Personal (too?) Revelations and why trading is analogous to Sonic The Hedgehog.

“What is also pleasing is that I have largely been very consistent. I have traded 20 markets this year, and only one of these markets shows a loss. That was a small pre match trade in Valencia v Espanyol where I lost £1.86. All other markets have showed a profit.”

Compare and contrast the concept of trading as against 1990 console games such as Sonic The Hedgehog and Super Mario Brothers.

Confused? Let me explain.

The first comment was one I made back on Saturday 9 January 2010. A more recent comment would be.

“What is gaoling about my trading through the past 8 days has been losses of £200, £80, £150 and £230.”

The second comment is a question I will attempt to answer through the following post to attempt to explain my recent losses.

Loss One. A £200 back of 0-0 prior to the start of the Leicester v Ipswich game. I am a 0-0 scalper. The odds drifted pre kick off. I backed to my maximum liability. Joined the laying queue in play but a goal after 30 seconds meant I lost £200. I have no issues with that. An occupational hazard so to speak.

Loss Two. A loss of over £80 on Dancing On Ice. This was slightly annoying but explainable. Usually, ITV reality shows offer a recap before voting lines close. They didn’t and the market was suspended with an unequalised book. I wasn’t too concerned at the time as late money had been highly unreliable during the X Factor. However, for the first show, it was a poor idea to make any assumptions and what did aggravate the loss was that I had accurately called one of the Bottom two, but had looked to lay for a total green book and did not recognise value as it appeared.

Loss Three. £150 on Arsenal v Bolton. The 0-0 market was highly abnormal in this game due to the presence of a five figure layer of 0-0 at the start, rendering my usual in and out method futile. I therefore “recognised value” and the fact that 0-0 was likely to crash in price. Which it did. At 12.5, I looked to lay off for £0 although I wanted to earn some money from the market so turned around and entered at 12, knowing that I had placed a lay at a largely empty 10.5. However, a large chunk of money appeared at 11, but I declined to exit as I usually would and got caught out. The stupidity rating on this was high. I behaved in a manner that was “If the market is being irrational, I too will be irrational.”

Loss Four. £230 on Newcastle v West Brom. I looked to trade the Half Time Correct Score market and did very well save for a drift on 2-1. However, this was a linear train that would come down with time, and being first in at 4.5 and 4.6, I was content to leave my money there and not quit. Also, a goal for Newcastle would do well for my trade so in effect, I was laying West Brom not to score in the opening 2 minutes. I missed the start of the second half, and a goal was scored after 32 seconds.

This raises an interesting question. Is this a loss one type event or a loss three type event. I am minded to say loss three. To not be aware of the start of the second half is ridiculous and this was not an “occupational hazard” as much as a display of arrogance.

So what has gone wrong? How has someone so risk averse that at age 21 they set up a pension invested in Gilts to avoid the Stock Market turned into someone who treats the Betfair markets with utter disdain.

I can think of three possible explanations.

The “personal issues” that I have referred to previously as a reason for not writing the blog have developed into thinking errors. Is it a good idea to be trading a market at 8.30 after being awake from 5.30, out at work until 6.30 and generally feeling fatigued.

Secondly, have I lost the value of money. My main income is (hopefully) Rugby League and Formula 1. Knowing that, and with the knowledge of my 2009 earnings, am I thinking that “it is only £200” and therefore leaving trades open. However, if this is so why am I so bothered about one tick trades? Why not make two tick trades at £100.

Thirdly, and this will answer the initial question posed, goes back to the intrinsic reason I trade and my nature as a person. (Apologies if I get deep and away from the general trading comments!)

My trading is fundamentally a “hobby”. It is something I do for enjoyment. I like watching sport. I like testing my brain. This combines the two. However, there is a third underlying reason, which the “personal issues” can attest to.

I am a perfectionist. I abhor the concept of losing or worse still, being wrong. Give me 99% on a test and I won’t celebrate the 99%. I’ll focus on the 1%. In a previous job, we had a sample of our work checked. I developed a system to avoid “sampling”! A lot of who I am as a person relates to my perceived accomplishments. It sounds ridiculous, but one losing trade can equal one losing person and that is why I focus on small, mathematical based trades.

Recently, I have noticed that maybe my confidence is pretty low and it has been ever since I commented on going back to law school back in August. Certain other events and people haven’t exactly helped either. Therefore, I am incorporating more and more “thinking errors” into my trading and striving for 100%, turning down even 99% because in my eyes, that is as wrong as 0%.

So, how does this relate back to Sonic The Hedgehog? Well, that’s easy. Number one, trading fulfils a relaxing / entertainment role in my life like computer games do for others. Secondly, and this is the key, in Sonic The Hedgehog, you get 3 lives per level and a continue at the end of each level.

If you get something wrong, it is not game over. At least not to begin with. It is in fact an unavoidable destination on the road to success.

And that’s the key. Perfection (which is also not using and to start a sentence!) is an unobtainable goal and something that is generally not required in any case. After all, it measures you against objective standards when all you can control is subjective. Is James Milner not a “better” player than Robinho for his industry and dedication. Talent is something that we are born with. Making the most, or least, of this is something that we can control.

So, maybe in my trades, I need to realise that I won’t always “get it right” but focus on accepting that. Usually I can do so without exception. Recently, I am not. And the ultimate irony in all this is that at Half Time, I could have “won” in any case by laying all scores for a 100% book given previous trades! And for the year in total, I am now around £30 down, which is pretty exceptional given my recent trades.

There’s probably a good chance I’ll read this in the morning and take the post down for fears that it is too self-revealing. Assuming that it is still here, I would be grateful for any comments received. Although short of “get a grip you loon!”, I am not sure what you can say!