you is “use tight stops.”

Except for a Martingale nothing has lost more people more money than tight stops. Tight stops are essentially a guarantee that you will lose all your capital in tiny little chunks or certainly die trying. Tight stops are the Betfair Trading equivalent of a death by thousand cuts.

Most naive Betfair Traders believe that stops are linear. In other words you are twice as likely to get stopped out with a 10 tick stops as with a 20 tick stop. WRONG! Because of the natural oscillation of the auction model ( which is what all speculative markets are) your chance of getting stopped out on a 10 tick stop is probably 4 to 8 times higher than on a 20 tick stop and so on and so on. The function of successful Betfair Trading is to AVOID stops as much as possible.

So STRUCTURE, SELECTION and STOPs are the three keys to successful Betfair Trading – and you really do need all three to work together like a finely tuned machine in order to bank those ticks every single day.