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Tuesday, 10 January 2017

...the chicken or the edge.

What stops us from becoming the trader we aspire to be? Why, when we look at the market, do we see all this money available yet fail to extract any on a consistent basis? The answer is fear.
Fear is the wannabe trader's most formidable foe. It controls us completely, governs our thoughts and actions within the market and, unconquered, will ultimately lead to our failure.
This fear or fears manifest in numerous ways; fear of missing out, fear of being wrong, even fear of being right, fear of the opinion of others, fear of loss, the list goes on. Then, of course, there are the innate fears that have been imprinted on our psyche through our own life experiences. It's these innate fears people feel they need to weed out the most. The need to go through some Freudian process to alleviate. Is this true though? Can we not overcome the more obvious and still achieve trading success?
When fear is removed, we are confident. Confident in our ability, confident in our knowledge, confident that we can control ourselves in a given situation. Think about the first time you got in a car and how well and how automatically you drive now. Similarly, with your job; first day fear and nerves soon dissipate. But trading is different. No one market is the same as another, so how can we build a mental mould for it? We can't. That's the point. So, what is the alternative? What can we do to remove those fears, to build confidence, knowledge and therefore control? We find our edge.

Your edge is what you sets you apart from all the other would-be traders. All the people that begin this journey and the uncountable who end the journey without success.
The kingdom is on offer to us, there for the taking, but without an edge it remains so close but so firmly out of reach.
Ask yourself, right now "What is my edge?"
If your answer is quantifiable and based on positive probability, you're likely already profitable. If you're not, maybe your execution needs work.
But if your answer is ambiguous or you genuinely don't know, stop! Don't make the same mistake so many of us do/did. Spending every trading session guessing, hoping the light bulb moment will come will take years off your life and large sums from your bank balance. The more you try and trade in this way, the more fear will imprint itself and the harder it will be to reach your end goal. Deep dive into your results, make detailed examinations of every entry you've made. You might be so close but aren't aware of the small change you need to make.
Use your trading session time to examine the markets, decipher the flow, find the anomalies, the patterns (they do exist). Correlate what you find, back test, paper trade, fail and start again.
All the information is available but you cannot take it out if you're too busy getting blindly stuck in.

Sunday, 21 August 2016

Head first, ladders later?

Regular readers of this, rarely updated blog, will know I am part of Steve Howe's MG World, an excellent trading community centred around swing trading the nag markets but taking all sports into account. This community continues to grow and being part of it means engaging with traders at every level of experience. As you might expect, a good number are novice traders.
Over the last year and over the last few inductions into MG World, my attention has been particularly drawn to the psychological approach of new traders. If you've been trading for at least a year, you'll already understand that the method comes first, after which, you learn the battle with your own mind and emotions is not only a much bigger foe to defeat but a war that has to be won in order to achieve success.
Now, we all know there are a few well known traders, some famous for being genuine, others just infamous, and some of them do blog, tweet, record etc about psychology (notably Caan Berry who's YouTube channel is very good), offering insight into overcoming your own psyche and a lot of it is good, helpful stuff. However, whilst all good training/e-book providers deliver something around a pragmatic approach or mindset, none that I have seen (I've seen pretty much all of them) offer anything in depth to assist the novice trader in identifying their personality traits and how they might help or hinder in the early stages of their trading pursuit.

During a Skype chat this week, a MG member confirmed he'd reached the point of being a scratch trader, after just 18 months of discovering trading. Impressive, I think. But how much further forward might this trader be had he known his personality in more detail?

What am I getting at? Well, in simple terms, I'd like to rectify the above. So, over the next 6 months my trading will be scaled back, to focus on a non-related project, but also to really understand how examining personality, at a very early stage in the trading journey, might highlight areas of focus and, potentially, shorten the journey.
Ask yourself this, if someone had told you, right at the beginning, your personality lends itself to taking unnecessary risks or risks that are out of balance with reward, would you have taken steps to remove the chance of these traits creeping in?
I happily and readily admit, after taking a trading specific test, that my personality type sits in conflict with that of the ideal trader. So, fear not. There is hope...

I would very much like to hear from traders of all experience levels to understand the difficulties, past and present, who are happy to help identify, not common mistakes but the personality traits that lead to them

Friday, 29 January 2016

Are you your own worst enemy?

After posting so regularly for so long, I took the decision to post only when something really poignant either occurred or came up. This is one of those occasions.

So, yesterday I was in the markets as normal, pre-race and in-running. It was a strange day pre-race, moves looked likely but never really materialised. Patience is key, as you know, sitting and waiting for the opportunities to present themselves is a large part of the game. This patience was eventually rewarded with two large moves, one an absolute stonker from 3.95 - 6.4, in the bumper.
Knowing the later AW markets are not as solid as the afternoon cards, I carried on trading at Chelmsford City. Started off with a solid green then, not only did I make a poor entry, a long way from where a safe exit would have been possible, I got trigger happy with the entry too, making multiple entries. Of course, the position reversed massively leaving me with a £100+ red. This was more than a schoolboy error, this was discipline disappeared, forgotten, lost. Why am I so damning at this foolish act? Because I did it again in the next race. Not to the same size red but, this time, I went past tilt and massively increased my liabilities when trading in the run - the classic increase in stakes.
The in-running trade resulted in a scratch overall, though it's debatable if that's a good thing...
Almost 10 years I've been trading, 6 of them full time, and still I'm prone to such ridiculous errors.
After taking time out and clearing my head overnight, the analysis. We ask ourselves so many questions when we do this and the answer is always the same "I didn't stick to the plan". The plan is so simple, there are just a few qualifying aspects to take into account. What's worse is on Monday this week, to get a refresher, I re-attended Steve Howe's excellent Racing Workshop, where the plan was drummed into me over and over. A plan that works exceptionally well - when implemented effectively. After telling Steve about my stupidity I requested his wisdom;

 "Knowing when enough is enough is something we all struggle with. When it comes to trading there HAS to be a line. 
Having an exit plan, and implementing it is as important as your entry, if not more so. I have an exit plan built into my entry position and if that exit point is reached it’s game over. I close the trade and reassess my position. Not to chase any loss, but as a completely different trade. This takes a few key skills; discipline, confidence, practice. 
The less experienced you are the less flexible you should be. Experience enables me to see a bigger picture, so occasionally I let my planned exit lapse. I will need to see the reasons for this. A good example would be; I have a Back bet on a favourite, it’s drifted to the point of my planned exit (or Stop Loss position). There is no strong opposition and the favourite looks to be at the front of the line-up. Armed with this information, I make a judgement that the drift is temporary and the odds have a better than average chance of coming back. If I can see the reason for the drift, maybe the 2nd fav that was drifting has reversed and is now opposing the favourite, the a swift exit is called for. 

The absolute Golden Rule for any trading is “Protect your bank”. If you don’t lose then you win by default."

Steve's reference to a lack of experience is relevant here. Though my experience of trading the exchanges is lengthy, my experience with pre-race is relatively short. Though you'd be forgiven for suggesting I should still know better. 

The day ended with a profit overall but there were times when my liabilities were far too high and the trading was woeful. 
It's back to basics for me with pre-race and much-reduced stakes until the errors are equally reduced. 

NB: Steve's Racing Workshops are the best pre-race training available. I can say that with impunity because I've done them all, sometimes twice, and it's only Steve's that have ensured consistent profit.

Wednesday, 8 July 2015

The importance of creating chunks

Next to my bed there are currently twelve books. The stack gets ever bigger and, dependent upon the subject matter that has my interest, their order tends to change. Right now I'm enjoying a book called the Two Second Advantage. It's main theme is how we might deliver into modern technology the ability to have predictive powers, thoughts almost. Happily, close to it's beginning, there is a sports reference to the Ice Hockey great Wayne Gretsky and his ability to read the game and make incredible moves and passes within it. This ability was considered inherent, a natural, God-given talent. The reality is a lot less romantic but a great deal more encouraging for us lesser mortals. Gretsky had created "chunks".
Our brains work by processing billions of pieces of information, fusing new with old, removing the minutiae then building broad reference points, "chunks". These chunks are simply memories of what has happened in the past, from which we are able to make predictions about the future. The reference to Gretsky is simple; his own constant study of Ice Hockey, both on and off the field, meant he had innumerous "chunks" to refer to. So many in fact that it became automatic, subconscious. Leaving him to consciously focus on how he should behave within the game.  
Our brains are wired to recognise patterns so we can refer to chunks and predict what might happen. When trading markets this is pretty much near impossible, however, what we can recognise are the signals that suggest to us what might happen. It's these signals and their outcome that we must build chunks from. As novice traders, if we move from market to market without creating a frame of reference, we have no anchor point from which to make a decision. The ideal is we get to a point where our autonomous brain says "You've seen this set of circumstances before, this is what happened, this is how you should or shouldn't react". In doing so we cement that mental image. When this same process happens again and again we are building the chunk(s) that eventually become second nature, allowing you to focus on how to behave in the market. For this trader, this aspect, this point, is never mentioned, purely because so few recognise it happens naturally over time, over literally thousands of markets. The difference between us and the really successful traders we know and love is that they all, very likely without knowing it, have created ways of cementing the image, dropping the anchor point. The most common way and, from my own experience, the most successful way to do this - talking to yourself. Tell yourself what is happening, what is the bi-product of that? What is the reaction in the market? Even the silly stuff is helpful, like "I wish these big stake f*ckers would stop road-blocking the market and switching from one side to the other!". It happens, we all see it everyday but what does it mean to us? What should we do with that info? Most importantly, remember it.

Stay green. 

Friday, 14 November 2014

This is how it should be done - Betfair take note.

Geeks Toy now in Beta
Important Please Read.

Due to the retirement of Betfairs current API, on Monday 10th November we were forced to migrate everybody onto Betfairs new API version.  Although this version had been on beta test for three weeks and we addressed the issues in the product as they came up, since Monday many issues have come to light that are causing some customers issues at this time.
 With the number of issues to be resolved and the amount of work we are doing in critical places to resolve these issues we cannot at this time maintain a release version of the software that we are confident for people to use for their betting and trading.
As such I have with regret taken the decision today to put Geeks Toy back into beta until we have the worst of these issues resolved.  I am hoping this won’t be for too long, but we need to be 100% confident of software operation before we can run it as a release version again, and with the current issues it is unacceptable to do so. 
I’d like to apologise everyone for this, and to say that Richard and I are working flat out to deal with the problems.  Once we are through the beta stage, all subscribers  will have the expiry date extended on their accounts to make up for this downtime.

In the meantime if you want to help us resolve the issues as quickly as possible, please continue using the software with small stakes, and please report any bugs you find here. 

Friday, 26 September 2014

Target fixation

Stubborn. Stubborn is the word that Mrs. Lambretta would use to describe me if we were on some bad ITV husband and wife show. I am stubborn, in simple terms. In real terms, I am determined, single-minded, driven, indefatigable and totally focused. However you choose to describe it, as long as it doesn't have a detrimental effect on your surrounding life, it's okay. But, there is a danger to the overall goal. Such focus can mean we lose sight of the very things that can help us succeed.

My stubborness means I shall not give up the endeavour to become a very profitable pre-race trader but it occurred to me that I've spent so many hours looking at the markets, football, golf, nags (I-R and PR) that it's possible I've become blind to what they are telling me. So, I am now resolved to taking a month off. No trading of any kind until Tuesday, October 28th. Why this date? Because the previous day I am attending Steve Howe's pre race trading course. Some of you will know the vast amounts I have invested in numerous training courses but, after viewing Steve's YouTube vids, I'm confident there is something different to all the others and that his style looks very similar to mine, only he makes good money and I make mistakes...

After so many years of trading so often, it'll be interesting to know what withdrawal looks like.

Stay green.

Wednesday, 10 September 2014

Belief. Where does yours come from?

First, I'll give mention to Caan Berry who has referenced a conversation we had earlier this week, in his latest post. That conversation sparked a train of thought, at stupid o'clock this morning, which led me to ask myself certain questions and relay them here.

Personally, trading is tough for me at present. The EPL is yet to show any real tradeable form, the change of codes in the nags, plus I'm waiting for some questions to be answered around cross matching in-running. In one of his many video blogs, Peter Webb suggests we are entering the time of year when many question their trading ability and some even give up, (Jan/Feb being the worst months). So, how do we ensure we do not fall foul and press on? Belief!

There's a DIY ad around at the moment, where people in it stand back and admiringly view the shed, shelf, paint job etc, that they have just completed, and we hear them proudly think "I did that".
We have all had moments like that. A job or promotion you wanted, a project you completed, something that made you both very proud but also surprised you in it's very achievement. That is the seat of belief. "I know I can do this because... "

Of the numerous schools of thought I subscribe to one is - taking the path with most resistance.
Sounds illogical, I know, but bear with me. During our conversation, Caan talked about how the Monday card was poor and, for a novice like me, can be difficult to trade. Perfect. If my ability to trade grows out of trading really difficult markets I can truly make the best of the easier ones. Where as, should I do all my learning on Saturday afternoons, my overall experience of the markets will be skewed and making good trades on the more difficult week days will prove really tough. This is how I forged my corporate career so, rightly, I believe it is the right approach
Another subscription is taking a lesson from every experience. Edison's much used quote of finding thousands of ways not to make a light bulb is the perfect example. Go back over your records, there are always trades we remember that confirm our ability to do things correctly. There are also trades that confirm our ability to get things wrong, the fact that you have a record of them and what you know to avoid should give you confidence and belief in your ability to continually hone your skills.

NB - I was about to publish this when I remembered a footnote I wanted to add: The most successful people we know are not successful because they have inherent ability, a natural talent. They all did one thing with great skill; they aligned themselves with people who had the knowledge they were lacking. In short, they asked for help...

Happily, there are some good games around this weekend. I see opportunity at Arsenal, Chelsea and Barca in particular.

Stay green and, above all, never give up - you don't know how close you might be.