There is an old saying used by shopkeepers that goes something like “You’re profit is determined at the price you buy in your stock”. As you all know, I love a saying 🙂
So what has this got to do with trading on Betfair? Well more than you would imagine. Something that is debated at length and many seems obsessed with when looking for an entry point is ‘which way is the market going to go”. This is easy to get swept up with. After all if you can predict the direction of a odds move if it pretty much a licence to print money. But it isn’t that easy as many of you know. As odds move they take many twists and turns along they way, it’s easy to bottle it and be over cautious or be too “hung ho” by which time the old “well I might as week wait to see if it comes back now as I am up to my neck in shit here” thoughts start to creep in.
There are many signals that show a price may be about to move, depending on the volume and odds coupled with fill rate, these are sometimes more subtle that others. But there are simpler ways of making money than the almost impossible “which way will it go” game. Which brings me back to my shopkeeping adage.
When the Greengrocer is knocking out his bananas at less than half price as they reach the end of their shelf life do you suppose he is making a loss? Unlikely, He was smart when he bought them, he knew when he ordered that extra 6 boxes he was taking some risk, but the weather has been nice, and when that happens he usually sells more. Shame the weather changed mid week ! But they were a great price and he got a good discount for the extra volume he bought. He factored in that he may be stuck with some if the weather turned, that at some point he may have to discount some stock.. But the discount he got when he bought them will offset this potential risk. If he doesn’t sell the extra boxes, he will be able to sell them at just below cost price for sure, but he may sell them all at full price and make a handsome profit. Realistically he will be some where in between.
So why can’t we do the same? When we open a position, should we not factor in what happens if we get stuck? i.e The odds turn against us. But if we enter at a price that has an exit point “just below cost price” – I am not talking purely about a tight stop loss position, I am taking about a position where something needs to force the odds somewhere it doesn’t naturally want to go. Then it’s completely likely if we judge our position well then we can make some if not considerable profit if the odds move in our favour.
This is what this video is about. Not a banana in sight. 🙂
My opening position is based on 2 factors. 1) I have a good exit plan. There is a step in volume just below at 3.75 – This isn’t rock solid, but it’s a long way from the start of race. I judged it enough though. 2) There was pressure on it from the favourite.
You may be asking “Why didn’t you just back the favourite”? – Well there are a couple of reasons. Firstly I have the possibility of my lay bet going over the cross over in odds at 4. This will have the effect of doubling my profit per tick for no extra risk. So it is basically leveraging your investment. The other factor is, that if I am backing a runner, in a market like this I am relying on no other runner being supported. By Laying Satanic Beat, I have a chance of back up if the odds move on Gabriel The Great reversing. As proves the case. Although there are lots of mistakes in this trade. The point of me showing you it is hopefully make my point. If you entry potion is sound, there is room for some error. This wasn’t too difficult to spot., but it had control and the exits well covered. The added safety of enhanced profit for no extra risk too. I didn’t make the best of it towards the end, but the methodology is basically sound.
As always I welcome your comments and questions