Trading a position: back high, lay low, and why most traders lose

Everything in the course so far ends with the match being settled. Trading does not. A trader opens a position (a back or a lay), waits for the price to move, then closes it with the opposite bet, and does not care who wins. The profit or loss is the difference between the two prices, spread across both outcomes by the greening-up arithmetic from lesson 9. It sounds like a job. For almost everyone it is an expensive hobby.

The mechanics

Back at a high price, lay at a lower one: profit. Lay at a low price, back at a higher one: profit. Do either the other way round and you lose. In each case the closing bet is sized with the cash-out formula so that both outcomes show the same figure.

Two styles

• Scalping: trying to capture one or two ticks many times, in and out in seconds, usually before the event starts. Relies on queue position, speed and a very liquid market.
• Swing trading: taking a view that a price will move a long way (a favourite shortening before the off, a team drifting after team news) and holding for minutes or hours.

The costs people forget

• Commission is charged on the net profit of every winning market. A scalper making one tick per trade pays a large share of that tick in commission.
• The spread. To open and close at once costs at least one tick. Every trade starts one tick behind.
• Unmatched closes. The closing bet is an offer like any other. If the price runs away, the trade cannot be closed at the planned figure, and a trade becomes a bet whether you wanted one or not.
• Time and tools. Serious traders use ladder software, fast data and hours of screen time. The person on the other side of a quick trade is often one of them.

Why most traders lose

A price on a liquid exchange already contains everything the public knows: the team news, the weather, the form, the money. To profit from a move you must know, before the market does, which way it will go. Occasionally that is possible; usually the "move" a beginner sees is noise, and the costs above take the rest. Studies of betting populations consistently find that the great majority lose over time; trading is no exception, and its speed makes the losses faster.

If you still want to learn

Learn it with the smallest stakes the exchange allows, in one market, in one sport, for a long time, keeping a record of every trade including the ones that went wrong. Treat the cost as the price of a lesson. And set a limit before you begin: trading is the easiest form of betting in which to lose a large amount in a short time without feeling that any single decision was reckless.

Next: bankroll and staking.

Information only, 18+. Nothing here is a trading system or a recommendation. Real-money online gaming is restricted in India: see the lesson on the law.