What will happen to the elite?

I have decided to try to continue to post at least once a week but make the content more than just my P&L performance.

Let's start with the recent Premium Charge rises which will only affect a ‘small’ number of successful customers who have acheived lifetime profits of over £250,000. For customers who were profiting from the very start of Betfairs existence that would mean that to reach today's milestone they only needed to profit at an average of £60 per day. When you look at it from that perspective, the quarter of a million doesn't look that impossible to many people. Us bog standard traders know that it 's far easier said than done. Nevertheless should these elite few be penalised for profiting perhaps as low us £25,000 a year? I am sure they would argue that they have been instrumental in making Betfair what it is today.

I admit that I am not the brightest spark and I apologies in advance if I make naive comments but surely a PC of up to 60% of any profit is going to force the elite to move to Betdaq. What choice do they have? I cannot see how they can accept giving away more profit than they will earn.

I know there is always talk of a mass move and that nothing ever happens but isn’t this going to force the issue or will the loss of the elite make minimal impact to the liquidity. Is this what Betfair want?

I understand that the more a customer trades the more points they get and the less commission Betfair will receive from the constant winners which is disproportionate to the average customer base and that existing losing customers are leave Betfair quicker than expected when they find that they just cannot cut it as a trader but don’t they need to balance that with the risk of assisting other exchanges to grow?

From a selfish point of view, if the Elite do disappear from the scene it may make trading the ladders much easier. I know I find trading the ladders a whole lot easier on Sundays when I am sure that most professional traders take time off with the family. If it puts extra green in my pocket at the expense of the elite then that’s payback for all the times I have been screwed when the ladders go against me for long enough. It will also evolve over time to elevate a new elite group who will have a few years to enjoy the fruits of successful trading before reaching the upper limit.

I would really be interested to read comments from others on this.

Now, from successful traders to one particular person that I cannot get my head around. John from Betafir Profit and Loss. I respect anyone who takes the time to blog and with John you really get the feel of what is going on in his mind and his heart. When you read the comments from many people they may criticise John but it is almost always constructive rather than abusive. He gets criticism quite often in the blogging world too and it is done to genuinely try to help him rather than to kick him when he’s down.

John was very successful up to the end of September 2010 and showed his P&L for the previous 3 months at around £12k but since then things have gone downhill quite rapidly. In the last few months John has been sending the same message again and again. He says he is continuing to lose as he simply doesn’t have the large bank he needs to profit. This is simply not true and he has been told that more times than I can remember. If he has an edge to a winning strategy it doesn’t matter if he puts £2 or £200 on it as the end result is a win. His £12k profit he made between June and September 2010 may result in £600 this time round if he adopts the same strategy. Then he has a decent bank to move forward. In the last three months that he has been moaning about his bank he would have recovered his position to at least have more resources to step up. While John continues to take the view that a small bank will not work for him he will continue to lose. Psychology is all part of the trading game. If you are not in the right mindset you cannot possibly be successful in the dog eat dog trading world where there is such a fine line between success and failure. In his last couple of posts he is complaining about his small loss in the last three months but he fails to comment that in his last week of the three months he has won £226. He must stop his negative thoughts of how things used to be in the past and concentrate on being positive and moving forward. John doesn’t have any other income so he is under even more pressure to succeed which can also lead to unreasonable and rash trading decisions.

I and many others want to see him turn things around. Firstly he needs to be positive. Review his historical P&L for one last time and understand what went wrong then reduce his sport portfolio to concentrate on his strongest markets. He then needs to draw a line and start with a fresh page forgetting the past. I don’t want to read anything referring to how things were good last year. He needs to have a clear strategy on each market and keep to it. If he was successful in 2010 through strategy rather than being lucky then he will continue to profit. Bank size is totally irrelevant as he can reduce his stakes to scale but if he wants to start with a higher bank then the harsh reality is to find a job however junior it may be.