Monday, 19 March 2012

The Opposite

All over the Internet, you'll find debates. Small debates, mass debates (sorry, couldn't resist!) and out of control debates that become heated arguments. Discussion and debate is the lifeblood of the worldwide web, it's what makes it tick, taking the vast information at our fingertips and allowing us to see every type of viewpoint surrounding that piece of information, instantly. For the most part, this is fantastic, as we get to learn from other people about things we may have been ignorant or lacking in knowledge about. What it also means, is that we may be subjected to views we find abhorrent or which contradict our own views, even to the point of making our initial view seem ridiculous and downright wrong. This is particularly true when it comes to sports trading and betting, where we know that there will always be a reasonable number of people or even a vast majority, who hold the complete opposite opinion. This is one of the key reasons why there is so much heated debate within our community. That and the fact that money is involved! It's all well and good having our opinion about the latest Kings of Leon album torn to shreds on a music forum but when you've got £200 riding on Roger Federer to win Wimbledon, it's a lot harder to take when 50 people are calling you a mug on the Betunfair forum!

The problem is that we as humans are programmed to follow each other like sheep. We find comfort in the fact that other humans want the same things that we do. It's why famous film and sports stars are used to advertise products; we like to see other people (especially rich, talented, successful people) 'interested' in the same stuff that we like. It's one of the reasons why brand names become so big; we want to be seen wearing something that other people are wearing. It's a stamp of approval; if it's that popular, then it must be good and therefore, I'm going to wear it too and I'll fit in. It's why when we go on Twitter, we may get slightly angry at the fact that it appears that a large number of people disagree with our view. You'll often see the minority view on a Twitter thread, as the one which shouts the loudest and tries the hardest to get its point across. Why? Because they don't like the fact that they are in the minority. They type longer and argue more vehemently because they desperately want to change people's minds so they see 'the truth'. What they really want is affirmation of their own view because they are insecure about the fact that so many people seem to disagree with them. This is exactly what happens every single day on trading forums.

Think about the number of times you've held an opinion on a game and then logged onto a forum with the only specific reason being that you wanted to see who agreed with you. I would guess that when you were a newbie to trading or gambling, almost every time you opened up a thread related to a match you were getting involved in, it's because you were looking for affirmation. Chances are, you have no intention whatsoever of changing your mind. If you see even a small handful of opinions which agree with yours, that will be enough to convince you that you are doing the right thing and you are now 100% certain you are onto a winner. However, if you see that your opinion is in the minority, what tends to happen is that you feel not only worried but angry! You demand to know why everyone isn't agreeing with you, though it probably won't matter what anyone says if you've already placed the bet because you don't want to be seen as being wrong. This can lead to one of two outcomes. Either you stubbornly hold onto your initial opinion, desperate to prove to that the entire forum are mugs so you can laugh at them or you get too scared and change your mind to go with the crowd.

What I've realised over the past few months is that, just as in any form of life, going against the crowd can be a good thing. Not everyone is swayed by the stars on adverts or wears what 'everyone else' is wearing. There are people out there with their own styles and find their own ways of doing things which go against the herd. It's often these people who find the most happiness/success because they are innovators and they think in different ways which discover new inventions and ideas.

These people don't worry about what everyone else is thinking, in fact, they will often try to steer completely away from the majority as that is the best way to find a niche. That is how I believe trading should be. Going with the majority might be comforting and reassuring and seem the safe thing to do but in reality, what are you doing that is different enough to give you an edge? The truth is, you probably don't have an edge if the vast majority are doing the same things as you and as we all know, if you don't have an edge, you don't have a chance. So now, if I ever do see a majority of people disagreeing with what I'm doing on a market, I'm glad and I certainly don't waste my time arguing to the contrary. I need people to oppose me, otherwise, I can't make money! And that's one of the reasons I won't ever get involved in the value debate again; the fewer people who understand the concept, the better as far as I'm concerned!

OFF-COURT BEAUTY: World Number 52 Tamira Paszek of Austria:


Friday, 16 March 2012

The Dark Ages

Exactly a year ago, I was going through my worst period as a trader. I chronicled it on the blog, with this post being my lowest point:

FACING TRUTHS

It wasn't just my worst period as a trader but one of the worst periods of my life. Imagine going to bed each night riddled with anxiety that forced you to toss and turn, eventually waking up and the first thing that hits you like a sledgehammer is 'I've almost lost all my money'. You then have to drag your sleep-deprived limbs through another day of mental torment, as you begin trading with fear as the over-riding emotion. Imagine every minute feeling like an hour, pacing the room, heart beating out your chest, body sweating and boiling like a kettle, barely able to look at the match or the markets as seemingly everything conspires against you. Imagine redding-up at the slightest hint of things moving in the wrong direction only to curse loudly and smash your fist into the wall as it reverses and goes onto what would've been an all-green screen. Imagine swapping strategies mid-match, being unsure what you are doing from one moment to the next, considering having a straight punt just to get any sort of green on the board, flicking through markets you have never even traded before just to find something to stop the rot.

You know you are on-tilt but even if you manage to calm yourself enough for one properly executed trade, it inevitably ends up a loser and so you go back on-tilt again, only this time, the urge to do something stupid is even greater. You know you should stop and take a breather but you are scared of missing out on the next match and the profit you might miss, so you plough on; the tiredness from those sleepless nights throbbing through your aching muscles but the adrenaline from the anxiety keeping your mind alert like a caffeine overdose, fixated on the ladders. You despise trading now and your hand shakes over the mouse each time you see your entry point; sometimes you bottle it and inevitably, those are the times you miss out on the green. 'Just one win' is what you say to yourself, that's all you need just to give a bit of confidence, to stabilize your emotions but the harder you try, the more you unwittingly try to force a win but end up red. In the end, you either see-red and go 'all-in', for a win or bust, ridiculous straight bet or realise it's 4am and there are no more matches left to play, so prepare for another night of tossing and turning.............

Trading should never put that much pressure on you or make you feel that bad but it's inescapable that many people will suffer because of mistakes they make in a risk-orientated business. I'd like to be able to say, a year on, that I can raise a wry smile at how stupid I was but even now, the wounds are still a bit raw. Whilst there is no doubt at all that to be successful in trading, you must at some point experience the downsides of chasing and blowing a bank or two, I don't believe it's necessary to reach the depths of despair that I sank to.

That said, hitting rock-bottom is often the spur that some people need to rectify their problems, both in life and in trading and it's no coincidence that this period forced me to dig deeper, analyse more and make changes that pushed me onto the right path immediately:

FREEDOM

Bank management was the first of many basic lessons I was to learn over the course of the next few months, which eventually culminated in me being where I am now; a million miles away from The Dark Ages of last March.

OFF-COURT BEAUTY: World Number 125, Aravane Rezai of France:



Tuesday, 13 March 2012

Paper-trading Patience

WRONG SIDE OF THE BED

The above link is to my post from almost exactly a year ago. The thing that strikes me most about this post (aside from the truly awful mental state I was in!) was the fact that I had started paper-trading a new system. That system is the basis of what I do now, only it took me another 6 or 7 months until I actually implemented it fully. At the time, I wrote that I didn't feel happy with my strategy and was searching for something that would suit me more. The problem was, I didn't paper-trade the new ideas for long enough. I was trading so badly and with so much anxiety, that I decided I couldn't wait to trial it or I might lose my entire bank - so I switched strategy. School-boy error. You can guess what happened next!

The excellent results I was achieving on paper, turned to horse-manure as soon as real money entered the equation. Sometimes when we paper-trade, we fail to take into account things like whether we will actually get matched and most importantly, whether we will have the bottle or the discipline to execute everything properly. I exhibited neither of these qualities! Also, we have to think about variance. If your paper-trading is hitting loads of winners, the temptation is to start using real money whilst you are still hot. What often inevitably then happens, is that variance kicks in not long after and you end up cursing your bad luck as the wins dry up and results even out. That can then lead to you deciding to ditch the strategy completely, as you worry about the run of reds you now have with a system you've not fully tested for long enough. This is exactly what I did a year ago. I went back to the 'comfort blanket' of my old system (even though I had doubts about it) and ditched paper-trading the new ideas. If I'd just continued paper-trading, I would've saved myself several months because in the end, I returned to the new ideas and now I am making them work for me.

It's funny how things often come full circle when you are learning trading and so often it's because you don't have enough patience to properly test things out. A classic example is the 'Lay the Draw' strategy in football. I've lost count of the number of times I've seen people write that they gave up on LTD within a few weeks or even days, because they were losing too much. Yet months or years down the line, the same people come back to LTD with a new attitude and greater patience and understanding of variance and the discipline required and they have more success with it. We are all naturally looking for a quick short-cut to success but the fact is, for the vast majority of us, that just isn't going to happen. Patience and hard-work are dirty words in today's world for most people, I fear. But I've put in the hard work and now I'm getting to grips with the patience side of things, it's no coincidence that I'm finally getting somewhere.

OFF-COURT BEAUTY: World Number 30, Petra Cetkovska of the Czech Republic:


Saturday, 10 March 2012

Writer's Block

I've gotta be honest, I'm really struggling to find stuff to write about. In fact, all I can think of to write about is not being able to think of stuff to write about! In a way, it's a positive thing. This blog has always been about my progress along a steep learning curve; discovering new aspects to trading, discussing potential ideas and theories and sharing my thought processes and the anguish and the failures. Now, it appears that I don't really have any of that to write about. I feel as though I've found my style, crafted a comfortable strategy and discovered all I need to know about trading. Of course, I'm not suggesting I've cracked trading and it will all be smooth sailing from now on. There's still plenty I need to work on to improve and maintain, and long term consistency is still not achieved but is there anything for me to learn about that I have yet to grasp?

Lately, it seems that I read other blogs or find out about a new trading book or financials quote, and it's all just covering old ground. I occasionally will want to add my thoughts to a discussion (usually regarding value!) but then stop myself as I get that uneasy feeling of de ja vu. I feel as though I've done my apprenticeship years, put in the hard graft, passed my theory exams and am now out in the big, wide world, where I have to put all I've learnt into practice and make money.

The problem for this blog is that it's not really that interesting to read about or to write about, week after week of steady progress. Trading like I am doing right now, in essence, is boring. There's no rollercoaster ups and downs, no depths of despair, no intense highs, no soul-searching, nagging questions and raging internal turmoil. It's just plodding along, making small amounts with insignificant, unexciting trades. Very few massive greens and no massive reds at all, to rave about in glorious technicolour. And the ridiculous, sloppy, unprofessional errors just aren't there to force me to put finger to plastic to rid myself of the burden of shame.

So the question is, where do I go from here? I could talk about my trades in detail but that doesn't do anything for me. I already record what I do in detail on paper, so why would I want to regurgitate it via the keyboard? I don't make 'picks' either, as 90% of my trading is done in-play, and no point mentioning that as it would be pure after-timing. And as I've mentioned before, I won't post a daily P&L because I never look at it until the end of the week and sometimes even longer. In the year I've been blogging, I've discussed pretty much every aspect of trading there is to discuss and all my lingering questions I had were answered in the series of interviews I gave with other traders, bloggers and industry players.

I need to find a new angle, some new inspiration to write about, get the creative juices flowing. Until then, all I can say is that I'm doing well, resisting the urge to up those small stakes for now and genuinely, finally learning from all those mistakes I made during my school years. Of course, it's still possible I might lose the plot and go back to my old ways - then I'll have plenty to say!

OFF-COURT BEAUTY: World Number 68, Timea Babos of Hungary:

Sunday, 4 March 2012

What a Difference a Year Makes

Today, I looked back on a couple of posts I made a year ago and one in particular caught my eye:

Deer in the Headlights

It is about that 'deer in the headlights' moment, where we aren't prepared for something to go horribly wrong and when it does, we don't know what to do so just sit there staring at the ladders and hoping for the best. Reading over the whole post, it really does feel like another life-time. The way I was trading back then, I was always just one minor error away from losing the plot. If I had a bad start to the day, things would often snowball so quickly out of control that I could be hundreds of pounds down by the end of the day and my mental state in tatters. And it wouldn't necessarily end there. Now, A good night's sleep always signals a clear head and fresh start the next morning, no matter how bad the preceding day was. A year ago, I would often wake up feeling positive but the losses from the day previous would still be festering inside my subconscious and I'd be chasing, whether it was obvious or not. The startling thing though, is that once again, it's clear that I knew what I SHOULD be doing, and my analysis was excellent but I failed to take it on board and execute correctly for months and months afterwards.

I'm happy to report that I never put on that pair of antlers anymore! That's partly down to the fact that I have a clearly defined set of rules on when to exit, which I have confidence in. But even if I slip up and don't manage to exit when I should, I also have a big safety net because my risk-reward ratio is far, far better than it was last year. So if I do have a brain-storm or simply fail to get matched in time, I know that the worst that can happen is a 2-3% loss of my bank. That's because my staking and the prices I take on are not as risky. A year ago, if I was caught in the headlights, I could be losing anything up to 25% and if the red mist came down, I would even risk 100% on rare occasions!

Don't get me wrong, I'm still constantly working every single week on the mental side of trading because I know how quickly things can slip if you are not wary. On March 1st for example, I noticed that I seemed to relax a lot, following the end of my successful February. I just took my eye off the ball for a few games and I'm certain it's because I was still basking a bit in the glory following my best ever month. It gave me a bad start to March but I'm much more philosophical about it than I would've been a year ago, and shrugged it off. Plenty of time to put that straight!

OFF-COURT BEAUTY: World number 1, Victoria Azarenka:


Thursday, 1 March 2012

Finally!

I hadn't posted anything for a couple of weeks in February. It has done me the world of good, to spend less time at the PC screen getting involved in debates, arguments and deep analysis. During that period, my trading has reached new levels of consistency and I'm quite proud to report that I have achieved my best ever month of tennis trading, finally breaking the four-figure barrier.

Three things really pleased me about February. First of all, I had that terrible week or so where the luck wasn't going my way. The way I dealt with that and the fact I kept ploughing on and sticking to my guns despite the temptations to go off the rails, have undoubtedly made me a stronger trader, mentally. I felt that it was vital however, that things evened themselves out sooner rather than later, to show that I was on the right path. I was duly presented with that change the following week, as fortune did a huge u-turn and came sprinting back in my direction. Ironically, it was a turn of another kind which signalled the beginning of the change - Victoria Azarenka turning over her ankle during a match in Doha. Up to that point, I was staring at yet another red figure but the injury sent the market into panic, which I was able to take advantage of and escape with a huge green. My relief was palpable! After that, I noticed the greens started to pile-up more frequently and the hard work I'd put in keeping my reds nice and low during the bad spell, was rewarded.

The second thing that pleased me, was that I have now settled on my strategy 100%. Over the past 6 months, I have begun to mould my trading style so that I am a value taker and a 'discretionary' trader (use instinct more than strict rules). At the start, it was very different to how I'd previously traded and so there was a lot to get used to and many things I was unsure about. As each month has passed, I've answered more and more of my questions and made more and more choices about how exactly to make my trading successful. February has finally seen any doubts about what I need to do in any situation, banished. I have now reached a point where I am satisfied with all aspects of my strategy.

The third thing that I'm pleased about is that there is massive potential to up-scale. I achieved these profits using a maximum liability of just £50, with an average liability even less than that. Amazing to think that exactly a year ago, I couldn't get near these profits with 5 times that liability! In fact, it's been almost 2 years since I regularly used stakes that were this low; that's the best part of two years trading with stakes way above my station. I can increase these stakes by 10 times that amount and easily get matched in most games and that is quite an exciting thought. I'm fully aware that one good month does not make a good trader and there is no chance of me getting carried away, especially with my record of false dawns! However, considering that I've posted enough awful P&Ls to drive the average person to drink, I reckon I'm allowed to post this one up for posterity:


OFF-COURT BEAUTY: World number 92, Mandy Minella of Luxembourg: