Stop Loss Function: Improve your Betfair Trading

Using the stop-loss function can be misunderstood by new betting software users. In this article, Caan Berry explains what a stop-loss is, how a stop-loss function works, and how you can use it to help your trading.

Having a stop-loss function is one of the key reasons to use betting software and it can help you lock in profits and avoid losses when used correctly. Over a longer period of time, this can really make a difference.

You can check out more from Caan Berry in his education series section on the Betfair Hub.

What is a Stop Loss Function?

A stop-loss function is a feature you can implement when placing a trade, via betting software.

Using Geekstoy, see the example below.

As you can see, once opening your trade you can select the number of ticks that trigger your stop-loss if the market moves against you. This means your trade is automatically closed if the liquidity in the market covers your trade at that price. It’s an excellent feature for those who are learning how to trade because it takes away that moment of indecision, when the money is down.

You can also implement a feature called ‘trailing.’ This is a box to tick which means the betting software will automatically track the market moves and place your trade if there’s a price reversal. Essentially trading out for a green screen when the market has started to move backwards. For example, if the market moves ten ticks in your favour and your trailing stop loss is three ticks, it will green your position at 7 ticks profit if prices should revert.

See this feature in action below (notice the trailing box is checked):

Notice you can also select/de-select ‘hedge’. Leaving this box unchecked will mean all trading profit will remain on your traded selection.

A stop-loss is an important feature to have because it can take the emotion out decisions ‘in the moment’. Poor judgement, greed and fear often catch new traders out in this kind of situation.

What Are The Best Situations To Use The Stop-Loss Feature?

Say you enter the market at $1.90 and your mental stop-loss is $1.85 but you aren’t using betting software – when the price gets to $1.85, you might think to yourself to let your position run, freeze at the moment or make an emotional decision. Suddenly the price is now $1.75 and you’ve lost more.

Not all trades will go your way, so it’s important to get out of the bad trades as quickly as possible. A stop-loss takes the impulsiveness out of decision making.

There are some very important elements to consider before placing a stop-loss order. No two situations and sporting events are the same, but there are a couple of things to look out for, and a couple of market situations to avoid.

Stop-loss function is likely to be a lot more helpful when trading football in the lead up to kick-off, and trading horse racing markets a couple of hours ahead of time. I personally wouldn’t set a stop-loss function in the dying minutes before the off on horse racing as the market moves so fast – it might be a better option to Take SP in those circumstances to stop yourself going in-running if your trades aren’t fully matched.

The more volatile the market, and shorter the trading time-frame, the less I would recommend using a stop-loss. On the other hand, it’s well suited to highly liquid betting markets that extend over longer periods of time.

In-running betting on horse racing markets are probably the most ineffective use of a stop-loss. Just one big bet could trigger your stop-loss and the market may move right back to where it was. Or in another situation, you might not get matched because the market blows right past your stop-loss. Because of the way the software works; your stop-loss price has to be hit in the market before it triggers the placing of the bet. If the market is moving extremely fast, you’ll have less chance of trading out.

A stop-loss feature is an excellent tool in markets like golf, cricket, and football where the market is moving slowly. For that reason, Test Cricket is often a better fit than T20.

See a range of 3rd party betting software applications that offer stop-loss functions here.

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