Hitting the Rewind Button

It’s fair to say that this blog certainly hasn’t started how I envisioned it doing, but one of the key attributes a successful trader needs is a short memory. After all, you can’t let losses stay in your head and expect to be successful whilst it is crucial to be able to move on and correct those errors of judgement without letting them fester, unnecessarily.

Moving on is an apt phrase given that’s what I’m currently doing. Nearly everything is packed and moved, with just the essentials staying behind with me until I move for good on Tuesday. As I mentioned in my previous post (I did write another, but never got round to posting it) I am looking to move back home, temporarily. Sure, it isn’t ideal but it is currently the best of a bad bunch of options; it would look better if I had at least progressed various applications but true to form, they remain pending. Still, not every 1.01 shot succeeds and in a perverse way, I am almost looking forward to the daily commute, as it could turn out to be useful for thinking / pausing, whilst I’m also pleased to not be living in an atmosphere frostier than the North Pole.

If that has had one benefit though, it has enabled me to clarify my thoughts on what I want to achieve from trading and areas for improvement, which are obviously numerous! Despite that, I have had another reasonable month to the extent that my bank sits just under £2,000, a milestone I am confident of breaking by next week. A near 100% bank increase in two months is obviously pleasing although I do feel that yet again I have left at least double my winnings in Betfair. It’s fine to eliminate losses, but I seem to be eliminating profit at a far more expansive rate.

This week’s rugby league games are the perfect example. On Thursday, I turned a half time position of around £400 on the draw to a £100 profit despite the game ending in a draw. On Saturday, I turned a similar half time position into a £50 profit in a game which did not end in a draw. Of course, by the sound of that, my trading out basis looks impressive, as the frequency of a draw is far less than one in eight! However, that is not the true story. Far too much money, in both games, was laid off at poor value.

My trading has always been short term based, but what I need to consider is whether it is worth sacrificing a potential £250 profit for £10, or whether it is worth letting that run, and possibly losing the £10. A blanket strategy would be far more ineffective than I currently am, but I am coming around to the idea of letting bets run a lot more when my eyes tell me to.

For instance, in last night’s game I had 2 or 3 £10 stakes in the odds range of the 40s matched when the game was 2-0 to Hull. I laid these off in the 30s within a few minutes, giving a not inconsiderable £100 or so on the draw profit. However, at that time, the true trading value of the draw was around the 20s (the possibility of a draw eventually would have been higher, but I make reference to trading value, because I am not so interested in the end result on draw bets) so in effect I was giving away value that I had spotted to minimise a potential loss of 1.5% of my bank.

That’s not sensible. Especially when within 20 minutes, the draw was trading at 15 which was true value, and using £30 backed at say 41, if I would have let the bet run, could have produced a £50 hedge, instead of a £6 one. Even if it would have lost, the loss would have been minimal in terms of bank size and in terms of loss avoidance strategy (something I will look to address later this week). It all goes back to loss aversion, a topic I have blogged on in depth previously!

So how do I address this? When I created this blog, I said I would hope that a new year and a four figure bank would allow me to reduce this. It didn’t, so thinking that doubling the bank and another fresh start will reduce this would be ignorant.

Maybe I never will, but even if I don’t, things aren’t exactly disastrous. Secondly, I am more experienced now and realise that I can’t just flick a switch to reduce this. Thirdly, it is important to realise why I grew to love trading. At the simplest level, it’s fun. I enjoy it. I enjoy playing the markets and interjecting my own opinion backed by a statistical analysis (Yes, I was a stat geek as a child!). Fourthly and finally, I’m reminded of something that Santonio Holmes said moments before winning Superbowl 43 for Pittsburgh Steelers,

“I’m daring to be great.”

So, what is the way forward…