Why It’s a Mistake to Focus on the Stakes NOT the Returns

A pile of £1 coins

It was interesting to read some of the comments in the trading chat room during the Europa League matches last night. In the absence of Steve & Kevin there were some excellent suggestions from the members for in-play trades, particularly in the second half. The two popular strategies were LTD (lay the draw) and SH15 (Second Half 1.5 Goals) and with plenty at stake in the last group games it was no surprise when the goals started to come. Now, when trading LTD and SH15 there is always a dilemma after the first goal – namely, do I: (1) Trade out, i.e. exit the trade and leave equal profit on each outcome; (2) Hedge my bet, i.e. my worst case becomes scratch, whereas my desired outcome means a nice profit; (3) Let the trade run, i.e. leave all my potential profit on the desired outcome and accept the loss if it doesn’t work out. Personally my decision is based on my current position in the trading session. If I’m running at a loss for the session I will trade out and take the green. If I’m nicely in profit I will usually hedge. If I’m having a big evening, i.e. … Read more