Tuesday, 17 January 2012

A Valuable Lesson?

We are now just over 2 weeks into the 2012 season and so time for an update with how my trading is going. On the whole, I'm content. After a shaky first few days (where the month without trading had left me decidedly rusty) I am now really settling into a groove. This year was always going to be about cementing the new approach that I'd been working on towards the end of last year. I knew that I had to fully ingrain the aggressive, value-seeking, discretionary style of trading which I feel suits me best and will reap long term profit. So far, this has been going very well. In those first few days, I did slip back into old habits (such as trying to play the match rather than the market) but now I feel as though a switch has occurred somewhere deep in my subconscious, and the new approach is becoming steadily an automatic process.

Probably my main New Year's resolution was to improve my patience. This still appears to be the biggest struggle but I am improving. Despite saying (yet again) that I would not rush into a Grand Slam like a bull in a china shop, I did just that on day 1 of the Australian Open. It wasn't like last year though, where I was all over the place and losing large reds. This week was much calmer and the reds much smaller but I just need to follow my gut a little more and keep my powder dry for longer.

I've been noting whenever I've gone against my gut instinct, to see whether it's something I need to rely on more often and results show that I would have made significantly more money if I'd trusted my intuition. The problem is, sometimes I see a good value price and so take it, even though my gut is saying 'yes, it's value but I've a nagging feeling this is gonna bite you on the ass'. That gut feeling is normally based on an assessment of the players - what they are doing on the court and what I know of them from the past. I guess this is something I'm now grappling with as a trader - should you ALWAYS take a value price? I've come to the conclusion that the answer is 'no'.

A 'system' trader should probably always take that price as it falls within the rules and trigger points of their strategy but a 'discretionary' trade such as myself, relies much more on their instinct and reading of games in-play. I feel that if something is screaming at you to stay away, then you should listen to that inner voice - as long as you are experienced enough to have been in that situation hundreds or thousands of times. Without experience, you don't really have a well-tuned instinct that you can rely on and that 'gut' feeling is probably nothing more than fear or greed. Besides, my notes back up this idea so far because when I've ignored my gut and just taken the value, I've been burnt on almost every occasion.

But this then begs another question; if your gut is saying 'don't take the price!', does that mean that the price ISN'T actually value? Do we factor in that gut feeling into our assessment of the price? From a pure, cold, unemotional 'systems' perspective, that same price would be considered value but when incorporating instinct and feel at that very moment, from a 'discretionary' perspective, I guess I am saying that it isn't value. I'd like to know what others think.

I guess the lesson for me is that perhaps I should just stay away if it doesn't feel right. After all, you can't lose any money if you don't get involved. For now, I'm going to stick with what my P&L is screaming at me, which is 'TRUST YOURSELF MORE OFTEN, YOU NUMBSKULL!'

OFF-COURT BEAUTY - world number 59, Romania's Sorana Cirstea:



2 comments:

  1. Hey Sultan,

    I think you should always stick with your gut feeling and all experience you collected down the road. Just enter when you read the game in-play and feel like this is the point where the price will come in. No matter if it's value because of a break down or set down or before the game or at evens somewhere in the set.

    I am desperately trying to improve game reading but I am just missing the experience on the players and situations with less than a year of occassionally trading. But I just started to listen more to my "inner" and enter only when I got a decent feeling that the price will come in my way. That leaves the market more untouched for me and I do watch more than I trade, but on the flipside it shows on my record. 58 matches traded and only 8 reds. But to be fair I need to say that 1 red wiped out 30 greens with a stupid 6 times the stake while getting lost and confused. This happend because (as you mentioned) I got burned on a so called value.

    From following the blog I think you're just about to turn into a stage where in-play-reading-gut-trading is the key to become solid and big time green.

    ReplyDelete
    Replies
    1. Hi TTS, I actually used to trade just through in-play-gut-reading but I actually don't think it's the way to go. You need to combine it with taking value. It doesn't matter how many wins you have, it only matters about the size of the wins. I lose far more than I win but my wins are way bigger than my losses, which are always small. That's mostly because I take prices with good risk-reward ratio.

      I don't think taking a value price was your problem, I think you over-staked. It won't matter how good the price is if you put too much money on.

      No way anyone will last long term in this game without taking value prices, as any long term pro will tell you.

      Delete

Note: only a member of this blog may post a comment.