Trading and money management

Been a busy day today with no chance to trade so thought I'd answer some questions again. Firstly though it's great to know so many people are reading the blog, leaving comments and emailing me about it. Please do keep asking, sending good luck messages and letting me know what you think!

To answer the most common questions, yes I have a set bank and money management system, yes I use some one click trading software that enables me to trade quickly through the betfair api (Read more about it here - I honestly don't think I could do what I do without it. There's a free trial so why not see for yourself?) and yes I will explain the basics of what I do.

I'll explain how I manage my bank today and deal with the other questions over the next day or two. Please do bare in mind though that there are many people who are far more knowledgable than me on these topics and make far more on Betfair than I ever will. I don't even do this full time.

Money Management

I guess it's my fault that I hid basic details on the bottom of this page so not many people find it.

Basically I started with a £1k bank at the start of May 2006. My first trade was on May 8 and everything I make and mention here will go towards paying for my wedding which is in August 2007. To date the bank stands at £3,508.5 - roughly a £2.5k profit.

At the end of each day I either withdraw any profit made on that day from Betfair or add the amount I lost to my Betfair account. That means at the start of each day I have 1k in my Betfair account. Withdrawing winnings is just incase I have a rush of blood and exceed my set exposure limits in a crazy effort to chase losses. I think I've learned that's not a smart thing to do and it's far better to be disciplined and take a loss on the chin. But at least this way if I totally lost the plot the most I can lose is £1k and not all the profit I've made to date. (Unless I go completely insane and start depositing more of course!)

Anyway, on top of that I opened a specific account for this so all the transactions don't show up on my regular bank statement. And I'm also getting over 4% interest on the money in the account while it's there. Far better than leaving it doing nothing in my Betfair account and it all helps pay for the big day. :-)

Trading: amounts

I started with the 1k and obviously didn't want to lose a large part of that straight away. Combining that with the fact I had had a break from trading because of my mum's illness my initial trades were in blocks of £250. In other words I would back and lay the same result for £250. Once I was back into the swing of things I increased this to blocks of £500. (Naturally suffering a loss the first time i did it!)

Blocks of £500 is mainly still what I'm trading in. I do go up to £1000 occasionally (Again, losing the first time I did it!) and explain this below. Once I have (hopefully) built up some more profit I'll increase the standard trading amount again, maybe to £750, before ultimately using the full £1k.


Trading: Exposure and liability

While I accept losing as part of the game I don't like it! My biggest loss to date was £361.42 on a tennis match between Roddick and Baghdatis. It was my first loss once I'd started the blog. I had a long look at why I lost so much on that match and worked it out. And although I was pissed off about it I was ultimately pleased that I didn't blow a lot more and kept the loss managable.

So like I said I trade in £500 blocks. I almost always trade the favourite. So if I back the favourite my liability on the other runner is £500. If I lay the favourite my liability will always be less than £500. So as a general rule my largest exposure is £500. And that is the absolute limit I'm currently prepared to lose at this stage on a single event. Though in reality when things go wrong I tend to limit the loss to around the £250 mark as a maximum where possible.

I do sometimes trade in blocks of greater than £500. Even up to £1000. And although this isn't yet my normal stake level I'm prepared to do it where there are very short odds and there is no immediate danger of any real volatility. ie, The market may move against me but it will only be a few ticks and I will have plenty of time to bail. So although I may have a 1k red against a runner I would never anticipate losing anywhere near that amount on the event.

Anyway, apologies for rambling on a bit there (it looks bloody long from here!) but hope that answers some of the questions you've been asking. Please do feel free to leave comments / questions and I'll get round to answering them when I can.

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