Tuesday, 12 July 2011

Three Month P&L Shocker

I decided to take the weekend off and have a long, hard look at where I am going with my trading. I could feel myself starting to slip off the tight-rope and do irrational things, so I took a break and had a bit of hypnotherapy to sort my head out. I also thought it might help to take a look at my 3 month p&l. I rarely bother looking at it, (in fact, I never look past 24 hours) as it's just one of those things that scares me! I always have a rough idea of the amounts I'm making, as I keep written records, I just don't tot them up. But every so often, I find it useful to see everything in full detail. So it was with a deep breath that I pulled up my p&l for the time since The Dark Ages. I was shocked at what I saw. But it wasn't my profit that shocked me (it confirmed that I was turning over a reasonable amount), it was the number of full-stake losses.

I have lost almost £3000 in full-stake losses ALONE in the past 3 months. I'm stunned at the size of this figure. I tried to put a positive spin on it though. Think of it this way; I'm in profit for those 3 months by a healthy margin. If I hadn't suffered those full-stake losses (in other words, if I had redded up when I was supposed to, at the 25% mark) I would have been in HUGE profit. Well, huge for me anyway! I also know for a fact from my paper records, that many of those losses were in strong green positions which I didn't take, before they became red. So if I'd taken those greens and those 25% reds, they would roughly have cancelled each other out, leaving me with an extra three grands worth of profit. And all of this on stakes of £100-£150 for the majority of the 3 months.

So this does prove one very important thing; I know how to consistenly make money. Imagine what that profit could be with double or triple the stakes. And if I have lost £3000 through full-stake losses, I am obviously turning over well in excess of £3000 in order to cover it and all of the small losses. These are not big wins either (95% were under £50), so I am consistently producing a lot of winning trades. And I have very few losing trades of between £50 and £100, which shows that for the most part, I do red up early on, it's just a small number that get through the net. So it's obvious what I need to do in order to reach the levels that I need to be successful; start redding-up more!

I guess because I wasn't looking at my monthly or even weekly p&l, I misjudged just how bad the situation was. I had a total of 30 trades where I lost the full amount I started the trade with. That works out as roughly 2 per week. So every week, I'm putting myself a couple of hundred pounds in the hole before I've even started! I guess the size of the losses gets lost somewhere on the page when written down.

I am hoping that this realisation will be the spur that I need to get that passion back. Now that I know that it's just a handful of large, losing trades that are preventing me from hitting all those heights I'd dreamed of, perhaps I can now really knuckle down with purpose. When you put in all the hours of graft that I have, only to see you are still taking small steps, it's no wonder that a bit of the spark becomes lost. But a new challenge has been set, something for me to really get my teeth into - banish those full-stake losses.

16 comments:

  1. I feel you man, i am kinda lost right now after 5 months lerning the hard game of trading! Trying to make tennis trading my big financial plus in my life. struggling with a lot of death projects and strategies on betting sports which just failed after time due to all kind of circumstances. I am not loosing to often, but my big 2 losses where 110% and 51% the last 14 days and other than that like 2 or 3 < 10% losses. but i cant get my winnings as big to comprehense those losses. I'm really frustrated and dont know where i am going in my life, since this is such an important role to me. it consider this my last big shot to make decent money to make a healthy living. but right now working, studying, trading 14-18 hours a day 7 days a week i get really burned out mentally and frustrated with my way of life. i think its great you're writing in detail what is going on with your trading and wish you the best luck. hopefully you can make it and i do it to some day to get my family a good living.

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  2. Thanks for the kind words. I would say to you 'keep going'! You have only been trading for 5 months and I have never heard of anyone who has made it after such a short amount of time. You are still a novice (some would say that I'm still a novice and I've been doing it for 3 times longer!) and have not even completed a full tennis season yet. I'd say you need to complete at least one full season before you know if you have a winning strategy.

    You just have to keep trying but also, know when to take a break. 14-18 hours a day is WAY too much. I used to trade that amount too but realised that it's far better to get decent sleep, rest and exercise. Then when you do trade, you will feel fresher and perform better. I don't normally do more than 10 hours a day now and I try to fit a good break in. I'm considering taking a day off each week now too.

    Just cut down a bit, don't rush things and accept it is not going to happen overnight or even in a few weeks or months. It will help you psychologically. If I hadn't been so impatient, I could've saved myself months of agony. Take it easy and good luck!

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  3. Hello again, I'm the same and considering giving it all up. I cannot make any money in any form of trading. Would you say you stick to defined strategies rather than use intimate knowledge of the sport. Do you have trading strategies that are heavily rule based and I know it seems cheeky but are there any rules you could share ?
    My pitiful stakes (pitiful because of continuous losses) won't affect your market trades. I would really appreciate some help such as stake % of bank. % of stake to lose when redding up. % Profit before greening up, Matches to get involved with (eg where the favourite is within a price range ?) what sets to trade eg do you ever trade the last set ? Is it first set only ?
    Do you get in at a particular score eg server 0-15 or 15-40 down ? Do you ever stake before the game starts, is it back the fav after he concedes a break or is it all subjective ? I do appreciate if you don't want to share your knowledge but even if you could mail me I would appreciate anything.

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  4. Great article there Sultan, same here, not taking reds when I should have, have left me in a cant be arsed status, as I work most days...but hopefully it can click again in my part time trading, and above all leave the THIRD SET ALONE! :)

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  5. Cheers Sledge. Those 3rd sets can be a killer! I think it's a good tactic to leave them alone until you get confident trading the first set, where the swings are smaller. I do trade them occassionally but always with much lower stakes.

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  6. Hi Guy! Basically, you want to know my strategy ;)
    Firstly, it would take me far too long to fit in all the ins and outs on here. Secondly, it wouldn't make any difference beacuse you would need a very strong knowledge of tennis to make it work. And thirdly, having read your blog for a while now, I have given you loads of advice on there already and I think you need to look at that rather than start getting involved in tennis strategy.

    I can only re-iterate what I have said already - you need to concentrate on ONE sport, the one you enjoy most and have most knowledge of. I think you know that is the horses. You have to become a master at that before you even think about dabbling in stuff you don't know much about.

    Invest all your energy into getting as good as you can with the nags. You have to stick at it though, don't give up, it won't happen overnight. And seriously, I bet you still haven't looked into the psychological element. If you don't get that sorted, you will forever be moving from one strategy to next, thinking they don't work. You have to get your head sorted - you know what I'm talking about ;)

    My strategy is based on knowledge of tennis and the markets and reading games in-play. I have a strategy that is built around this e.g. exit and entry points, what to do in each situation but there is no one single idea that I repeat. I do any number of things based on my reading of the game. Percentage wise, I try to red out at 25%, I try to make an average profit of about 20% and my stake max is 20% of bank. But it took me a long time to work this out based on what I felt I could make in order to be profitable long term. Everyone's % will be different.

    My advice to you is this: start over on day 1. Horses only. Pick one strategy. Use small stakes. Work out what percentages you are comfortable with. Practice and tweak things for as long as it takes (use a simulation). Work on the mental side at the same time. Most importantly, accept that you won't be making money for a long time - the sooner you do this, the easier it will be to learn. Patience is the key.

    I don't know if my advice is the best but I can guranatee you one thing; if I had listened to this advice a year ago, I would now be a consistent and very profitable trader!

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  7. As I mentioned early on in my blog (and it's something I intend to come back to along with about 10 other things soon) performance analysis can be very, very useful. Even on its most simplistic level, as here where you've been able to identify one thing that has been costing you a significant amount of money.

    My question is have you tried to identify your overall profit or loss from situations where you were willing to let something run beyond your exit points (i.e. to a 100% loss) but you then went on to either win your full stake or greened out later on? The results would be very interesting. Although, I appreciate that as you say you rarely look at your results or do any performance analysis so doing this from memory may be difficult.

    All the best

    Curly

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  8. Alright Sultan, will still stick in there. Not giving up too easy, was just a real bummer yesterday again. So here is what I am gonna do...

    1) Stake Size as is (10%) of my Bank
    2) Never enter market on to back a player who is a double break up - 2 times big fail.
    3) Leave Tie-Breaks and 3rd sets alone for a long time
    4) Enter game upon reading the match (no more score board trading until I get really confident; if score board trading then only for 5% of the bank)
    5) When I enter for a break point, enter at beginning of serve and not at 15-45 or 0-40 and definately not at 30-40, by that time price is already gone too far. When taking the break successfull, stay in for jackpot (hold of serve) unless broken player gets to 30 first in next game.
    6) not doing too much scalping for a few ticks. i'd rather go for games instead of points. i've been choosen too many wrong entries on points. i find my position better backing the serve or laying the serve from the start or at 15-0 0-15
    7) Reduce my trading and take it easy from now... no more wining about full stake losses, it if comes to that, it's my bad not cutting losses...
    8) Cutting losses!!! 20% red definately out for a hedge... by that red I was getting in wrong or just not left the trade at the right time! No more sence in staying in there and hoping to reduce red because of a great rallye and crazy shots. It's Tennis! They all pros and really can play! And when it does not go your way, cut out!

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  9. TTS, I really like those new rules, they are very similar to ones I implemented a while back. As you get better at reading games and your discipline improves, you can tinker with many of those things but until then, it's good to keep your risk very low and have strict entry and exit points. Good luck!

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  10. Hi Curly, actually, I do and have done performance analysis for quite a long while now and keep written records every day. I don't keep an overall P&L, with the full amount totted up, as I don't like looking at it. But I have a rough idea and my written results are much more detailed than Betfair's.

    I identified the full-stake losses as an issue many months ago but neglected to keep on top of things. I have actually improved on this but not as much as I'd thought. Because I was getting more greens, higher ROI and more profit, I guess the full-stake losses just blended into the stats sheet. But it was not good enough and something I will have to monitor more closely.


    As for letting trades run, yes, I worked that one out sometime last year and it is definitely not the way for me to go. My performance analysis has always produced similar results for a long time now, which is basically, if I red up when I'm supposed to, I will be very profitable. I'm not shocked by the latest results, I'm shocked that I'm STILL doing it so much and didn't notice.

    But yes, without analysis, most traders will be doomed. It has helped shape my trading for a long time now and is something I've written about on this blog many times in the past. I'd urge all traders to keep notes on every trade they do.

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  11. Sultan, did you ever think abaut quit trading ?

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  12. Of course, many times! You obviously haven't read all of my blog because I've written about it several times. But I'm not a quitter.

    If you ask any successful trader, they will all tell you they went through rough patches before they became good at it. Not many people become successful with trading and it's mostly not because they can't do it, it's because they quit too soon. I'm not going to quit now that I'm actually do quite well!

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  13. I dont know how you are going to limit those 100% of stake loses as you did it for a reason those moments, generally becaust you thought something is going to happent in your favour. We all have excel results that we can adjusted on paper by lowering loses but its not so easy . I hope you will be able to do it .

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  14. I only have 30 100% losses out of 600 trades. There have been hundreds of times where I DID red up. It's not as though I never do it! We are talking about a very small percentage that I need to change in order to be successful. I will do it the way have done the other times - discipline.

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  15. In that case the reason why you lost 30 times 100% of your stake must be reentering the matches where you got your 20-50% loss limit . So the main issue here is that we MUST leave the market alone as we get our loss limit ?

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  16. No, there are many reasons why, every trade is different. In fact, most of those losses were because I let the trade run and didn't red-up at all, out of frustration because I made a mistake somewhere. It's all psychological.

    But yes of course, if you set a loss limit, you should never re-enter the market, otherwise what is the point of setting a limit?

    Speedwave, the main thing you need to understand is that big losses are all psychological. It's not difficult in theory to red-up, all you have to do is press a button at the right time! If you asked someone who had never bet before to hit that hedge button for you every time you reached -25%, they would do it every single time, no problem. But YOU somehow can't do it! Why? Because the pressure of losing your own money affects your emotions too much. The issue here is being disciplined enough to control your emotions so that you ALWAYS red-up when you are supposed to. That is the skill all traders need to learn.

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