If you are not familiar with the 'Green All Over' blog, then you cannot truly consider yourself part of the online sports trading community. Over the past few years, it has grown into probably the most well known, well respected and certainly well read trading blog. That is due to the author, Cassini, who is one of the few regular posters around who actually has plenty to write about other than a P&L update. It's without doubt my favourite read, with a nice mix of current trading and sports commentary, trading selections, scathing attacks and wry humour. So I decided to ask Cassini a few questions over a pint and a packet of pork scratchings down the Red Lion........
What was it that lured you into the trading world?
Pure chance. I stumbled into the world of Betting Exchanges in March of 2004 quite by accident. I had realised many years before, in 1992 in fact, that without inside information, beating the bookmaker with their 110% (or more) books was very difficult, and when I did find a method that was profitable, (Elo ratings in the 1991-92 football season), my accounts were closed, so I was pretty much done with betting. What was the point?
Move forward 12 years, and as I remember it, I was whiling away the hours on a Saturday afternoon with some Internet surfing and my search for "big boobs" must have returned a link to a story about someone's expensive mistake on a Betting Exchange. ‘What's a Betting Exchange?’ I wondered. My interest was piqued, and after reading the details, decided to risk all of £100. Initially it was the prospect of better value that appealed, and when I opened my account with Betfair, trading wasn’t something I had thought about doing.
It seems strange to say now, but back then, the whole idea of trading sports was completely alien to me. I was familiar with the concept of trading, having previously dabbled with trading stocks and options and futures, but while I enjoyed the challenge, I was clearly out of my depth, competing in markets populated by full-time traders who knew far more than I did about the likely direction of Pork Bellies and Orange Juice. The description of sports trading made it sound awfully complicated, but a picture is worth a thousand words (it is said), and after watching the prices move on a few events, I realised it wasn’t as complicated as it sounded and that trading had huge potential.
Which sports do you trade, which one provides most of your income and what do you enjoy about trading them?
I trade many sports, at least to some extent, but the main ones are NBA basketball and the NFL which (usually) keeps me busy from September through June. In the Summer, there’s no one real strong sport, so I play with tennis, golf, baseball and believe it or not, the women’s NBA, which was good to me this year. The NBA is my most profitable sport. Plenty of games, (when there is a season), good liquidity and very much a game of momentum. The same patterns repeat themselves time after time, and with the frequent stoppages in the game, there are plenty of opportunities to get involved. No lead is safe in the NBA, and one minute a team can’t hit the proverbial cow’s arse with a banjo, the next they are dropping in three pointers like there’s no tomorrow.
How would you describe your trading style?
First and foremost, I look for value. I look for situations where a price has been driven too low, and where I have a high degree of confidence based on my experience, that the price will rebound. Time and again you see this happen. I have written on my blog before about laying the NFL team scoring the opening touchdown. The market almost invariably drives the price too low, and it is usually possible to exit for a profit even before the next kick-off is taken. You see this phenomenon in other sports too. People love to be on a winner, sometimes seemingly at any price, and if you take the contrarian position when that price is too short, you will come out ahead in the long run. It’s fear and greed that drive the market and if you can recognize which of these is in the driving seat at any time, you can use this to your advantage. People feel safer in a crowd, but following the crowd blindly is not a long-term winning strategy.
If it's not too personal, what size stakes / liabilities do you work with?
It varies from sport to sport, and will depend on the liquidity. For a highly liquid NFL or NBA match, I will risk up to £3k or £4k, although I have no intention of losing that much. For games where the liquidity is ok, but not that great, then I typically play in the high hundreds, and for sports that I am not so confident about, tennis or golf for example, I don’t usually risk more than £500 at a time.
How long have you been trading for and roughly how long did it take you before you were able to consistently make profit?
As I said earlier, I started out in the Spring of 2004, and after reaching four figures and thinking I’d cracked it (I hadn’t) my balance shrunk to at one time as low as £20. At that point, I decided that I wasn’t going to ever deposit again, and if that money was lost, I would have walked away. That money really was my bank, and I took great care of it. I went into PPC mode (an acronym for "Preserving Precious Capital").
I read some advice which was to "Forget about making money, just try as hard as possible not to lose any" and "The key to being a winning trader is to not lose a lot when you lose. If you cut losses, the winning trades will take care of themselves". Excellent advice, and at the end of August 2005, my balance was back up to £93.11, and by the end of that year, by keeping the winning strategies, and dumping (most of) the losing ones, I was back over four figures. So I would say my ‘apprenticeship’ was close to 18 months, although this is a constantly shifting business which requires constant attention.
What was it that you feel finally enabled you to make that transition from breaking even or losing, to winning consistently?
The advice to try not to lose was key, because it really made me more disciplined in that I would only get involved when I thought I had excellent value. I may have cut winning trades short a little prematurely in those days, but I think when you are working with a small bank, that this is perfectly acceptable.
Did you find trading relatively easy to pick up or have you had to struggle to get past the psychological barriers?
Learning the mechanics of trading is very easy, but mastering it is the hard part. It’s all about identifying the entry and exit points, and sticking to the plan. By nature I am risk averse, so indiscipline is really not a problem. I still find myself getting involved with small amounts on borderline value bets on a quiet day, but chasing is not an issue.
When learning, what did you find the hardest aspect of trading to crack?
The hardest part of trading is identifying the entry and exit points. Anyone can back the unders in a football match, wait five minutes for the price to drop a few ticks, and lock in a profit, but was the entry point value? Was the exit point value? A lot of people consider this to be trading, but to me, without a valid reason to enter or exit a market, it’s gambling. The predictability of price movements is the big problem with trading football in my opinion. The scarcity of goals means that prices trend in a very predictable way, and if the opening price was correct, you are unlikely to find value during the game. If the opening price wasn’t correct, then my approach is to take the value bet and let it run.
What was the biggest mistake you made during your apprentice years?
Without doubt it was pressing the 'submit' button rather than the 'clear' button and backing the loser on a game that had finished but had not yet suspended. I was trying to do too many things at the same time, got distracted, and then absent mindedly wiped out a fair percentage of my bank. I’ve made mistakes since my apprenticeship ended as well though! Recklessly backing Manchester United to win at Newcastle with £5,000 on New Year’s Day 2006 remains my biggest single loss in money terms, while trying to be clever on the dead-heat half-time score in an NBA game was costly when the officials reviewed a three point shot during the interval and reduced it to a two pointer, meaning my ‘value’ lay was now great value for someone else but not for me.
I also learned that alcohol and smart investment decisions do not go well together. One comment about mistakes is that so long as they are not fatal, and you learn from them, they are a perfectly acceptable part of the learning process.
What do you think are the biggest mistakes that new traders make when attempting to become successful?
A couple of mistakes come to mind, one in the preparation, the other in the execution. One is over confidence. Too many people seem to think that profitable trading is just a matter of sitting down at the PC and that somehow the funds will simply roll in. They think that in a sport like horse-racing (something I never touch by the way) they have an edge over insiders and full-time traders with years of experience. Really? Optimism is good, but so too is realism. The other is the need to let winning trades run and cut the losing trades short, whereas the tendency is to do the exact opposite.
Where did you gain the most valuable knowledge and insight as an up-coming novice?
Really it was just from trying different things and from watching how markets move and react to different scenarios. As I mentioned earlier, football is predictable, but dynamic sports such as the NFL are more interesting to me because the price ebbs and flows and you get to recognize patterns repeating, and learn to identify where a price will move next. There is no substitute for experience. Put in the hours and study the game and the markets.
If you could give advice to any aspiring trader, what would it be?
Take a professional approach. Keep records. Put the hours in to learn how markets move. If it was as easy as some people seem to think, we’d all be making thousands each week, so be realistic in your goals. You are going into competition with many other people who all have more experience than you, and many will have far more money than you. Start small and build up, and if you aren’t building up over time, it is because you don’t have an edge. Work on identifying one.
Don’t spread yourself too thin would also be some advice I would offer. There are dozens of events and markets out there, but find sports that interest you, and study them. Make sure you know the rules as well. I’m constantly amazed at how many people trade a sport without knowing the overtime rules or the dead-heat rules. One other comment on choosing your sport is that you have far more chance of success if you target one of the less mainstream sports. Horse-racing and soccer for example have thousands of followers, and your chances of identifying a trading edge in those sports are somewhat slim. Yes, you want liquidity, but some of the US or Australian sports have that, and are far less studied.
Forget all about goals and targets too. They are counter-productive. Bet when the value is there; don’t bet when it isn’t there. Some days there will be several opportunities, while other days there will be none. Having a goal in place doesn’t change that – it merely puts pressure on you to try and meet that goal, and pressure makes for poor decisions.
What qualities do you believe every trader must have in order to be successful?
It’s not a quality as such, but I do believe that to be successful you need to be trading with an untroubled mind and with money that you don’t need. A trading bank should be money that will never be needed for anything else, and this gives you the freedom to make the correct trading decisions. When you are under pressure to make money to feed the family, you are not going to make the right decisions.
A trader needs an understanding of probability and value (it constantly amazes me how some people appear to be unable to grasp the concept of value – e.g. “What good is value if it loses?”) as well as the ability to make quick decisions under pressure. You also need to have a selective memory - to handle big losses you need a short memory, yet when trading, you need to access your long-term memory (where the historical record of what works and what doesn’t work is stored).
Join me tomorrow for the second half of this interview and follow me on Twitter for blog updates and trading chat!
0 comments:
Post a Comment