Friday, 24 August 2012

Depressing August Come-Down

Going into the fourth and final slam of the year next week (the US Open) I should be feeling full of optimism and verve but for some reason, I'm not. August has been a strange month for me. After the euphoria of July and the distraction of the Olympics, my trading fell flat. The massive high of my 6th consecutive profitable month and the British pride of 29 gold medals, almost left me nowhere to go other than down. I have struggled to find my focus and felt as though I wasn't sure what the next move should be. Of course, I knew I should just continue being consistent but after achieving my goal of 6 months of strong profit, it almost felt like an anti-climax when I started trading in August. The realisation dawned on me that I'm still a long, long way away from being solely reliant on my trading. I have also not been able to grow my bank as I'd wished and thus, have not been able to increase stakes. Unforeseen circumstances have meant that I've had to continue withdrawing all profit and it feels like I'm treading water, unable to get the leverage I need to reach the next chapter in my trading career.

I keep wondering how much potential could be unlocked by taking a few more risks. My bank is relatively small still but the vast majority of it remains untouched and has been just sitting there, unused for over 6 months. I don't think I've ever had more than 5% of it in use at any one time during a trading session and the lowest point it has been depleted by over those 6 months, is no more than 10%. So basically, 90% of my bank is going to waste. Of course, this 90% is there as back-up in case I hit a bad spell but am I being overly-cautious? Whilst in past years, there was always the danger that the entire bank could be blown in the space of a few days, I'm 100% certain that those days are long gone. Only variance could destroy the bank now but my worst spell of losses over the last 6 months, has only bitten off around 10%. I try to stick to the standard % of bank (my average stake is around 2.5%) as most experienced traders tend to go for 1-3% from what I've read. Whilst this is no doubt the correct route to go down for novice traders, perhaps I am now established enough to take a few more risks?

I feel as though I need a new challenge, something to gee me up and get me out of what is rapidly becoming a stagnant rut. I've started to make mistakes because I think that maybe I'm not taking enough risk. When it almost becomes too easy and there is a complete lack of fear, sometimes it can produce more errors and problems because you start to lose discipline. If you aren't bothered about losing your liability, where is the motivation to stay focused and dig in to keep those reds as low as they can be? And when things start to become monotonous and the challenge ebbs away, it's hard to keep sharp. But then, maybe the reason I've done so well is that I have not had that anxiety over my bank. Peace of mind should not be underestimated. I think I need to find that happy medium with staking. Larger stakes with larger profit would definitely get me motivated again but what happens if I start with a bad spell of variance that depletes the bank or if the increased exposure affects my mind negatively?

I'm sure some of you will think I'm moaning about nothing and just need to remain patient and plod along with the same gameplan.  However, there is so much potential there for me to make some serious money now but I am stunted by my bank size and my situation. Most readers won't know this but I work as a freelance writer. This job has enabled me to easily fit trading around it, as I work from home and have a lot of flexibility. This year, things have improved so much with my trading that I now fit my writing around the tennis, as it has become more lucrative. As the recession has tenaciously dug in, my freelancing has suffered whilst my trading has slapped this adversity in the face. I want to make hay whilst the sun shines, as you never know what is round the corner. With the tennis season shorter this year (cheers Nadal), I will have almost 2 entire months with nothing to trade, which is even more frustrating. It could be a very long time before I'm in a position where I can grow my bank and by then, I'm worried that this malaise may have reached epic proportions. If anyone has any ideas about what I could possibly do about this stalemate situation, I would welcome them!

N.B. I can't really be bothered to do a US Open preview so I'll keep it short and sweet: Federer, Djokovic or Murray (Del Potro outsider). Serena, Sugarpova or Li Na/Na Li (Kerber outsider).

Ana Ivanovic:


9 comments:

  1. In my opinion you should keep going as you are, and try to grow the bank and therefore the stakes in line with that growth. Compound mate. If it means you have to make cuts in other areas of your life in order to leave more of the profit to grow the bank instead of withdrawing, then so be it.

    Growing the bank is the answer, not risking more of it. You might be surprised by how quickly you can increase your stakes in line with the growing bank. Cut back on other stuff rather in order to do this.

    Dont underestimate the psychological battles you will face increasing your risk %.... No matter how certain you feel, you do not know for certain how you might react to an adverse run of variance....

    Trading profitably IS BORING. If you're finding it boring, this is a good thing. Get your kicks elsewhere. You're here to make money.

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    1. Hi LT, I can't argue with anything you've said but I am not really able to grow the bank at all, otherwise I would definitely be compounding. As I mentioned in my post, I have some unforeseen circumstances which have cropped up recently, which mean I can no longer grow the bank as I need every penny. This is likely to be the case for quite a while. Cuts are not possible as I'm already scrimping to the max, especially as I won't be trading Nov-Dec.

      It's just unfortunate that this has happened now but shit happens. I either have to just accept it and be patient or find another way to get an extra grand or two in my pocket............

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  2. You could try and find another job for 2 months, gigolo perhaps?



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    1. Trust me, I've thought about it ;)

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  3. If you stick to the 2.5% (or thereabouts), then the bank will build, and is not 'going to waste' as you put it. I keep far more money than I expect to ever need, but 2.5% of 20k gives you a bigger stake than 2.5% of 2k, and if you have a profitable strategy, then bigger stakes mean bigger profits.

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    1. That's my problem though Cassini, I am not likely to be able to build it for the forseeable future. So in order to get that larger bank for those bigger profits, I am going to have to find some other way. That's why I'm considering a % increase. Or becoming a gigolo.

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  4. Hi Sultan, I have restarted posting a few things on my blog, was wondering if you would put my link up again? Yours has always been on mine, keep it going my friend, you are an inspiration to many. Thanks

    http://rodhulltennis.blogspot.co.uk/

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    1. Will do mate, thanks for the comments!

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