Ouch

Took a fair hit yesterday all on one race and I must admit that it hurts pretty bad.

I came home from work and had 15 minutes to kill before I had to head back out. The laptop was on so I thought I'd just trade a quick race from Kempton. Bad idea. In fact, it was an awful idea that cost me €239.

I opened a position but forgot to put on the stop loss. I left the room for a moment and came back to see my position had moved miles away from me. I should have just took a red book but I tried to continue trading the race and it went from bad to worse.

Trying to grab a few minutes here and there just doesn't work really and I'll have to cut it out. My concentration was down and I'm pretty disappointed with myself.

It's a real kick in the teeth and it means I'm certain to miss this month's target now. I suppose I should try learn from it so here's another couple of new rules:

1. Always check the stop loss is in place before I start
2. Never leave an open (short term) trade unattended
3. Don't try to 'grab a few minutes' at the computer. If I don't have the time to do a decent session, forget it altogether.

A major setback, but we live and learn.

Book Review

Finished that book I mentioned before ‘The disciplined trader’, and I’m going to give it a five out of ten.

It started off very promising and it was clear that the author had ‘been there, done that’ with regard to busting banks, losing money and more. I find it refreshing to read a book by a real trader because with some books, you get the feeling that the author doesn’t really trade all that much. This guy lost his car, family and gaff so I was looking forward to reading about his road to recovery and how he pulled himself together and became a disciplined, successful trader. We don’t really get to hear that though.

From about mid-way through the book, he looks into the psychological side of trading but for me, this is where it comes up short. He talks about the memory and energy etc, but gives no real scientific examples or evidence for what he is saying. It gets a bit waffly to be honest, and comes across as one of those self-help power of positive thinking type of books – with no real facts, evidence, or examples to support what he is saying.  I do realise that the book was written nearly two decades ago so things like neuroscience and the study of the brain were in their infancy. However, after a while, I found myself ‘scanning’ through the book trying to get through it and get past the waffle.

In the last couple of chapters, he talks about trading and gives some examples of strategies which is fairly interesting and salvages the book somewhat. Perhaps the book needs to be updated for the computer age.  It’s probably worth a read but it’s not one of my top ten anyway.

Noel Fehily

I see from Paul Nicholls' Betfair blog that Noel Fehily will be getting the plum Kauto Star ride in the King George. It's a real bummer for Ruby as he wasn't long back after injury but Fehily has been doing pretty well in fairness to him and deserves a chance. Couldn't complain about his ride on Master Minded at the weekend although I must admit that I didn't back it. 


Link here:  http://betting.betfair.com/horse-racing/paul-nicholls/latest-news/paul-nicholls-exclusive-noel-gets-the-kauto-nod-231110.html

Imperial Commander

A decent weekend on the betting front, thanks mainly to Imperial Commander. I put him up as a max bet in the Irish Independent so that was good.

I couldn't believe he was 10/11 - I had him priced up at 8/11 so his SP was a steal. After all, he had 22lbs in hand so I can't see why the layers took him on.

When having a Max bet, it's important to try get a good price and I thought I'd found it when backing in the bookies at 10/11. However I see that the Betfair SP was 2.02 so I probably should have backed on the machine. Still, a win is a win even if it was odds on.

Spent most of the morning preparing a big Sunday roast (leg of lamb) which was absolutely delicious if I may say so myself. I only got to trade the last few races of the day after dinner and it went fine with a very small profit. Still a fair bit behind target though so I'll have to try my best to get some trading sessions before the month ends.

Blogger is having problems with uploading pics today but the profit made was €15.31 and I've posted a pic on the Let's Bet forum. 

Dundalk

Done a few races at Dundalk tonight and earned forty quid which is very reasonable - don't have time for a proper review as I've loads to do but I'm pleased with the results.

2 screen trading

I was trying to hook up my TV to the laptop today to watch a movie and discovered how to use the 2 screen function where you have your regular laptop screen and also a 2nd TV or monitor.

This could prove very useful when trading as I often need multiple screens open but have to tab back and forth to each which is a pain.

You can move your mouse right over to the next screen and it looks pretty cool too! I've been pricing up some monitors and may go with one soon as I think it could help. I've attached a picture where I have two separate Betting Assistant markets open (one on the laptop and one on the TV). These are controlled by the one mouse and both are run from my laptop.

Monitors are a bit more expensive than I expected but there are a few strategies I can think of where it would help to have multiple screens open at once.

Real work

Spent most of the weekend in the back garden working on a BBQ area which I hope to use next summer. I should have been trading if I want to start meeting my targets but the weather was fine and with the winter now here, I thought I'd try get it finished while I can.

It was pretty heavy work lifting blocks and putting down cement but it was quite enjoyable and I stuck on the radio and worked away.

Pics can be seen here:

http://www.facebook.com/album.php?ai...0&l=e183cabb4f

All I have to do now is paint it tomorrow and add some flowers to brighten it up. Roll on the summer!

It's been quite some time since I done some 'real' work (that is, not sitting in front of a computer) and my body aches but it was nice to be outdoors.

On the trading competition front, I got stung with the price of Gold. The Chinese are talking about upping interest rates and this has partly reversed the buying of commodities although there are other reasons too.

Bloody Chinese eh? Definitely not ordering a chow mein tonight!

Anyway, it knocks me back down a bit in the comp. I'm still holding quite a bit of Gold and I really need to to staring rising again if I want to get into contention for a prize (see below pic).

Not sure when I'll get to trade on Betfair to be honest - my wife's away in England at a training course so I'm minding our daughter on my own. Maybe I'll get some done this weekend but I'm getting anxious about going back to it as I really want to meet some targets.

In the top ten

Not sure if I mentioned this before but I entered a trading competition with Market Spreads (the parent company of Sports Spreads).

I'm glad to report that I'm in the top ten (see screenshot). The competition started about a month ago and ends in December. Basically, you are given €5,000 to trade as you please.

This is a great way to learn how to trade without risking your money. The fact that you have a goal (prizemoney) makes it more real than paper trading and I'm happy with my progress.

I've been mainly trading the overall FTSE, DOW, DAX but also some commodities like Gold. I've bought some Oil yesterday which is doing OK so fingers crossed.

My bank is now 147% of what it was which is fairly modest compared to the competition leaders but there's plenty of time left.

I think I'll look out for more competitions like this as it's a great way to learn. Funny enough, the table below is not in proper order so I'm actually fifth rather than ninth place:

Too good to be true

Not sure if any other traders get this feeling now and then, but sometimes when I’m trading and picking up easy money off the table, it feels too good to be true and I can’t help thinking that it’s all about to go downhill. It’s harder than it seems to get these thoughts out of your brain but it’s something that needs to be overcome.

When I’m trading well, it feels good but there is always a niggling doubt that things are going to go belly up and that easy money is simply not possible, certainly for a sustained period of time. However, I’m finally coming around to realising that sometimes it is, and I’m trying to change my mindset on this issue.

For various reasons (sometimes cultural, religious, moral etc) many people don’t feel that they deserve easy money when it comes to them and they put a lot of psychological barriers in the way. Even when it’s on the table in front of them, they won’t pick it up. People who are lacking confidence in themselves will put good trades down to luck - and when a bad trade comes along, they almost get a masochistic pleasure that the market has twarthed them. It confirms the low self belief they have in themselves as a trader – that ‘someone else’ is better, more clued in and somehow more deserving. They get a ‘told you so’ feeling about themselves and it compounds the negativity they have and their ability to make money in the markets.

I’ve been in similar situations myself where I felt that the market has beat me up. The outcomes are not always pretty – there have been times when I’ve started to stake erratically following a loss in a pathetic attempt to somehow ‘get back’ at the market. This, of course, will eventually lead to a bust bank which, in turn, will confirm your own belief that you are a bad trader. I’ve had times where a small loss has got bigger through chasing, then bigger, and bigger again - and I’ve chased to the point where the stakes don’t really matter anymore. It seems like utter madness to look back on. But when you are in that frame of mind, you don’t really care because you almost feel that’s what you deserve.
Do this often enough, however, and you will end up on the scrapheap of failed traders with wasted money, time and self-esteem discarded along the way. The funny thing is, most of these failed traders have lost the battle with themselves, rather than the market. It’s easy to say that these traders should ‘snap out of it’ but I’ve been down that road and you will always come up with an excuse for not listening to the voice of reason. Eventually, you will lose enough banks to either (a) cop yourself on and work on the mental side of trading or (b) exit the game, having lost a lot of money (and in some cases, family and friends). I feel lucky to have chosen option (a) but there have been many times when I’ve been close to packing it in.

So why do we feel like this sometimes and do these things to ourselves? I think it’s down to memory and not being able to let go of past experiences – in this case, past losses. A loss hurts much more than a gain in trading (and generally speaking, people will let their losses run much higher than their gains) so when they see their figures starting to go red, all those negative feelings and memories come flooding back. These negative feelings can be overwhelming and make some people feel worthless. It’s amazing, because an otherwise rational person can start acting in a crazy manner as soon as this rush of negativity is released around his body. Often, the trader will go on to lose a packet through chasing and this will instil yet even more fear in him the next time a trade goes red.

On the opposite side, a green position can be good but you don’t enjoy it as much as you should - as you are worried that it will turn bad. So we trade out for a small profit (and then watch the market go sky high in our direction!). This is frustrating and partly the reason why bad trades stick much much deeper in the psyche than good ones.

When we are in a bad trade, we must try to step outside the situation as I explained before, and almost be an independent observer to what is going on. When the bad days come (and they will!), we find it hard to switch off this flood of negative emotion, fear and worry.

Of course, all of this is easier said than done but that’s why it is estimated that over 90% of traders fail. It’s my guess that these failed traders are not terrible market readers – they are simply bad at managing emotions.

Then we have some good days…

Instead of patting ourselves on the back for a job well done, we get nervous and feel we don’t deserve it. For whatever reason, we just can’t possibly believe that we are good traders. Luck, randomness and other thoughts come into our heads as excuses for our good trades. We always think there is ‘someone else’ or the ‘big players’ in the market that deserve the money - but not us mere small fry. We got lucky today but will never sustain it. But the reality is this; little old you is just as entitled to that money as anyone. There are times in the markets when it is just easy to make money. Other times are hard. Simple as that. That applies to traders with banks of 100 quid or 100 grand. When the easy times come, don’t put up barriers or excuses, take it while its going and enjoy your trading. Sometimes, it’s easy. Sometimes there is such thing as a free lunch.

In a book I’m reading, ‘The disciplined trader’, the author talks about an experiment done some years back where a guy stood on a busy street corner with a sign saying ‘Free money here, just ask’. There was no catch – if you asked for some money, he’d give it to you. Thousands of people passed him by that day but only a small number actually went up and availed of his offer. Nearly everyone who passed by couldn’t, or wouldn’t take the free money. This is a perfect example of what I’m talking about above. Our memories tell us that there is no such thing as a free lunch and there has to be a catch. In the real world, we know that no-one hands out free money so we convince ourselves that this has to be a scam or a trick. Our past memories of these type of events won’t allow our present mind to try something new or accept the situation for what it is. We think we know better. Besides, we have grown up believing that no-one deserves money for nothing and that hard work is the only way. We simply can’t accept that there is free money out there and we walk away.

Trading is all about breaking down the barriers and changing the way you view work, money and life (for the time you are active in the markets at least). The general ‘rules’ of this world we’ve grown up to believe don’t often apply in the trading game and this presents both opportunity and pitfalls. The profit you can make from trading is virtually limitless – but so too are the losses. I can’t think of any other job like that in the ‘real’ world and that’s why the rules of the trading game are different from the real world. It’s also what makes it (sometimes) devastatingly appealing.

I don’t want to come across as too philosophical here as I’m certainly no expert - but I think there are a few things that traders, including myself, must realise to become successful. These are just my own thoughts by the way, feel free to disagree – but here’s my take on it:

1. It is possible to make money from trading. Most people who fail are probably not really bad market readers at all – it’s just that they can’t handle the big rushes of negativity that invariably come quite often.
2. You deserve success as much as any ‘expert’ or ‘big player’ in the market.
3. Sometimes trading is very hard – but other times it’s quite easy. We can all accept the fact that trading can be hard – but won’t seem to accept the opposite at times.
4. Your memories of bad trades are much stronger than your memories of good trades. Realise this and try not to panic when a trade goes bad. When you are looking at a red book, think about this fact and recognise the feelings you have. Don’t become paralysed and miss your stop loss. This will lead to chasing later on. You’ve called it wrong which always painful - but make sure your bank lives to see another day.
5. Opportunities for profit often pop up unexpectedly from nowhere. The rules in this game are not like in the ‘real’ world. Sometimes there’s money on the table there for the taking. Free money basically. We often put up barriers in our head and won’t pick it up: (how come someone else hasn’t spotted it, it’s too good to be true, why has no-one else made that trade etc.). Take the market for what it is; a head-case that sometimes gives away money. To paraphrase the shampoo ad: You are worth it.
6. As great as all the above sounds, it’s a lot easier said than done. But that’s probably why most traders fail. Recognising that the psychological end of trading is harder than the actual trading itself is one of the steps to becoming a better trader.

***

Sorry about the ramblings but I like to get these things written down – it helps me think more clearly going forward. Thoughts and comments, be they good or bad, are most welcome!

As regards my own trading, I haven’t been doing any lately due to work but I’m off over the weekend including Monday so will definitely try to get a few hours in at the very least – a full day at it would be nice if possible so I’ll report back in a few days with how I get on.

October Review

A very good month overall with the bank increasing by more than €500 to a bit over 2K. As usual, the main problem was finding the time to trade and I’ve a feeling that November will be no different.
I’ve a very busy week at work and have to work some weekends so realistically, it could be the following weekend before I get a chance to trade. I'm also trying to do some DIY in the house and garden too on my days off.

This can be hugely frustrating as you can be raring to go but just don’t have the time due to other commitments. I’ll try grab as much time as I can at it on my weekends off and maybe the odd Friday evening meeting.

I’ve also decided to review how I try to meet my targets. At the start of this challenge, I worked out how much my bank would be each month if I increased it by 5%. I started in May so this meant that I hoped that the bank would be €1340 by the end of October. Because I’ve already passed this figure, I don’t really have a target.

Therefore, I’m going to review the target at the end of each month and the new target will be 5% of the rolling bank.

The bank currently stands at €2443.70 so five percent of this is €122.19. So the target for the end of November is €2443.70 + €122.19 = €2565.89

I’m not quite sure I will meet this target as I won’t be trading as much as I’d like but I’ll give it a lash and see.