Whenever you trade on a betting exchange like Betfair, for example, you have to know that you have the potential to win or lose. So essentially, to become a successful trader, you need to know how to manage both your wins and losses.
The common problem that I see among traders is that whenever they do make a trade, they always assume that they will win. It’s as if they’re already conditioning themselves that they will get that best investing and they envision how they will celebrate the win.
Unfortunately, if they lose, they will become more devastated than not having to assume that you’ve won from the get-go. It is important to realize that an exchange like on Betfair is not really set in stone and
anything can change. As I’ve said countless times in my previous articles, Betfair and other similar markets do not perform in a linear and predictable pattern, but it is focused more on the randomness.
Another problem that I see is that when people lose, they continually make stupid mistakes. So instead of regrouping and thinking clearly; making better decisions in the process, they’re stuck in an almost endless cycle of perpetually losing due to poor decision-making.
So, the best way for you to manage your losses is, you actually don’t. In most cases, people actually just trade low so that their losses will also be low. If anything, you can try to hedge your assets by setting some stops, but other than that, you just have to look at things from a clearer standpoint. If you find you’re losing two or three times in a row, it is best that you stop for a while until your mind is ready to get back into the game.
So, How Do You Manage the Winners?
If you’re advised to take an easier approach to manage your losses, the inverse of that should be applied to your wins. You have to pay more attention to winning as opposed to losing. This is because in most instances, whenever a person wins, they keep on trading, leaving all other factors that can influence the trade out of the window.
Most people believe in “strings of luck” where people can be in a winning streak. But, how would you know exactly if you’re going to win? You can’t. Plain and simple. And oh, if you want an explanation, the answer is really simple: because exchange markets are unpredictable and totally random.
The reason that you’ve won that trade is simply because the market conditions were right for you at that particular moment. This is not to say that from then on out that you will also experience a win as well (although that can happen, it doesn’t necessarily mean that you’re going to win 5 times in a row).
So what is my point, exactly? Well, pay particular attention to your losses. If you’re on a losing streak, it is best that you stop for a while and regroup. Conversely, if you’re winning, do not blindly assume that luck is on your side because by relying solely on something arbitrary, you could potentially lose again.