Win at trading by playing the losers game

Is there somebody watching over your shoulder?

Ever felt like somebody is deliberately trying to coax you into a mistake when you trade?

When I first started trading I wasn’t sure why the market did what it did. But my response to this was quite simple, and something I have always done in any market I have participated in. I started keeping detailed records of everything I did.

That sounds incredibly dull and uninteresting, but it’s actually the core of any successful Betfair trading strategy. What I was looking to do, was to strike out any obvious errors and look for failure points. Profit or loss is such a fine line, by striking out errors you can start to turn things in your favour. I learnt this in the stock market. Sometimes the best way to be profitable is to reduce the errors you may and ride them profits as much as possible.

By looking for failure points and looking at your loss rate,  you can learn what task you have ahead in order to turn profitable. When things didn’t work out as planned, I simply looked at my records for some comparison, explanation or correlation to any previous results that would explain why something didn’t work. I could learn from that and, over time, striking out those errors or adapting my behaviour allowed me to morph into a core strategy.

Professional traders are trying to minimise losses. That way they can tip the trading scales slightly in their favour and that is all you need to get profitable in the long run.

The losers game

As discussed above, when trading in financial or sports trading markets, you adopt the same strategy. See what the market will offer on both sides and try and minimise losses. Trading software will help you do this through the speed and the range of tools available. It’s easier to see the money flowing in and out of the Betfair exchange and seeing where the market has traded on the Betfair exchange. Knowing that will give you some feel for where the traded range is and allowed to lock in a profit, or more importantly avoid bigger losses. But most people get obsessed with winning short term, not over the long term. Your focus should change, in order to be profitable.

When I started trading pre race horse racing this was a natural place to start. I knew nothing about racing so I had to adopt a mechanical approach to trade to tip the scales in my favour. So how did I do it and what allowed me to get profitable?

I took inspiration from a game of Tennis and Tennis players. When I was learning to play, my friend told me my aim wasn’t to win the game but to not lose. It was a bit of a ‘say what’ moment. He pointed me to work written by Author Charles Ellis.

The theory was that professional athletes play a “Winner’s Game” and amateur athletes play a “Loser’s Game.”. In Golf, the winner defeats his opponent by superior play. However, the winner of an amateur golf tournament is often the player who makes the fewest mistakes. Amateur golf is a Loser’s Game, the loser usually defeats himself by poor play. Ellis cited a study revealing that in professional tennis, 80% of points are won. But in amateur tennis, 80% of points are lost.

So my base for participation is to not find a winning strategy first, it’s to avoid the most obvious cock-ups and everybody has plenty of those when you start!

One fits all, fits nothing

Using this method is how I figured out that a one fits all strategy just isn’t effective if you want to get really successful. Some strategies work well in some markets and others perform better elsewhere. You should also be aware that some people, fit certain strategies better than others. Learning about yourself is all part of the process. Deploying a generic strategy into a generic market and expecting it to work, is a road to failure.

Learning to win is one thing, but learn to lose and learning why you lose is critical in the scheme of things. Over time, I have got better and better at identifying what I should do, when and why. This also has the dual impact of reducing  the frequency and scale of your losses allowing you to put more and more money through as you feel more comfortable with the downside risk you are taking.

My first bet on the exchanges was just £5. Over time my focus has changed from not just try to do the right thing, but trying to do it with as much money as possible. You too can achieve the same thing as well. You would do this with some hard work and by looking long and hard, not at your wins, but particularly your losses.

So in order to get profitable, make sure you are winning the losers game.