Paddy Power Betfair’s (PDYPF) Q1 2017 Trading Statement Call (Transcript)

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Best Uses

Personally, poker online I prefer to trade five minutes pre-race until post. This is where most of the action happens and the most money is matched. However, there are plenty of people who trade slower moving markets.

For example, other pre-race traders might prefer to place their trades in the morning. This kind of trading can start hours before the race actually begins. These traders may look heavily into form and trade the odds when they don’t agree with them. For example, you may look at a horse’s form among other factors and come to the conclusion that it should be priced at odds of 6.0. If it’s currently priced at 8.0, you could look to back the horse and trade out at 6.0 for profit.

With this kind of trading, it can be impractical to sit there all day and monitor the odds. You could be looking at a market for hours before anything actually moves. There’s simply not that much interest in the markets at this time in the day and therefore, not much activity. Placing a lay bet at odds of 6.0 in order to take profit and a stop loss perhaps around odds of 10.0 allows the computer to do the work for you.

The above example is beneficial because it can save us time. We can literally go to the pub with our trade open, if we wanted to. However, some people like to use stop losses for reasons related to discipline. Many traders, especially newcomers will place a stop loss when they don’t trust themselves to close out of a position.

Markets force traders to read a lot of information and make important decisions in a short space of time. Using stop losses can make exiting easier, especially if you’re struggling under pressure. Simply place your stop loss immediately after entering the market and stick to it. Don’t be tempted to adjust it and risk more than you initially intended.

My Humble Opinion

They’re not something I use on a day to day basis. I prefer to trade at busier times of the day, usually 5-10 minutes before a race. Prices are so volatile around here that I could be accidentally stopped out at any moment. A big bet could come in and trigger my stop, only to return to the previous traded range.

Stop losses are designed to protect us but they can’t be relied upon. I find it better to monitor the market myself and exit a position when I feel my reasons for entering are no longer there. This can change at any second, so placing stops can end up being quite impractical.

I have no problem with other people using them, but always be aware of the conditions you are trading in. Does this market really require a stop loss? If I’m using a stop loss, is the market too volatile to use one where I’d like?


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