Saturday, Aug. 9, 2014

Multi Tasking When Trading

Betting Exchange ArticlesOne of the features of Betfair is that it contains a myriad of sporting events and a myriad of event types and if you are not careful this can confuse a trader. What do I mean?

Consider a Football match. It is a sporting event and lasts 90 minutes. Betfair allow you to trade Football matches one of two ways, either by placing your trade prior to kick off, sitting back and waiting for the result or by allowing you to trade during the match itself when the game is turned in-play.

It might seem obvious, but trading the same football match in play as opposed to trading and waiting for the final result of the game when the match is either not in-play or as a trader you chose not to trade are two completely different things. So what is the difference?

Take the case where the match is not turned in play, when the game starts all unmatched trades are cancelled and trading is suspended in this case, you get one shot. You place your trade prior to the match kick off and once that trade is on, you can only sit and wait. Imagine you back Man U to beat Man City. Imagine further that Man U takes the lead and the score is 1-0 at half time. So far so good, it looks like your trade will be a winner, but because the game is not in-play you cannot do anything but wait until the final outcome of the game before knowing whether or not you trade has ultimately been successful.

Take the same match but imagine it was in play After a Man U goal or at half time you might want to trade out of your position, or even take an other position based on your analysis of the play that has already taken place. I will explain. As Man U are in the lead at half time having backed them just before kick off you could now lay them in order to reap a guaranteed payout irrespective of the final result of if you fancy that Man City actually deserver in a better position due to their play, perhaps even Back the draw and await a City goal. If the goal arrives you could then trade out.  In this way you could have mutultiple trades within one event.

Another thing you need to remember and realize is that not all events behave in the same way. For example a horse race has a pre race market and an in-running market. The suspension of the event takes place once the race has been started, the in-running race then starts and the next suspension takes place once the race has been completed and the first horse is past the post.

Compare this to Football. The match is suspended in the same way at event start kick off in this case and on the final whistle. However the match will also be suspended and all bets cancelled when a goal has been scored. So this must dictate the way you approach your trades and the way you handle your risk.

So how does it alter the way you think about risk? If you trade football we have already established that a goal will cause a game suspension and that further when that goal comes it will fundamentally alter the prices in the market when the game is put back in play. All this without you being able to alter your position until the game is put back in pay.

An example, imagine just before kick off you have back Man U at 1.94 j and imagine that Man City were trading at that time 2.24 and the Draw at 3.6.  Now if there are no goals by the 60th minute you could expect that the prices on the draw come in and on Man U and Man city they go out. Lets say the position at 0-0 is then Man U 2.25, Man City 2.9 and the Draw 2.0.  Lets also now say that City score a goal against the run of play. This will have the effect of catapulting the MAN U price out to something like 5.2, the City price will come into 1.7 and the draw will go to 2.8.

For those interested in very tight risk control with precise stop out levels this could cause an issue. How?  Imagine that you were prepared to stay with your MAN U Back trade until the price reached the level of 2.94 in other words you were prepared to risk a point.  When the goal comes and it is City who score this level is completely blown right through way past your stop point.

When the event can be traded in-play and there are game suspension points other than the final result, you risk exposing yourself so your trading plan needs to take this into account and trades have to be kept smaller than when you trade events which are suspended either on the start of the event and /or on its completion.

So remember Multi Task keep in your head what sort of an event it is you are trading and keep in your head whether or not the match can be suspended during play or simply at the end of the event and keep in your head your risk profile for the event in question.

If you would like to talk trading then drop me a line.

This article has been published with permission. You can contact the author by emailing [email protected] if you need any help or have any questions regarding the articles.