Monday, 27 June 2011

Great Gambling, Terrible Trading


Serena OUT. Venus OUT. Wozniacki OUT. Lisicki, Paszek, Sharapova and Bartoli ALL through to the quarter finals. Every major prediction I made for the women's draw has come true. And what have I got to show for it? NOTHING!! It is times like these when I wish I was a gambler again. These predictions generally mean squat when you are a trader. But when you are going through a rough patch, these things become magnified and can cause you to start straying from your strategy. There's nothing more annoying than having an all-red screen from a game where you correctly predicted the winner. Even more so when you correctly predicted the winner over a week earlier, in writing and on your own blog!

The day off on Sunday had really done me a lot of good. I was refreshed and re-focused and ready to re-start my Wimbledon in the right frame of mind. And I was definitely fully focused as I began. But things just did not go for me. Tamira Paszek, my best tip of the tournament and probably any other tournament, failed to win the points I crucially needed her too. So despite winning the match as I'd expected and continuing her fantastic run, she let me down when I most needed her and I ended up losing money. That's just the way it goes and is something you have to take on the chin as a trader, where the short term is everything, but I let it affect me and ended up making that red twice as bad as it should have been and almost a whole lot worse. The exact same thing happened with Sabine Lisicki in her win over Cetkovska. The frustration prompted me to chase on the Tomic game and basically throw money down the toilet. I then failed to get matched by a split-second in the Sharapova game, which would have won me back my Paszek loss, as Maria went on to win. Once more, I could not profit from my early predictions.

In anger, I then threw my money onto Marion Bartoli, who I tipped (along with Sharapova) to win Wimbledon. I hinted on this very blog that she would beat Serena Williams, who I said would be out by this round at the latest. Frankly, I could not believe she was 2nd fave to win Wimbledon, the daftest price I've seen all year and was sorely tempted to actually place a bet in the outright winners market, laying the crap out of her. I would seriously have lost the plot if Bartoli had knocked out Williams and I'd not made any money. Fortunately, I did and it enabled me to calm down and sort my head out. I was unlucky with the Nadal loss as I was caught the wrong side of a large price shift following Nadal's injury. Typical of my Wimbledon.

I've decided that I will never write down any predictions for any match or tournament ever again! It was supposed to be a bit of fun but when your trading isn't going well, it suddenly becomes anything but that. Again, the fragile psychological equilibrium of the trader can be so easily disturbed. I would now quite like someone I didn't tip to win Wimbledon, though that doesn't leave much option! Of course, none of this matters if I trade properly and for much of today, I've been dodgier than a Venus Williams outfit. I predicted she would be out well before the final too, though I would never have gone for Pironkova to do the job. This girl only seems to bother playing at Wimbledon, the other 50 weeks of the year she can't string 2 wins together! I only hope the opposite is true of me.......

14 comments:

  1. Hm...from what you writte looks like becoming a trader inplay based on players attitude its a difficult more like endells process. The prices moves so fast that can bring as to our red exit point very fast. One player that looks very strong from stats can lose first set for as to back him in second ,but actually he can lose some points in the begging of the second set for as to leave that match alone with loss limit achived ..only for him to come back later and win the match so we can be happy ... The more I trade the more I see that the ballance of profit/lose is somewhere in the middle with the tendencies for losing due to human imperfection .everyting can influence our decision : the players, the prices, the price jump ,injury , weather, what your girlfriend told you in the morning, your health, what the fav have to lose , what we have eaten,power/internet failure, and finally and the most important how our life was childhood until we decide it to become a trader (Mark Douglas ) . So after all , maybe keeping the old job with all the stress that has is nothing compare with becoming a full time trader..

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  2. I would agree with most of what you've written there Speedwave. So many little things can affect your trading but that is the challenge - to over-come these things. If you don't enjoy the challenge of trading, then it is not for you. Too many people seem to think it is easy money and are not prepared for when things get tough. The rewards are there with trading - you get to be your own boss, you work from home and the amount of money you can make is almost limitless. But only those who work hard and don't give up will ever get a slice of that money. The rest can play it safe and stick with their stressful, dull, old jobs but I would rather take the risk :)

    As for the fast price movements, that's just part of trading. You have to learn to deal with it, which means you must have an 'edge'. If you don't have an edge then you will get caught out by those movements too often and never profit.

    Just choosing a player because of stats and hoping he will start well and / or win, is not trading, it is gambling. Reading stats alone does not give you an edge. Anyone can read those same stats - if it was that easy, everyone would be doing it! Unless you are very, very knowledgable about tennis (which would be your edge) then you need to find a system that will give you profit over a long period. That system MUST include exit points when things go wrong becasue you have to accept that you will not get it right all the time, no matter how good your edge is. How long have you been trading for?

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  3. check this if you dont alredy know it http://www.youtube.com/user/cairnes2009#p/u

    It was a point of refference stats, I always check stats before trading to get the big picture and prepare myself with the backup plan (whatching the market for a while..,exit imediatly if my fav have the tendencies to be TO RELAX in order to lose the set ,etc ) . I trade tennis since January actually full time but most of it in sim mode because I need to fix some issues ( losing money when switch to real money ), Imagine that I still fight in sim mode ,but the key is that now I really believe is real cash and still have problems exiting .When I will be able to apply my strategy which gives me 70-80% of bank/month( ---if follow my rules from paper) on sim mode ,I will switch it for real cash with small stakes , right now I'm still fighting not exiting the trades FOR GOOD in time, I always comeback altough I got my red of 20-40% stake. Abaut price jump ,they can hit hard in terms of getting near or cross our red target actually forcing to exit and if not losses become worse.

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  4. You have only been trading since January? That is a VERY short time! I have been trading for 16 months and that was full-time. Before that, I was trading football for 3 years unsuccessfully. It's only the last 6 months that I've really started to learn and develop quickly. You can't expect to be successful full time after 6 months, it isn't realistic, especially if you didn't know much about tennis when you started. I'd say you will need one year MINIMUM, before you become comfortable with everything - the markets, your strategy and your tennis knowledge. It may still be another year, maybe even longer, before you conquer the mental side of trading. It's impossible to say really.

    But you are doing the right things, using sim mode, small stakes etc. 6 months is way too early to consider giving up if you really want to succeed.

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  5. Hi Sultan, interesting blog (I've added a link to it on mine) I've only read through your posts from May and June (will start from February eventually) so I apologies in advance if I completely miss the point.

    In my experience a lot of people are keen to make a distinct but often arbitrary separation between the terms ‘gambling’ and ‘trading’. The belief tends to be that gambling losses are undisciplined and trading is the only way to success. In reality they are one and the same, only differentiated by the timeframe that the position sits within. Whether you hold a position for 10 seconds, 10 minutes or until the end of a match you’re still taking an opinion that the odds you take are favourable. That isn’t to say that your strengths and/or edges won’t lie predominantly in a short-term context but I think it is potentially short-sighted to pigeonhole yourself.

    I guess my question is why can’t you be a gambler and a trader? Value is value and if you think (with reasonable certainty) that a player’s outright price is wrong why not lay/back it as appropriate? This is something I have often wondered as having an outright position on a player shouldn’t have an impact on you trading sections of their matches as they’re not directly related. The only reason I can really think of is bank constraints although with proper bank management it shouldn’t really be an issue. I’d be interested in your thoughts.

    Best of luck

    Curly

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  6. Hi Curly, always an interesting discussion about the differences between trading and gambling. I think that different people have different definitions and that is where the arguments often lie. Personally, I think there is one key differentiating factor between a straight up gambler and a trader; a trader almost always looks to limit their losses, whilst a gambler always lets their bets run to the finish.

    There is no reason why someone can't be a gambler and a trader but in my opinion (and if you read any of the material on the subject out there), if you attempt to trade and you continue to have that gambling mentality (i.e. you often just want to place straight bets and let them run) you will struggle to be successful.

    I do occassionally let my trades run to the end but it is rare and I don't go into a trade with the intention of letting it run. Something would have to occur during the match that would make me think it was good value to take that player to the match. But if things go wrong, I'll still be looking to come out - a gambler wouldn't.

    Gambling and trading could be considered one and the same (as you say, it's all gambling, just tends to be on different time-frames) but having a gambler's mentality and a trader's mentality are very, very different. That's where the seperation lies and so it's not arbitrary.

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  7. By the way, I don't see how you can possibly have an outright position on a player and still trade within the same match? Your opinion on the player you've backed to win must surely cloud your decision making when trading? I've never heard of anyone actually doing that. One of my number one rules is to remain neutral when trading and not have a strong opinion on who will win. Again, this is something you'll read about in most trading literature.

    I suppose it's possible in theory to place a bet and still trade seperately but the problem is that 99.9% of people learning to trade have issues with getting the correct trading mentality. So if they are still placing outright bets at the same time as trying to trade, it's surely only going to create massive problems. I don't see how you can possibly learn to trade successfully like that. I know I couldn't do it!

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  8. You’re right, there are many different definitions of the term ‘trading’ (almost all apart from arbitrage involve some form of ‘gamble’) and perhaps therein lies the difference in opinion.

    About 70% of markets I enter I will eventually trade in (whether I originally intended to or not) and these represent c. 60% of my total profit. I’m not sure my mentality alters too much depending on what I’m doing, but that’s because I’m generally quite open to changing approach depending on how a situation unfolds. I guess it comes down to what you’re comfortable with.

    It all kind of merges with the taking an outright position and still trading point. Taking the women’s championship at Wimbledon as an example, say you backed Maria Sharapova at 6.0 to win the tournament at the start – that money has now effectively gone and if she wins the tournament then great, otherwise you’ve lost your stake. When trading, you’ve already said that you’re not taking a view on who will win the match, just what will happen over the next point(s)/game(s)/set. So your outright bet should have no effect whatsoever on laying Sharapova in one of her matches with the intention of greening up a couple of points later. It obviously works the other way around too – the outright money doesn’t have to be ‘gone’. There’s no harm in greening or redding up if the price to do so is value – there’s the ‘trader’s mentality’ for you.

    I don’t see any reason to limit your opportunities, if value exists then why not take it? The next guy certainly will if you don’t. I guess the problem for some people (and this is probably what is referred to as the trader’s mentality) is that they can’t accurately price an event and so their punts/gambles have a negative expectation so even with short term success eventually they are going to lose money this way. What they perceive to be value is actually a fair price (and they‘ll lose in the long term to commission) or worse still the other side of the price holds the value. Therefore, trading and a trader’s mentality is a way to avoid this and a very sensible one too.

    A final point, you said ‘One of my number one rules is to remain neutral when trading and not have a strong opinion on who will win. Again, this is something you’ll read about in most trading literature’. I have a strong suspicion that this philosophy originated from horse racing markets (which I have no knowledge/experience in) and could also be applicable in any other pre-event market. However, I don’t think I could trade an inplay tennis match (or any other sport) without forming an opinion on which player was playing the stronger or atleast who I thought was going to win the next point/game/set etc. Unless I was piggybacking someone else’s prices ofcourse. Apologies if I’ve taken you in completely the wrong context :)

    Curly

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  9. Ah I understand now, you were talking about taking an outright position on a tournament. I can see how that wouldn't clash with trading the individual matches. If I'd done that during Wimbledon, I would not have had a losing week! For the moment though, I prefer to master what I am doing. I am no expert yet! But once I do, it is something I may consider delving into.

    Overall though, you sound to me like you have a trader's mindset! I think you are a trader! I think any form of gambling where you, for the most part, are looking to limit losses where possible, makes you a trader. There are people out there who never green up and never red up - for me, they are the true gamblers.

    I think there is a misconception that all traders have one system that they repeat over and over again like a robot, never changing from match to match. Some traders do have systems whereby they don't care how players are performing, they are only looking for patterns in the scoreline and they will robotically place trades based on mathematical probabilities where they feel they have an edge over a long term. But this isn't what I do, and it wasn't you do, yet we both use elements of trading. We are still trading, we just use our knowledge of the game and our own judgement more.

    I agree with your final point, I think you've slightly misread what I meant by 'neutral mindset'. When I trade, I always have an opinion of who is playing better and who I think is likely to do well in the short-term. But I remain neutral as far as the long term goes. Basically, staying neutral just means that any pre-conceived ideas of who might win at the start of the match, should not influence what I do once it has started.

    If your expectations are that player A is definitely going to win and starts the game well, your expectations can easily cause you to pile in on player A too early. When player B starts to pull back, because those expectations are not neutral, it can cause you to hang onto that position for too long because you are so sure that player A will win, even though the warning signs are there. The trade then becomes a straight bet, as you refuse to let hold of the idea that your trade might be going wrong.

    By remaining neutral, it enables me to accept that I might be wrong and to trade out for a loss if I need to. And the trader's mentality is simply to accept when your bet (or trade, however you want to put it!) is turning against you and to red up. You say you are flexible and open to changing approach. A gambler ISN'T! They place the bet and let it ride no matter what. To me, that makes you a trader :)

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  10. Well, either that or a gambler who uses elements of trading! Take your pick!

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  11. How will you conder stats checking , you do it ? Or to you is more like useless ?

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  12. That's another difficult debate Speedwave! It all depends what your strategy is. There are some traders who base their whole way of trading on stats and use very specific stats to make trades based on probability.

    I personally don't bother with them because I trust my own knowledge and match-reading skills above stats. The only stats I look at are current form but as with all stats, what you read on the page can often be misleading. A player can have won 10 matches in row but that doesn't neccessarily mean they will definitely win the next game. You have to know about the quality of opposition they beat and whether there were extenuating circumstances in the game, such as an injury. You have to be able to use your knowledge and experience to read stats correctly, otherwise they are often meaningless.

    However, when I first started trading tennis, I studied loads of stats because I didn't know much about the game. Now I have more knowledge, I don't need to look at stats so much for what I do.

    A set of stats can be read and analysed in different ways by different people. You can't say all stats are useless but you can't say all stats are useful. It is how you interpret them and what you use them for that determines the quality. You need to work out what your strategy is and what stats are useful, it doesn't matter what anyone else is doing.

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  13. I certainly agree that holding an opinion for too long can be costly - although changing it too quickly can be even worse. The same goes for any pre-conceived ideas of who will win 0-30 in the first game shouldn't always be the cause to panic out the market.

    I'm also happy to call myself a trader, or a gambler. Perhaps a trader who is not afraid of a punt?

    All the best

    Curly

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  14. I think that the word 'gambler' has much stigma attached to it. Most perceive it as being a negative thing and I think that is why most people choose to call themselves a trader.

    But I also think that anyone who is attempting to become a trader or to use trading methods in their gambling, is doing so because they realise that it is a more likely way of becoming successful.

    For a decade, we've had betting exchanges which allow us a less risky way of being profitable from sports betting, akin to stock market trading. I think it's only natural that there should be a clear distinction between the people who are taking advantage of this 'new' way of gambling and those who continue to stick with the old way (a way which hardly anyone was ever succesful at).

    Good luck to all you traders out there (and gamblers!) ;)

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