The Paradox of Choice

The problem with maintaining your discipline when trading on Betfair is that you have to be disciplined in many things, many of which I've written about on here before. There are studies that show that if you give a person too many choices, then not only does this confuse and depress the person, it also gets them using pointless features that they wouldn't otherwise have taken notice of.

For example, think about the last time you bought a laptop; did you think I want so and so laptop and then went out and bought it? Or did you think “I need a new laptop, I'm going to get one”?

If it was the second and you were going for a PC then the chances are you looked at a lot of laptops and probably read a fair few reviews before buying it. There's even a chance you put your purchase off by days, maybe weeks, maybe more, because you just couldn't stand the thought of buying a computer and then missing out on a better deal. Or maybe you even got bogged down with which serial BUS was quicker or whatever, when you had no idea what a serial BUS was before you started looking.

Barry Schwartz, author of the book by the same name, calls this The Paradox of Choice, tells us that people become unhappy if they have too many options in life. He cites a famous jam experiment whereby two identical stalls are set up in a public place, one with 6 luxury jams on show and one with 24.

You can sample the jams for free at both stalls and you can buy the full range of 24 jams at both stalls, at each stall the jams were on offer with a dollar off coupon if you bought one.

The free sample rate was the same at both tables, but the table with only 6 jams on show sold to ten times as many people, 30% of people bought at that table as opposed to 3% at the 24 jam table.

What does this mean to the average sports trader?

Well, it can mean a couple of things; first it could mean that you miss trading opportunities and it could also lead to you making far too many trades; it seems paradoxical, but we are talking about a paradox after all!

So how can the paradox of choice make you miss a trading opportunity?

Most markets are open by default

Most markets are open by default

Imagine you have been waiting to trade on a particular event and this event happens to be a football match. Beforehand you have been thinking about laying the home favourite, what you are faced with is the market you want surrounded by lots of markets you don't.

This is where the dreaded paradox of choice rears its ugly head, especially if the odds for your trade aren't quite as good as you thought they'd be. Now your mind starts to wander, maybe there's more value in backing the away team, in fact 0-2 is 19.5! Maybe you should back a correct score, but wait, what if it's a draw? Maybe you can do a few trades to cover those outcomes, like lay the HT draw. As long as it's something that will give better value than the home lay, after all, you don't want to miss out on a nice big pay day do you?

John didn't want to miss out on anything so he backed everything.

John didn't want to miss out on anything so he backed everything.

And so it will go on, until, you either confuse yourself and make yourself unsure about your original choice and simply log out thinking you'd better give this one a miss. Or you cover all these amazing trades that are going to really pay off so much better than a silly old lay.

Now and again your luck will be in and your lack of choice, or indeed many choices were the right decision, but usually, you end up regretting it. If you've done too many they end up going wrong and your original choice barely covers the other losses (or worse) and if you give it a miss you see the trade go the way you originally thought it would.

So what's the answer, how do you avoid the paradox of choice?

The answer is surprisingly simple, the first part of the answer I've written about before in the BTT article How To Use Vocalisation To Win Big On Betfair. As the title suggests, you should say your intentions out loud when planning a trade, before you login to Betfair. The reason being is that it takes the thought out of the realm of the subconscious and fully into the conscious, real world, a definite plan that you are going to follow.

This might seem like a simple solution, but it works, believe me, try it. The reason it works is because if a thought stays in your head then you are susceptible to other thoughts coming in and clouding your judgment. The "cloud your judgement thoughts" are usually the kind you get when you're stressed, so they shout the loudest and can drown out your original thought process.

Whereas if you say your plan out loud beforehand, any doubts about the trade will happen then and you will either agree with your doubts and move onto another trade, or you will quell them with a rational argument, which you will remember later when you are about to make a bad decision based on impulse choice.

The second and most obvious solution is to  take the choice away from you, if you've ever caught one of my #BTTLive sessions on Twitter if I'm tweeting screenshots from my laptop (the Betfair phone app only shows one market at a time), you'll notice I have collapsed all the other market menus, leaving just the one(s) I am trading open. This simple measure could literally save you thousands of pounds over the course of your sports trading life, it means that you will only trade in a market you intended to. Even if you decide to trade on a market in-play, it will be because of events happening on the field of play and not just because you're watching the odds change in a particular market.

This tactic backed up with the first tactic of vocalising your plan before you are anywhere near logging in, will make you a more disciplined sports trader and whilst you may slip in other ways now and again, you will be better at spotting your own indiscipline, which ultimately, will make you a better trader.

Good luck and happy trading.

The Zen Trader