Thursday, 26 May 2011

Taking Each Game as it Comes


One of the most boring and over-used cliches, yet also, one of the most important philosophies in sport 'I'm just gonna take each game as it comes'. But this old phrase, usually trotted out by charisma-free footballers with nothing interesting to say and tennis players asked the same dumb questions in pre-match interviews, is one of the keys to being successful in any sport. And as always, the same can be applied to trading.

The idea is to basically stay in the present and not take anything for granted. Once the mind starts drifting towards the future, concentration levels can lapse and form can dip. How often do we see tennis players cruising to victory, only to suddenly take their foot off the gas and let their opponent back in the game? How often do we see football teams start to produce poor results directly before a massively important tie, such as a big cup game? It's usually because they are not focusing on the game they are currently involved in, not giving 100% effort, already preparing for the next game. Most of us do it all the time with our trading. Maybe we let a trade run, thinking it can't lose, take our eye off the ball and get burnt. Or maybe we get carried away with our short-term success and start getting over-confident, running before we can walk. Just like those sportsmen and women, we need to just take each game as it comes, stay in the present and always keep our expectations neutral. We should never think that any trade is a 'gimme', a 100% certainty and every match we take part in should in theory, be approached with the exact same attitude. But it doesn't often work out like that, does it!

It certainly didn't for me at the start of Roland Garros. Sunday, Monday and Tuesday were an unmitigated disaster - the worst 3 days of consecutive trading I've had since The Dark Ages (which is what I like to call March and most of February). The main reason I believe that they were so bad, was because I didn't take each game as it came. I had already built up The French Open as a key crossroads in my trading career. Reading through my previous post, it is clear that I had set myself up for a big week, expecting maybe too much to be gained. This is something I've done at almost every Grand Slam event and almost every time, it's come to bite me on the ass. What I should have done was just to treat RG as I would do any other tournament. But I put a much greater emphasis on hitting a monetary target and making larger amounts from each day than I would normally.

So from the word go on Sunday's 1st round matches, I was pumped up and hit the matches like a bull in a china shop. There were so many great match-ups and potential opportunites on at the same time, that I was trading too many games together, flipping betweeen streams and scoreboards too often and not being able to focus on a game as much as required. I bought myself a Eurosport online subscription, so I could flick between matches but that only made my trading even more of a mess. The streams are way behind the live action AND the IBM Slamtracker scoreboards, which made trading and watching very hard to combine. It didn't help that the streams were constantly buffering, presumably under the weight of customers accessing the system - I don't reccommend Eurosport online for trading. My trading was generally all over the place; a mad, hectic rush from one stream and one match to the next. I'd also decided to up my stakes by 50%, a last minute idea to try and boost profits and make the most of all the quality matches coming thick and fast. This only caused me to panic more when I wasn't doing well, as red figures appeared larger than what I'd become used to. It all cost me badly as I made some huge errors, ones I'd not been making for weeks. And all because I didn't just take each game as it comes.

I had probably gotten to over-excited by my recent successes and was starting to dream of great possibilities of the future. All of a sudden, I wanted to make more money, in larger amounts and over a quicker timescale, neglecting my 'slowly but surely' low stakes approach. I didn't concentrate on one game, as I usually do and was too anxious not to miss out on opportunites in other games, so had eyes all over the shop. In the past, I would have slid back into the Gambler's Cycle and probably ended up in deep trouble. But these days, I tend to get over any setbacks very quickly. It took 3 days this time, longer than I have been experiencing but once I'd settled down, I had a fantastic Wednesday and Thursday, recouping all losses and finally getting my head into the right frame of mind (as you can see from Thursday's P&L). I stopped looking at Roland Garros as the be all and end all and started relaxing.

My trading was as bad as my predictions for those 3 days! Berdych and El Mugro made me look a mug by going out in round one. Both were 2 sets up and STILL managed to lose to rank outsiders! Florian Mayer was well beaten in round 2 by Alejandro Falla. So all the ones I fancied to cause an upset, except Gasquet, have been upset! I think my prediction that Clijsters wouldn't win makes up for it though. Dumped out by Rus, a player who I've seen a lot of this year and to be frank, was not that surprised she gave a good showing. She's a real raw talent who will go a lot higher in the rankings. Azarenka and Kvitova look in great shape and my other prediction for the women, Zvonareva, squeezed through against Lisicki, a great result as she couldn't have had a tougher draw at this stage of the competition.

If I was to revise any predictions, I'd say Schiavone is playing as well as she did when she won RG, form which has come out of nowhere. I still think Franny will come up short before the final. And I still think Sharapova will take some beating, despite the fact she was getting obliterated by 17 year old French girl Caroline Garcia. A set and 4-1 down, she looked finished. I was routing for Garcia, as rarely have I seen such a young player attack with such confidence and accuracy - one of the matches of the year, for me. Just couldn't quite get over the finish line as Maria brought out the big guns and ripped into her. Watch out for Garcia in future though, I've not seen anyone ranked outside the top 100 play as well as that against such a strong opponent. The new balls they are using this year are apparently zipping through very fast and as the courts at RG are quite quick for clay, it will really suit Sharapova and my main tips, Petra Kvitova and Azarenka.

As for me, I'm taking all the pressure off this fortnight and just treating it like any other tournament. It may sound boring but my main goal is now simply just to take each game as it comes.................

Friday, 20 May 2011

Roland Garros

It's almost upon us, the second Grand Slam of the year and my personal favourite to watch. But I'm also looking forward to the French Open because I feel that I am now at a crossroads with my trading and how I perform over the next 2 weeks will be a major indicator of where I'm going.

I am currently at a stage where I have stabilized my trading. There is no longer any 'boom and bust' mode. I've pretty much flattened out the trading graph and have experienced steady, consistent profit for 2 months now. My next step was to gradually up the stakes but I've put that on the back-burner till after Roland Garros, as I've needed to withdraw much of my profit and have been unable to build the bank. Instead, I've concentrated on sticking to my 5 key points, which are as follows:

1. PREPARATION
2. FOCUS
3. PATIENCE
4. CONTROLLING EMOTIONS
5. PROTECTING THE BANK


I know that whenever I get all 5 of these as close to perfection as I can, I have a successful day. Preparation involves making sure I'm in the right frame of mind, have my goals set and being thorough before I start trading. Focus speaks for itself - just making sure I have no distractions and keeping my mind alert and body comfortable and relaxed during trading plus constantly talking my way through each match. Patience includes waiting for clear opportunites, not rushing into anything at the start of a game and sticking to the strategy. Controlling emotions means not getting frustrated at missed opportunites or players stuffing things up, keeping anger suppressed, not getting over-confident but also knowing when it's best to stop trading to sort my head out. Protecting the bank entails redding-up when required, never letting a trade run into a straight bet, keeping to the staking plan and not neglecting the get-out points.

When all this is in place to a satisfactory standard, it enables me to be a bit more free with my trading. By that I mean occassionally trying out something new or attempting to go with my intuition a bit more than I have done in the past. This has seen immediate improvements in my trading results, which I hope will remain long term. I find there are more and more occassions where I can use my knowledge and experience to be a bit more aggressive and go for opportunities that in the past, I would've been too worried about because they didn't neccessarily fit in exactly with my strategy. I suppose it's 'thinking outside the box' more, taking a few more calculated risks and I like doing this as it fits in perfectly with my personality. It keeps me on my toes, so I'm constantly thinking and learning and I don't become too passive and therefore too bored and lose focus. This is something I'm looking to introduce into my style much more in future, to stop it all becoming too staid.

If I can successfully mould all of this together during Roland Garros, I would say that I'm ready to move into the second half of the season with absolutely no fear of upping my stakes. With an ultra busy first week in Paris, everything I've learnt since the dark days back in March will be fully put to the test and I'm really looking forward to the challenge.

As for the tennis itself, is there any point discussing who will win the men's title? We all know it'll be Rafa or Novak and almost certainly it'll be them in the final too! Only possible candidate for an upset would be Del Potro for me. Soderling seems to have taken a backward step since parting with coach Magnus Norman. He's winning when he should do but always seems to make a meal of it these days, he's not commanding opponents as he does when at his best. Murray is playing very well but if he couldn't beat Djokovic when serving for the match when the Serb looked dead on his feet, I can't see it ever happening. As for Federer, the way things are going he may NEVER beat Rafa or Novak again! I'd love to see him do it but to beat both of them in consecutive matches, which is what he'd have to do in all probability to win, it just aint gonna happen.

If I had to pick an outsider to cause an upset or reach the semis, I'd go with Richard Gasquet, Florian Mayer or Nicolas Almagro. Gasquet can beat almost anyone on his day and is playing well. Confidence must be sky-high after beating Federer in Rome. Mayer is in the form of his life and no-one will want to play him. Almagro is always a danger on clay and has enough weapons in his game to trouble even Nadal if he truly believes it. I just saw him muller Pablo Andujar in Nice and the quality of his tennis was so astounding, he would've given anyone a rough ride. Got a funny feeling Thomas Berdych might do quite well this year too.

It's far more open and interesting with the women. Clijsters is the obvious pick but I will stick my neck out and say she won't win. Too long out the game to just come back and win a major and she wasn't playing well before her latest injury anyway. I know she says she struggles to focus in smaller tournaments and produces her best in the Grand Slams but you don't normally just find form in an instant - she hasn't played a clay court game in over a year! Wozniacki will be hard to beat as always but we know she struggles against big-hitters, especially on clay. I just think she'll come up against someone who will raise their game enough to blast her off the court. And there are a number of players who can do that - Petkovic, Li Na, Goerges, Stosur, Sharapova, Bartoli, Ivanovic, Kuznetsova, Wickmayer. Li is still short on confidence, as is Stosur. Bartoli doesn't move well enough on clay. Wicky has just injured her back. Petkovic has looked very tired of late and along with Goerges, I think it's too soon for them to win a major. Ivanovic is too inconsistent. Kuzzy is hopeless at the moment. Sharapova? Possibly. Gut instinct says 'no'. But my pick of the bunch would be Petra Kvitova. It all depends whether her style of play can work for 2 whole weeks on the slow-clay. I know she won in Madrid but conditions were very fast due to the altitude, which suits her style more.

Schiavone has the perfect game for Roland Garros but I give her zero chance of defending her title on her current form. That leaves Jankovic (brilliant one day, disasterous the next), Azarenka (injury prone) and Zvonareva. If Vika is fit, I really fancy her to go all the way. But it wasn't looking good in Rome. So my pick would be Mad Vera. She has experience of reaching major finals and has enough in her locker to beat a big-hitter aswel as the brain to beat a Woz, JJ or Radwanska. Not been in great form recently but I've just watched her blitz Alex Dulgheru with the sort of play that champions are made of. I'm going with Zvonareva or Kvitova for the title, unless Azarenka has shaken off that arm injury. But watch out for Peng Shuai and Anabel Medina Garrigues - might just cause a big upset or two! Good luck to you all and I'll report back on my progress during week 1.

Monday, 16 May 2011

Sinking-In

Why does it take so long for things to sink in? Why do we keep repeating the same daft mistakes over and over? Why can't we just live up to the old adage 'once bitten, twice shy'? I would have been a successful trader for a full year by now, if that was the case! I often wonder just why it is that all those bad trades, those full bank-job nightmares, those whole weeks of pure chasing, those foolish errors where I let the trade ride, occurred not only a second time but a third, fourth, fifth, sixth, seventh.............a hundred times perhaps! Why do we just forget the bad stuff? Is it just that the human mind naturally selects the good moments? I know this to be true because it's often how the brain works to protect us, sparing us the more gruesome aspects of life by 'blacking-out' our memory. It happened to me once when I was physically assaulted - can barely remember a thing about it. Ever find it funny how you tend to have rose-tinted spectacles when it comes to an old relationship that in truth, had as many bad moments as good? This has to be what happens with trading too. I can't think of any other reason why I would continue to put myself through the misery of another blown bank! We tend to remember the positive trades, the big wins, much more than the crazy lump-ons and plumbing the depths of the Gambler's Cycle. Those emotions of pain and frustration and heart-palpitations, the tears, the desperation, the insanity and the soul-destroying hopelessness, where you just don't care anymore, seem to vanish into thin air after a while. If only they would linger around for a bit longer, were a little bit harsher. If only those 'demons' actually existed and could sit on our shoulders, burning our flesh with a lighted cigarette every time we considered staying in for a point or two longer than we should. We'd soon learn then!

I think it's a lot worse with some people than others. I don't consider myself a quick learner in life. I remember once training up to become a call-centre worker for Interflora, leading up to their busiest period of the year - Mother's Day. I was in a group of 20 or so people and we had just a week to learn how to handle calls, take orders and operate the computer system, before being thrown into the lions den, where we could expect flower orders every single minute for the period running up to Mother's Day. The amount of info lobbed at us on that first day was bewildering. I struggled with it, as I need time to digest instructions, go through them at my own pace, re-read things till they sink in. Another poor guy was callously singled out by our trainer, as the person struggling the most to pick it all up quickly - I'll never forget the poor lad's cherry red face. Yet the guy sat to my right was flashing through it all as if he'd done it for his whole life. By the end of day 2, the cherry had become a deep beetroot purple and I had decided I couldn't face the demands of the flora and fauna bouquet delivery world and never returned. But I know that if I'd had a little bit longer and if the trainer hadn't had such poor inter-personal skills and if the whole thing hadn't been such a mad rush and conducted in such a panicky way, I'd have not only picked it all up but would have gone on to be one of the best rose sellers Interflora had ever seen!

I was slow to pass my driving test too, having had around 50 lessons and 2 final test failures. There was a point where I thought I'd never pass, as I just didn't have the confidence or the desire. I could even feel my driving instructors getting fed up. But I stuck at it, kept trying and eventually it all just clicked. Now, I absolutely love driving. At school, my worst subject by a country-mile was maths. I was top of the class at every other subject (bar graphic design - why I took that I'll never know!) but just couldn't get my head around numbers in the way I could with words. I remember getting an F for my mock exams and was so worried about not having at least a C grade to aid with future employment and studies, that I spent the next 6 months working harder on maths than any other subject I've ever studied for. I ended up getting that C, a massive improvement in just a 6 month period and was more proud of that than any of the higher grades I got. It turned out that it wasn't that I was no good with numbers, it was just that I needed more time to learn it.

So this brings us back to trading. I remember it took me a long time to get my head around even the concept of 'laying'. And then just as long to grasp the idea of greening up, rather than letting a bet ride for more profit. So it's no wonder that it took me at least 6 months to fully appreciate the idea of redding-up. It was another 6 months before I was actually implementing it regularly. It's taken me a full year of tennis trading to finally stop chasing losses by reverting to the football and about the same amount of time to banish all distractions (such as forum posting) from my trading. The full bank-job lumps are a thing of the past but I had a good 3 years of doing that intermittently before it finally ceased to enter my mind that it might be a great way to get back what I'd lost, quickly!

But still, even yesterday, certain thoughts pop into my head out of nowhere, thoughts that you would think are inexplicable for a trader with my level of experience. Only yesterday, I got greedy and looked for double the green I had, only to lose it all and end up in the red. Why did that happen? I know full well that all I have to do is accept it didn't work out and come out of the trade before it slips into a loss. Why did I then get worked-up to the point of a full-blown seethe and set off on a trail of stunningly misguided trades for the following 5 matches? I had only suffered one small loss, yet for some reason, it gnawed away at me, taking away all sense of perspective for a couple of hours. Every now and then, these little things happen, even after all these weeks of consistency and all these years of learning the hard way.

When you learn to drive, you never forget how to do so, you just do it automatically. If you were in a call centre every day, you wouldn't forget how to run through the protocol and sell those flowers. So why does it take so long for all aspects of trading to sink in? Maybe the big question is, does it EVER fully sink in? Will those demons always try to catch you out when you least expect it? Or is it just me and my slow learning style? Are there traders out there who NEVER experience these lapses? Are there traders who learn from their mistakes immediately and never repeat them again? I doubt it somehow. I think when there is money directly involved in anything, the human mind just can't quite ever cope with the idea of losing it. It's an unnatural thing we are doing really, accepting losses, cutting short our potential profit, waiting around patiently for ages for something that might lose us money.

Fortunately, that aberration yesterday did not cost me as much as it would have done in the past. I was quicker to spot when I was losing the plot and sorted my head out, taking small reds and not doing anything too rash. So I suppose that is an example of learning from my previous experiences. One hour of bad trades (that's 'bad' trades, not 'losing' trades) is now always just one hour, it doesn't slip into a whole day or a week or a month, as it has done in the past. Sometimes I don't even realise I've cut a bad habit from my trading and one day I suddenly think 'Hey, I've not done that in weeks now!'. Things are improving for me - slowly but surely! I'm not 'there' yet. But does anyone ever reach 'there', in this game?

Wednesday, 11 May 2011

Cabin Fever

The solitude of trading can be one of its biggest pitfalls. I've really been struggling over the past week with it. I realised that lack of social interaction was potentially going to be an issue with any long-term trading career-path. That had an effect on the type of strategy I was looking to form in my early days. I always had it in mind that I wanted to go full-time one day, it was always my main goal. So I knew that I would need to have a strategy that kept me motivated, was enjoyable and allowed me some degree of creativity. One of my biggest fears was that I could get trapped into a mundane trading cycle, where all I did was stare at flashing numbers, waiting for hours and hours for an opening where I could actually do something. The problem is that, essentially, what I've just described is exactly what trading entails! Of course, some strategies require a lot more patience than others. I realised quite early on, that unless I found a way to make trading more interesting for me personally, I was never going to crack it. And even if I had the aptitude for trading, I felt that it was only a matter of time before I became jaded and unfulfilled. This is what happened a few months into my trading.

After the initial excitement and genuine interest in studying the sport and the markets had died down, I found that I was getting bored with waiting around for the same limited positions to occur and subsequently, this affected my focus, patience and discipline. I know that if I don't enjoy what I'm doing, if I don't have a rewarding challenge with my work, I will struggle to be at my best. Plus, imagine 40 years (potentially!) of staring at those same flashing numbers, over and over and over and over and over............it would drive me insane! Fair play to any trader who can do that. Life would be a lot easier if I had that same strength of mind. So I knew that I had to find a way of making trading interesting, providing me with new challenges each day and allowing me to really immerse myself in it and think creatively. That's why I decided not to just go for one idea and repeat ad infinitum. That's also why my strategy relies on reading matches. It means that I can enjoy the tennis and allows me to figure things out from game to game with a different perspective on each one. It's also why I don't tend to spend very long on any one game if possible. It keeps things fresh and allows me to enter several games and re-set my mind for each one and the new challenge it brings.

It's certainly something that I think all prospective full-time traders should think about. Trading can be extremely monotonous, especially without social interaction. I do whatever I can to mix things up in between games (it's one of the reasons I started this blog) but don't let anyone tell you otherwise - it's a tough job. I personally have never had any problem working alone in past jobs and enjoy my own company when I'm not working. It's not an issue for me to sit down and read a book, watch a comedy DVD or go for a run on my own. But I still find trading very difficult, day after day, week after week, from a mental perspective. Cabin fever sets in regularly and I have to get out the house in between trades every now and then just to stop me from boiling over with frustration, no matter how well I'm doing that day. I know some people like to post on forums and be part of live trading groups but that doesn't work for me. It's too much of a distraction.

I often wonder whether I'll burn myself out, get fed up of watching tennis and being on the ladders in years to come. That's what happened with my football trading and I loved that sport since I was a kid. Now, I can't even get through a full 90 mins without becoming very bored because I've watched so many games. Not much excites me any more (though the state the game is in today, as I wrote about in a previous post, is another reason why I don't watch much soccer now). I guess that for most pro-traders, the ultimate ambition is to gradually lessen the amount of hours they trade as they become more proficient. That's certainly something I think I'll need to do in order to sustain trading longevity. The idea is to build a bigger bank, use larger stakes and so place less trades in order to gain what I need. At the moment though, it's a daily grind, so to speak. Of course, these things never seem so bad when the profit is rolling in! Sticky patches inevitably lead to more negativity and greater thought towards the future and what it might bring. Hopefully, I'll catch you in a week and my enthusiasm will have been rekindled by a string of green days!

Wednesday, 4 May 2011

Fighting Yourself


Time for an update on how things are going generally. I've attached yesterday's P&L, which is a fairly typical one for me over the past month. Since the end of March, my trading has entered a level of consistency which I have never experienced before. This was of course, due to my changes with risk and bank management. The freedom and loss of anxiety which followed, enabled me to trade to a higher standard, without the pressure I'd been suffering from. During the last month, I believe that I've reached a new phase in my trading career. The fear factor has gone, I'm 100% comfortable and happy with my strategy and this has born out in my results. I've only had one really bad day in roughly 6 weeks. And best of all, I can pin-point exactly why it was such a bad day - alcohol!

It occurred last week. I had been on a night out and ended up drinking too much. I'm not much of drinker anyway and only have a lager very rarely these days, so it doesn't take much for me to exceed my limits. I paid for it literally the next day, as I woke up at 10am after just 6 hours sleep with a monstrous hangover and attempted to trade immediately. Never, ever again. I was tired, irritable, dehydrated, my mind was wandering to the events of the previous night and I just couldn't focus. I have a vague recollection of trying to kiss a woman I'd just met and didn't even find attractive, getting turned down and then storming out the club in embarrassment, missing my last bus and walking several miles home in Baltic weather. Not great preparation for a day on the ladders!

Anyway, I managed to lose 2 full stakes that day and served as a harsh reminder that I just can't afford to be anything less than 100% focused and professional. In the past, I would have then gone into meltdown for the next few days at the very least but it's a sure sign of my evolvement as a trader that I followed it up with a whole week of profitable days without the aid of even a hint of chasing.

My mid-term goal of late has been to string together a month of consistency. I've achieved that during April. So I'm now moving into a new phase, where I aim to increase stakes gradually. I'm still on stakes of between £25 and £100, which is far lower than when I started this blog. I'm averaging about 50% ROI most days, which is obviously a fantastic return but I don't have the financial rewards I'd like as of yet. I will begin by increasing in either £25 or £50 increments every couple of weeks and see how it goes.

My long term goal remains to make trading my sole source of income and I would hope to achieve that by the end of this year. I've stripped this back by more than 6 months, as at the start of 2011 I fully expected to be at that point by now - didn't quite go as I'd planned, that one! I am being far more conservative with all my goals these days, as it helps take the pressure off, so actually, I know that I can achieve it sooner if I remain focused. The question is, will I remain focused?

Over the past month I've come to realise that it is this aspect of trading that now stands in the way of my success. There has been a direct correlation between my better days and the amount of focus I've put in, over the past month. Whenever my head is not quite right, whether it be a wandering mind, tiredness, stress etc, I have generally put in worse performances by making more errors. Focusing well, as a technique, should not be underestimated. It is a skill in itself and one that every trader needs to work on.

During April, I realised that I could deal with any focus issues in a different way. Rather than it being a constant battle to stay 100% focused every single hour of every trading day, I decided to just accept I cannot always be at that level. So instead of ploughing on through the tough periods and inevitably making mistakes and getting frustrated, I now am able to feel when I'm starting to flag and just stop trading. That could mean missing whole matches or taking an hour off to do something different, a change of scenery or activity. It's worked wonders and I think generally, this is an attitude I've taken in all aspects of my trading, where I've just taken a step backwards, away from the trading bubble that is so easy to get trapped inside.

When you are a neurotic perfectionist like me, it's very hard to stop what you are doing because you are constantly striving to get everyhting as good as it can be. But with trading, you can never be 100% perfect all day, every day. Whilst I understand that, changing my personality to suit this methodology is almost impossible. So instead of this battle to change who I am, I decided to just accept those flaws but learn how to manage them properly. Whenever I start to get obsessive over small losses, or frustrated over a tiny error or if I get a sudden urge to be creative or get some exercise, I don't fight against it - I stop trading and do whatever I need to do to get it out of my system. Sounds like a simple thing to do but trust me, when you are full-time and the pressure of making money is on, it's hard to miss out games where you could have made profit. But you have to remember, you can also lose on those games too!

Comparing myself to tennis players, 2 months ago I said I was like Svetlana Kuznetsova or David Nalbandian - brilliant one moment, bloody awful the next, erratic. Now, I'd say I have advanced to a Tommy Robredo or Shahar Peer - reliable, consistent without being spectacular. But my next aim is to become Caroline Wozniacki or David Ferrer - consistent but with a bit of added flair and unrivalled mental toughness. Of course, the final goal is to become Rafa Nadal or Serena Williams - that means taking the Grand Slams consistently. I'll let you know when I get there as I've added a new section to the blog: 'Which Player Am I This Week'!!