The 5 Most Common Reasons For Losing Money On Betfair

 

The meaning of Zen is action with awareness, so Zen meditation and especially Shambala Warrior meditation is all about being aware of self and surroundings, using meditation to focus on the moment; which in turn make’s you a more focused and driven human being.

So what do we need to focus on when we are trading on Betfair? 

Well obviously we need to focus on our profits and making those as big as possible in each and every trade; right?

Wrong.

Profits are important and a bankroll that increases in size over time is what we’re after as sports traders. But there are so many different markets and techniques you can use to make profits, from scalping to dutching, cold trading to bookmaking and everything in between there are a growing amount of ways in which you can achieve profit.

Which you would think, would mean that; if there are lots of ways to win, then there are lots of way to lose and of course technically this is true. However we’re not talking technically, we’re talking emotionally and once you get to know trading and the mind of a sports trader, then you realise that losses tend to have a much more finite set of reasons.

Talk to any trader who is in the middle of a shaky or even downright disastrous run and ask them how they've been losing money and after listening to them carefully for a while you’ll realise all that’s changing is the events they’re trading on, but their methods are not. Or the events have stayed the same but their methods have changed radically from the time they were winning.

This is a form of self sabotage, it’s infuriating because nobody wants to consciously sabotage themselves, but it’s such a powerful force that often you just can’t help it.
The reason self sabotage is such a powerful phenomenon is because of course, you don’t realise on a conscious level that you’re doing it, if you did, you’d stop; wouldn't you? Hopefully.

Below I'm going to set out the 5 most common ways a trader will lose money over time, you may do one or all of these things from time to time and think that it's fine because you're only doing them now and again.

But... 

"habitually repeating an action that losses you money is bad news."

...and if you need that statement explained to you then maybe you should rethink entering into any venture containing financial risk.

1. Zero Point Blank

John Cusack - Star of Grosse Point Blank

John Cusack - Star of Grosse Point Blank

Let’s look at a real world scenario, a trading acquaintance of mine recently was telling me how he liked to operate a trailing stop loss on certain types of trades, whereby the odds are falling or rising at a reasonably quick rate. Basically a trailing stop loss is whereby you lessen the liability of the bet by trading the opposite action as the odds are going your way.

So for instance in a football match whereby you've bet the point spread so under 2.5, 3.5 or whatever, the odds for this outcome will be continually falling without goals, how fast they fall will depend on the type of match.

So in this scenario if you start out backing under 2.5 goals at 2 (evens) then using a trailing stop loss method, as the odds fall you can start laying off the same bet little by little until your overall potential profit is smaller than you started, but your liability is at zero.

My trading friend told me that when he used a trailing stop loss and he made it to zero, he tended to ignore good cash out opportunities and hang in there with the trade and let it sit, especially if he had made that zero point really early in the event, because he felt that he could significantly increase the size of his green book if he sat tight.

"This;" he intoned,
“Is probably costing me money.”

I told him to take out the word probably out of that statement and replace it with the word definitely and he'd have a much more accurate statement. Losing profits you already have in favour of virtual profits you don't have, just because you don’t stand to lose anything is counter-productive. 

Even though you haven’t lost any capital from your bankroll, you haven’t added any and you've wasted an opportunity to increase your balance through greed, if you carry on doing that you're just increasing your percentage chances of gaining nothing from winning positions.

You see the problem is; and this is a universal problem and by no means confined to my friend, when a trade is going your way your critical mind puts you into a kind of optimist mode whereby everything looks rosy and it’s very tempting to just let it ride all the way as you start to see the virtual profits you’ll lose by trading out early, rather than the actual ones you’ll lose by not. Which I suppose, is like the traders version of the half-full as opposed to half-empty bottle.

After all you’re supposed to let your winners ride; right?

Of course you are, but if you let every single trade that initially goes right ride till the end then inevitably you'll lose some and the more you leave the more you'll lose; whereas if you never stay at a zero green position for longer than is sensible then you'll hardly ever lose.

Losing sucks!

Note: Casinos use the zero point blank phenomena to lure gamblers into bigger losses, that is why high paying slot machines are put near the entrance of the casino. The idea is you’ll play those first and win some money, then you’ll head into the casino with the mindset of “I'm up now, I can’t lose.

Which of course you can and will.
Getting ready to lose their money inside.

Getting ready to lose their money inside.

The reason this optimist mode is triggered in the brain is because as you’re watching that green figure go up and up, you are getting little dopamine and endorphin rewards in your brain each time you see those numbers increase.

You tell yourself that you won’t be disappointed if the numbers fall to zero;

but of course you will be and you are.

Avoiding Zero Point Blank

The best way to avoid this zero point blank scenario is to devise a clear exit strategy beforehand and stick to it, stick to it every time, no matter what.

It sounds simple when you put it like that;

“Have a clear exit strategy, stick to it every time, no matter what.” 

But it isn't that simple is it?

If you back a 0-0 draw and then lay it at half time for a healthy profit, but the game ends 0-0 anyway, that part of your mind which Zen philosophers call your critical mind criticizes you and tells you;

“You should have let it ride, if you had you would have more money now, you've definitely missed out there.”

Which of course may be true for that particular trade but the critical mind is only viewing it one dimensionally, from a point of view of the final result and not the reasons you traded out in the first place i.e. it was your exit strategy and you should always stick to your exit strategy.

The problem is that the effect on our behaviour that the critical mind can have is a very powerful one. It’s the critical mind that makes you feel self-conscious in a new social situation, telling you that people will find you weird or you’re talking too much.

On the flip side the critical mind can give you overconfidence, telling you in your mate’s game of poker that you should definitely see him, don’t let him bluff you, he’ll think you’re a weak pussy who can be bullied. 

Once the critical mind gives us that feeling of missing out on something, the feeling is so strong that it can influence you in not just the next game, but the next ten, regardless of the results you’re getting. 

We see this phenomenon manifest it self in the form of tilt, an expression originating from poker. A player who has been having a bad night who fold’s a 9 and 2 off suit only for him to see that 9 and 2 turn into a full house after the flop goes down, can go into tilt mode and will play the next ten to fifteen hands no matter what cards he’s getting.

So you can end up ‘missing out’ on virtual profits on one game by trading out at half time instead of 85 minutes, but then that’ll cause you to hang into the next ten games, maybe catching those virtual profits once and zeroing out the rest of the time.

From a very early age Jimmy knew he was special

From a very early age Jimmy knew he was special

As you read the articles in the Zen Trading section of Betfair Trading Tips, you’ll read a lot about how to recognise which instincts are the knee-jerk ‘bad instincts’ (for trading) and which ones are the ‘good instincts.’ When you come across the bad instincts, you don’t try and suppress them, you control them using your intellect, like Spock in Star Trek, this will help you trade like a Vulcan and as everybody knows Vulcans make the best traders!

It is no different here, if you are in a game you've backed 0-0 which you've laid at halftime for a healthy profit, then you need to talk to your critical mind don’t just let it come to its own instinctive conclusion.

You have to say to yourself something along the lines of; 

“Well done! I had an exit strategy and that along with my starting strategy has got me a nice green book, I have to keep doing what I’m doing and I’ll make money in the long-term.”

Or if things have gone wrong;

“Well done I  stuck to my  exit strategy which means I’ve managed to cut my losses by 50% which is almost like making 50% because now I’ll be able to go ahead and trade with that money I would have lost. If I keep doing what I’m doing, I’ll lose less when I lose and win more when I win”

OK, so not so much a case of mind over matter, but intellectual mind over instinctive mind.

Note: When I write the words; “you have to say to yourself” I mean this literally, you have to say it out loud as this makes the connection between your conscious and subconscious mind. If you want you can follow the link to read about How To Use Vocalisation To Win Big On Betfair. Right click and open in a new tab and read it afterwards as it compliments the contents in this article.

Let’s look at another common way traders lose money on Betfair.

2.The Happy Jump

The happy jump is a losing strategy which will ring true with a lot of traders, the happy jump is something a trader does just after achieving a green book, in fact the more money the trader has won, the happier he will jump onto the next trade without really thinking about it.

In order to understand the neurological mechanics behind the happy jump we have to once more take a glance back at our evolutionary past.

Up until quite recently in evolutionary terms we were hunter gatherers by nature of our environment and our genetics. Even though in the developed world we don’t have a need to hunt or gather in the same way that we did just a handful of centuries ago, our brains haven’t caught up with that fact yet.

Our brains are still wired to receive certain hormonal rewards when we take part in activities that are similar to hunting and or gathering, the human race being a wonderful complex species that we are; engage in a plethora of activities that are akin to hunting and gathering.

Our brains are still so tuned to the whole hunt/gather, reward loop that we even enjoy watching others hunt and gather, the reason why sports and home makeover shows are so popular.

When you research a trade, it is rather like stalking your prey by surveying your environment, tracking it down, getting ready for the big hunt.

The start of the actual hunt is when you login to Betfair, place the initial part of the trade, the event start’s and the rising or falling odds, together with the cash out figure become the animal that you are chasing down.

Once you've greened up on your trade, you've won, you have caught your animal, your brain floods with chemicals and hormones that make you feel good, the same ones that would have flooded the brains of our ancient ancestors on the plains, in the forests and on the savannas after a successful hunt, making sure that they would go out and hunt again.

However, they would have had the need to hunt switched off by shutdown chemicals and hormones as the feeling of satiation took over as they ate their catch, after which they may have gone for a nap to sleep off all that badly cooked meat   .

This is where hunting down a woolly mammoth and trading on Betfair part company, because of course, unlike hunting and catching an animal, once you've caught your green book, you have no shutdown chemicals flowing through your brain, you’re still in prime hunting mode and ultimately your brain wants maximum pleasure from minimum effort and what’s easier than clicking on a button on Betfair and entering a figure into the resulting pop-up box?

Football traders or traders who trade in sports whereby there are regularly multiple matches being played at the same time, in particular seem to be prone to the happy jump, but it is definitely not restricted to those sports. As a happy jumper will just as happily jump from one sport to the other, though this requires more mental effort as it is akin to hunting a mammoth and then going fishing and then trying to trap a bird, all wildly different types of hunting.

I just want to talk!

I just want to talk!

This isn't to be confused with making a plan to trade on game B if game A comes good, that’s fine, so long as  you've planned and researched that second possible trade, no problemo, it’s all part of the plan.

The problem comes when you just want to keep your ‘buzz’ going and so you quickly find another trade, convince yourself that your logic is sound and then enter the trade, only to see the odds race away in the wrong direction.

These trades are EXTREMELY dangerous, why? Because you have no exit strategy and your brain wants the euphoria of the first trade to return and because you didn't really have a solid reason to trade in the first place, you’re much more likely to let that red book grow way beyond what you would have if you had properly planned the trade. 

Quite often a happy jump will result in you losing all, if not most of the winnings from the first trade.

Note: This is true of any trade that you haven’t planned properly; you’re much more likely to let that red book grow to an unacceptable size because unlike our ancient cousins, you haven’t got the visual reference of the animal you’re hunting escaping out of range to tell you to conserve energy and abort this particular hunt. All you have are abstract numbers on a screen, so your brain just tells you to keep going, keep hunting; it’s fun!

How do we stop ourselves happily jumping onto the jagged rocks of post-win losing trades?

  • Abstinence

Simple, once we’ve researched and decided upon our trading strategy for our main trade we can do one of two things, we can either say to ourselves (out loud), “That’s it, if this win’s or if this loses, I’m not trading anymore tonight end of.”

Or 

  • The Preordained Trade

We can look for another trade beforehand and say to ourselves (out loud) “If this win’s then I will move onto that, I will risk no more than X percent of my winnings from the first trade which determines my stop loss point and I’m going for Y green point.”

So if you’ve gone for the first option of abstinence, then once your trade is over, shut Betfair down immediately and in fact, unless you’re in the middle of sending a file; which you shouldn’t be because that will slow down Betfair, TURN YOUR COMPUTER OFF!!! 

Seriously, your brain is a crafty bugger and it will soon have you believing that actually;

Real Madrid are 0-0 at Getafe, I should get on over 3.5 it's still good value!

The world and your computer will still be the same when you turn it back on, get into the habit of doing this after your trades, it will reaffirm in your mind the whole decision to action scenario that you want to do after each trade and it will snap you out of hunting mode.

If you go for the second option to stop yourself happy jumping, that’s fine as long as you research the trade just as thoroughly as the first and you pledge not to risk all that you’ve just won in the very next trade.

Sometimes you may use abstinence to avoid happy jumping and sometimes you may use the preordained trade method, but whatever method you decide upon before your trade, stick to it; it’s the sticking to it, regardless of last time’s outcome that will turn you into a disciplined trader, which in turn will turn you into a good trader, which in turn will turn you into a rich trader.

Note: I do recognise that there will be times when you make a ‘good spot’ after a trade that you might not have necessarily seen, but as a beginner to intermediate then I would advise the two methods that I have described above. When you’re a strict, disciplined trading expert then you’ll be able to jump onto another trade whilst still making rational decisions, till then avoid it.

3.Impossible Bring It Back Scenario

If you have been trading on Betfair for a while, then you’ll be all to familiar with what I like to call the  impossible bring it back scenario or IBS for short, not as uncomfortable as irritable bowel syndrome but just as annoying. The Impossible Bring It Back Scenario is whereby a trade has been going well for you and you’re in profit, but not quite at your exit point, then something goes against you, be it a goal, a wicket, a break of serve or any of the other thousands of things that can go against us when we’re trading sports on Betfair.

In that situation depending on the event and market we’re trading, we can see our nice fat green book fall between 50 and 150% maybe more. In this scenario it is not uncommon for a trader to try and recreate the good times by bringing his green book back to the point it was before the crash, this is regardless of what stage the event is at and that is a recipe for losing money.

In order to understand and avoid getting into the impossible bring it back scenario we have to use our Zen awareness to analyze each situation as it comes up and the only way to do this is to be first aware of why we do it.

If you haven’t already, then at some point in your life you will meet that special person and you’ll fall head over heels in love.

When Harry met Sally

When Harry met Sally

Then one day, seemingly without warning that special person, akin to a finishing move in a violent video game, will rip your heart straight out of your chest and feed on your blood soaked organ in front of your very eyes; metaphorically of course, I don’t’ want to put of any young amorous men or women who have yet to experience this wonderful feeling.

When that happens you will lament, cry, drink or whatever is you find comfort in doing, to get over this heartbreak as you go through it, you might even (and this is more common than you think) find yourself outside her bedroom window staring forlornly up, wishing it could be just like it used to.

You may even write her long letters (more likely emails or texts these days) about how you’ve changed and you can make her happy, if only she’d let things be like they were before.

This is because the brain, lazy little beggar that it is, is wired to get maximum pleasure from minimum effort and in this scenario it feels like it’s easier to try and get your old girlfriend back as opposed to just moving on and eventually finding a new one.

Note: At the point it does seem like more work than it’s worth to forlornly chase someone who clearly doesn't care for you in that way anymore, than to go out and get laid, then guess what? That’s when you feel like going out and getting laid, you are as they say, over it.

In love we can afford to wallow in our own self pity for a while, until a combination of friends, family, being ignored, exhaustion from excessive masturbation and sheer will power pull us out of our fugue.

However in trading we cannot wallow, we cannot dwell, we need to jump straight from the “I’m totally gutted and can’t live without her.” Phase, to the “I’m completely over it” phase immediately, without hesitation.

If we hang on to the feeling of how big our green book was before that goal, wicket, break of serve or whatever, then the chances are there will be another action on the way to make the newly created red book even bigger, or worse still we find ourselves in a situation whereby we’re still trying to make something happen with less than 1% of the event left and we’re hoping for the miracle save. 

Which is a bit like hoping your ex will see you as she’s out shopping with her new boyfriend and realise upon seeing you again, that you are in fact the most wonderful handsome human being on the planet and she leave’s him for you right there and then, while stripping off and making love to you on the spot.

It ain’t gonna happen buddy.
  • Getting Over It

Luckily getting over a trade that was going great and now isn't, is a lot simpler than getting over a relationship that was once great and has since turned sour. 

Again it links back to a detailed exit strategy; whereby you have said to yourself (out loud) that should it get to over or around the halfway point of the event (work out what the point of no return is for your particular event) and a goal, wicket, break, touchdown or whatever goes against you, then you will readjust your expectations to what you can realistically expect to happen.

If what you realistically expect to happen is a small loss, then take that small loss immediately. In fact part of your exit strategy will be to tell yourself; 

“…if it’s 1-0/a wicket falls/her serve is broken by that point, I will instantly get over it and cash out for hopefully a small profit, but more likely a small loss, but I WILL take it.”

There you go, it’s as simple as that, using vocalisation and rationalisation you can essentially pre-program your brain on how to behave. Because when it comes to the killer action that ruins your green book, you've already told your pesky brain to suck it up and get over it. That way there is no indecision, no looking longingly at that red figure and dreaming about when it was green, you just simply move on.


4.Trading for trading sake

This is probably the easiest money losing trap to avoid, especially if you have been doing your Zen meditation and you've avoided information hoarding mode. If you've done those things then you’ll recognise when you just want to trade because you fancy clicking a few buttons and staring at the odds for a while.

If you haven’t got into your meditation yet, please do, it might seem to you that it is completely unconnected and a waste of time, but I assure you it is not. Meditation is a test of will, the will to concentrate on one thing and one thing only for an extended period of time, it is this intense focus that will help make you an aware trader. In other words a Zen trader is; somebody who is aware and in control of his actions and possible reactions to events.

Before I started meditating about a year and a half ago I was an undisciplined, information hoarder who would enter into trades haphazardly and was prone to all the losing traits I've detailed in this article.

Now however I’m up meditating at 5 a.m. on weekdays writing articles, then going on to research tips and trades in the afternoon, only acting on the research I've been doing when I feel that there’s a point to act, I no longer mindlessly follow my base instincts. I’m not suggesting that you should or have to wake up at 5 a.m. to meditate, but just start setting aside 2 minutes a day, everybody has 2 minutes to spare; everyone!

Trading for trading sake is something I see and hear all the time and in fact was one of the biggest obstacles to me making money on Betfair 

“Oh I saw they/he/she was playing and so I fancied a quick punt, just a bit fun.” 

But where’s the fun in mindlessly losing money?

If I lose after thoroughly researching and devising a trading and exit strategy, then I can turn round, shrug my shoulders and say 

“Oh well, c’est la vie, I did all I could, onto the next one”

However if I've lost money because I was playing pool in the pub and they were playing a match that I was kind of watching on the big screen in between taking my shots and talking and I’d kind of thought about a possible outcome and then thought to myself;

 “sod it, I’ll stick a quick tenner on, not too much, just a bit of fun.” 

Then even if I only lose £2 out of that £10 I’m really annoyed with myself, because that is a common way of losing money and unless you can cut out common ways of losing money, then you’ll never be a rich Betfair trader, just a regretful one, full of bad beat stories.

Note: Even if I win money on a trade for trade’s sake, I’ll still chastise and scold myself for doing it, the result isn't important, it’s about getting into winning habits and sticking to them.

Avoiding trading for trading sake is simple, all you do is make sure you plan your trades well in advance, so maybe on a Monday you take a look at the week’s events and you decide what you’re going to trade on, do your research and keep going until you have a couple of trades lined up.

If you plan ahead it will be less likely that you’ll feel the need for the spur of the moment trades, because your thinking will turn from;

“It’s just a bit of fun” 

To;

“I don’t want to throw away today, what I might make tomorrow.”

Plus acting on a plan will bring it’s own chemical and hormonal rewards in the brain and therefore the more we stick to a preordained plan the better we’ll feel and that feeling will happen whether we win or lose our trade, which in turn will take away the need and the joy of just trading for trading sake.

5.Strategy Slipping

I was going to call this Cumulative Destructive Evolution of Strategy; but I figured that was too hard to remember and a bit up it's own backside!

Strategy Slipping tends to happen after you've had a long string of winners and you suddenly start losing and it can seem like maybe you had been lucky after all and now your luck is changing.

Let's take the imaginary case of Roy; he tends to trade Football and he has just found a formula that seems to work for him. He has become very adept at finding games whereby the favourite is away from home and struggling.

Roy has realised that if a team high up the table is playing a team halfway down or lower then the market usually gives them generous odds, especially if the lower team is lower than halfway.

So Roy has been laying favourites away from home and using a trailing stop loss so that his liability is at or near zero by half time depending if it's 0-0 or 1-0.

Roy has hit a long string of winners, but then he starts to lose and he can't stop losing.

So what happened?

What happened is, slowly, over the course of the fifteen winners, Roy subtly changed his strategy in little increments, so each time he went into a trade his strategy was slightly different from the last trade. At first that didn't matter, because the strategy was only slightly changing with each trade, so there was still a tolerance within the strategy.

However Roy is only human and like most of us at least some points of our lives, is driven by greed.

So when Roy first started winning he was getting to zero liability on average by 47 minutes in games where there was no goal and he was greening up in an average of 26.5 minutes when the home team scored first.

However because of various little factors, some of which we've discussed in some of the previous reasons, Roy started trying to get more money out of his trades so he started pushing those averages further and further, leaving bigger and bigger liabilities for longer and longer.

Not only that because of the very specific nature of the games he was trading in, there wasn't necessarily a game like that every week, so he started loosening his criteria for a struggling team.

Until one day, he loses a load of money on a trade when the away team goes 0-2 up after 15 minutes, he then finds that he can't get back to where he was because he's so far away from when he had a good solid, safe strategy and spirals into a string of losses, losing all his previous profits and more.

Sound familiar?

How to combat Strategy Slipping

The solution is probably the easiest and altogether the dullest solution of them all, because it's all about writing down your trades in your trading journal and reviewing your notes every few trades or so.

On top of that you have to write down your strategy, that way you can keep an eye on yourself! 

Roy's strategy might have looked something like this:

Favourite Laying Strategy


Criteria

  • Find top 6 team playing away
  • No more than odds of 1.75
  • Has to have been struggling to score away consistently all season, wins are OK, but no big recent away wins.
  • Current form must have scored 3 or less in last 3 with no more than 1 win

In-Play Strategy

  • Stake should be no more than 45% of bankroll
  • if 0-0 half liability by 20 mins
  • if 0-0 HT zero liability
  • if 0-0 look small to mid green by 60 mins (if team is reknowned 2nd half team get small green before 55 mins)
  • if 1-0 green up immediately if trading blind - if watching assess to see if 2nd goal or immediate comeback is likely, green up no later than 10 mins after goal

Writing a template like this will enable you to check whether your winning strategy is slowly slipping into a losing one.

Summary

So in my experience, those are the five most common reasons for losing money on Betfair, cut out these above behaviours and you’ll cut a lot of losses, do that and your bankroll will be bigger in the long term.

If there are more recurring reasons for losses that you can think of, why not put it in the comments section and others can compare and if I can, I’ll give you the solution, which will as ever, be based in Zen.

If you still haven’t opened up an account then follow the link and open up a Betfair account and claim your free bonus

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Good life and good luck

The Zen Trader