Trading cricket

Cricket is in my opinion the best sport to learn to trade. The price movements are often quite slow, and there are no massive events which will wipe a price out. If you trade football, a price can go from 1.01 to 1000 with a last second goal.

There will be some big movements in cricket, but there won’t be any like that. The price changes will generally be ones that you have taken into account when making a trade. When you start, remember that every trade must have a strategy behind it.

Ideally, when you make a trade, you want to have an exit point, or exit points. For example, start with a back at 2.0, and then decide the exact level at which you want to get rid of that trade. If it drifts to 2.2, cut your loss; if it shortens to 1.8, lay some, or all, off.

The actual prices you’ll be laying off at are up to you. You need to decide the state of the match and the market at the time. I often like to back at a price and then lay off parts on a sliding scale. Back ten units at 2.0, and then lay off two units at 1.9 and two units at 1.8 and you’re already ahead of the game.

You could close the rest of the position out, or you can let it run, knowing that the price can go well past 2.0 before you’re in a losing position. It gives you much more flexibility to run a trade. And if you get the chance, that’s what you want to do.

A very simple rule that someone once told me has stuck ever since: run your winning trades, cut your losing ones. That brings us on to what to avoid more than anything. Lots of people will lay off as soon as the trade goes their way, and then sit there pleased with themselves for making maybe 20% of their total outlay. Well, what happens if the trade goes the other way? More often than not, they sit there and hope for a miracle which doesn’t come, and end up losing their entire stake.

That’s a disaster, and you shouldn’t ever put yourself in that position. Always cut your losing trades if they go past your exit point. Trading can be great fun, and while you’re enjoying it, you should be learning. It’s not something which is easy to start with, but the more experience you get out of it, the better you’ll get.

Watch the match, but most importantly, watch the market. It can often tell you a lot more than the scorecard does.