Last week I talked about the fear of being all red on Betfair and I want follow that up by delving into what every trader wants and all green book.

To me: there is a lot of one-upmanship surrounding what type of green-book you should have when you have decided to close your position.

In truth: there is no right or wrong answer to the question, because as a trader your risk v reward calculations should always be within your comfort zone.

Just because ‘Jack’ is leaving himself liabilities on a short priced favourite because he fancies it to get beat, it doesn’t mean you have to!

I work to two rules if I dont have a strong opinion on the outcome of a match:

Rule 1: Do I know which direction the market is moving?

• If Yes: Leave profits on the market that is moving in my favour.
• If No: See Rule #2

Rule 2: Always green-up if you have no strong opinion on the outcome or know which direction the market is moving.

A common mistake traders make after they have green-up there position is thinking that their work is done on the market, this is far from the truth.

What you still need to know if activating rule 2?

The first thing they need to find out for future reference is which way the market did eventually move, should they have closed their position on the outcome thats likely or least likely to happen. Did I close too early or too late and missed the optimum price etc.

Lets look potential outcomes on a tennis match.

Example: Say you was watching a tennis match and having watched the first couple of games you fancied the favourite to break the serve of the outsider, the favourite is available at 1.50 on Betfair and you place £200 as your opening position.

They break in game 5 and the odds drop to 1.25, the immediate response by novice traders is green book and will close out for equal profits.

Let go back to Rule 1; we have an idea of the which direction the market is going to move, if the favourite holds serve the price will move in further, if he gets broken back it will move out to just over 1.50. (lets be generous and say 1.60)

An equal green book would see you win £40 before commission on both players. If you square off your liabilities on the outsider, then your green book would read £50 on the favourite and zero on the outsider.

If you did that and favourite was broken back next game and you greened up your position at 1.60, you would probably have a green book of something like £32 on the favourite and £30 on the outsider.

If the favourite holds serve in the next game then the price will probably drop to 1.18, you could squeeze another £2.80 profit on the favouite (£42.80) by reducing your liabilities on the outsider to zero on the break and greening-up if the favourite holds his serve.

Deciding what to do: Like I said at the begining of this post, there is no right or wrong when closing to make a green book, its down to what you feel comfortable with.

As a trader these are the sort of questions you’ll be asking yourself, if you find all this too taxing, there is no harm in just taking an equal green book. You just wont be as profitable as somebody who does!

Part 2

I will crank the thought process up a notch or two of what options are available  if you have a strong opinion on what may happen next!