In relation to some of the common questions that I received in the past few days and also for giving some standard rules to all tennis traders, I’ve decided to give a few general tips when you’re trading any match and things are going against you. When should you trade out?
Let’s look at the Back Heavy matches first as those are the big ones that we all want to profit from the most..
If you’re wondering what I mean by Back Heavy, please see question 12 in my FAQ section.
The stake that I’m using here (for the example) is 100 units.
Let’s take the following example as the match we are about to trade.
Betfair odds: Roger Federer – 1.85 vs Rafael Nadal – 2.1
My tip is BH on Roger @1.85, lay @1.5
Supposing Rafa has started off great here and our tip looks to be losing. Here are a few scenarios:
If Rafa takes a 1-0 lead by a break of serve, he will be favourite; but probably only just, so let’s assume he became the favourite with odds of 1.9. This means our odds fell from 1.85 on Roger to around 2.1 ish. That’s a loss of 25 decimals. Before I tell you what to do, let’s look at a bit of Maths here.
The following represents our odds moving upwards or basically us entering the red zone. Remember anything backed means we want the odds to go down, anything laid, means we want the odds to go up (just thought of mentioning that for the sake of new traders!).
In this case however, we are looking at a loss situation.
1.85 –> 2 –> 2.1 (Roger’s present odds) –>3.1
To summarize what is happening above, I have put the odds moving from our initial price of 1.85 towards 2, then hitting Roger’s present price and finally hitting 3.1.
First let’s look at 3.1 here. It is the stop limit of 40 % loss or 40 units. In this case that will be executed once the odds hit that price. I always advise the use of stop loss when using Back Heavy strategies
Calculation : Back 100 @1.85 , lay 60 @3.1
Stake difference: 100 – 60 = 40 units
Hence, if we unfortunately hit that, it means we’ve traded out the whole market with a 40 unit loss. This obviously means Rafa has stormed to a huge lead or even won the first set.
Trading out at this point is our worst case scenario. To trade out at this point, the price has to go against us by 125 decimals. Just thought I’d mention that!
Now moving on to price change from 1.85 to 2.
This is a price change of 15 decimal places.
If you trade out here, you are in a loss of 7.5 units.
Back [email protected], lay 92.5 @2
Stake difference 100 – 92.5 = 7.5 units
Anything from 15 decimal loss can be a thinking time in relation to your trade. I call it the Blue Zone. I do not generally recommend trading out early in the blue zone. This is because it is very early days. Remember, the starting price was almost a flip of a coin. This generally means you have to give your player a chance to show his potential or simply wait a few games.
Ok now, the price of 2.1, which is the present price on Roger.
Mathematically, there is only a few units loss difference from the above example as the odds difference is 10 decimals.
Approximate loss is 11.5 units.
Again, this is early in the blue zone and not worth panicking.
So, then when should you seriously think of trading out? I recommend about 25 % of the capital is a right time to look at things very seriously. This is because it is very likely odds will fluctuate a lot between players early on especially on a ‘tough to call’ match. Hence a 25% loss situation is something to start considering things as a standard rule.
To put it in odds, the corresponding odds would be around 2.5
So the real worry starts at 2.5 onwards if you are backing a favourite with a price of around 1.8!
As a pro-trader I generally have some of these numbers memorised and so get out of trouble earlier than most traders when things look fishy. At the end of the day, that’s what a good trader should always do, to get out early when you can!
Remember, always put a money management strategy before you trade matches, especially BH.
Thanks for reading! All comments welcome!!