Friday, 29 May 2009

Month 1 Result - A Lesson for All

The main reason I started this blog was an effort to install discipline in my second term as a trader. I thought that if I wrote my experiences, then there would be a strong possibility that other traders both novice and experienced would read it and that a number of things could then come of it.
- New traders could relate to what I was trying to do.
- Senior traders could possibly offer advice on what I was doing wrong
- I would have to improve my discipline, because I knew I'd feel awful stupid writing about my losses caused by the lack of it.
Points 1&2 have met with some success, whereas the discipline completely let me down this month, and I know that if this continues, my remaining time as a trader is limited to say the least. (one month, maybe two). My main fault comes probably from having a gambling background and it is this conflict that causes the big issue. I'll stand by my mistake in Week 3, as I really didn't see it coming, but this weeks horrendous loss was down to letting a really bad trade go in running, despite me advising other novice traders not to ever, not never, let a bad trade go in play. Amazing isn't it. that you do these things, you advise, and then bang.

One strength of mine however, is that once I have picked up the screen and keyboard from out of the back garden, banged my head against the wall until it hurts, I just then think of an Aaliyah record, where she sings, ''and if at first you don't succeed, then dust yourself off and try again'' and so that's what I'll do only this time. I'll reduce my stakes and my bank as the temptation with a £1000 bank, which is what I was playing with, is to let potential £450 losses go in running, and that is what I did.

On the positive side, of which there is always one, it's this blog, which does, when I'm writing it, help me focus on what I should be doing, and so my aim, for month 2, is to try and go a whole month without going in running, and I'll take it a day at a time. Yesterday was a success, but I know I've got a major hurdle to overcome here, well an open ditch really :)
Anyway, onwards and upwards and all that. At least this blog shows, that as well as all these successful traders earning thousands a month, there are some that are losing as well. Maybe I should have renamed this blog - £1000 to a Tenner in one month.

That's it for now. Thanks to those to have contributed to this blog (especially Steve who hit home with some hard truths) and hopefully, when I post next week, I'll show my first green (don't laugh)


  1. Hi, an excellent post that I can really relate to! Given that the vast majority of traders don't make a long-term profit, I expect there's a lot of other traders out there who can relate to it too.

    I also come from a gambling background and what you say and Steve's comments on your previous post really ring true. Going in-play is the biggest challenge I think for people coming from a gambling background. The rush of going in-play is a real livener after a few hours of scalping at the money. I try to keep the previous disasters in mind to prevent this!

    I also agree with Steve that there's no point in having such a large bank. What I've found is that with a bank of a few hundred I normally make 20-30% and sometimes up to 50% in a day, whereas a few years ago I had a bank of £1500+ and thought 10% was ok. Clearly, there is much more room for manoeuvre if you're making 25%, this in itself reduces the chance of going on tilt because when you have a loss you can accept that it's just a blip in the day and that you will still come out on top. In other words, I think it's best to focus on improving technique with a smaller bank than to try and make the same daily total by whacking in big trades and managing 10% profit. I actually think that my technique is average at best to make 25%, I should be able to make 50-100% I reckon.

    I saw a post on another blog, I can't remember which, that said the number one reason people fail is going in-play. If you can stop that then you will succeed. It really made me think, as I reckon it's true.

    All the best. MG.

  2. I like to review my own P&L's in detail on a monthly basis. I think this timescale is useful to gauge progress or otherwise.

    Your problems mirror those of the majority of early traders. Analysis of most of my early P&L's show a similar trend - success, then a significant loss, followed by a short stint of brainless trading during which weeks ( or months ) of good work can be snuffed out.

    It's taken me a couple of years to get past that 'Brainlock' stage ( as noted by Cassini at ). My success ( and yours ) or otherwise will be determined by the ability to deal with losses as Cassini advises.

  3. Some good points raised, I think all traders have experienced the Bainlock stage where we sit like a rabbit stuck in the headlights watching our reds go from bad to worse. Eventually you'll either crack that and trade most markets on autopilot or simply go under.

    Most gamblers turned traders make the basic mistakes of letting reds go in running without even thinking out the maths behind it and the very fact you've just started will mean you will have a lot of bad/red trades to cope with.

    If you consider a market where we're £40 red on 3/1 shot but £5 green the field through some duff trades. Novice trades wil let it run rather than red up even though they've effectively laid a 3/1 shot at 8/1, even the dumbest of gamblers will know you can't win long term laying 3/1 shots at those prices. Whereas if you were £40 + the field you wouldn't hesitate to green up because you're now a trader and the same dumbest gambler would be more than happy to let it run because laying 3/1 shots at evens will always win long term. Novice traders will continually get the worst of both sides by not closing out bad value but continually throwing good value bets away by chopping and changing strategies.

    You need to evaluate every bet you close and be consistent in your approach then move onto the next market. Personally I'm happy to let some runners go off red if I believe it's value but even then I won't let reds over £30 inplay, mainly because I know it'll throw my mindset if a bet of £100+ goes against me which they eventually will.

  4. Hi all, thanks for the comments.

    Midset, Letting bad trades go in-play is still a major issue for me. I don't do it for the buzz; it's to do with the brainlock. I'll trade a few races and my results are like this - +£3, +£2, +£7, +£1, +£6, happy days and then a trade turns violently against me and I stare at the screen - come back, come back, come on, come back, but it doesn't and it continues to go and go and now I'm looking at a -£22 across the field and something inside the grey matter says ‘'risk it, get out in running’', and bang - big hit.
    Another issue I have is the falling knife syndrome, where, when a trade goes bad, I increase the bet on the wrong side, knowing, or rather hoping that if it just turns a little, I'll be able to get out, but if it continues to go the other way, my losses double by the second.
    I should know from my previous experience on the futures market, that averaging down, can be financially painful. Old dog and new tricks springs to mind!

    Rob, many thanks for the Brainlock link, I always thought I was in the 10% that reacts positively, but it appears I got that wrong too as my results prove I suffer from the headlight syndrome.

    Steve, Thanks for the pointers. I'll try and be a bit more consistent in my strategies. I swapped again yesterday and failed, probably due to the gambler in me.
    For info, the horse that drifted and caused my £450 loss last week was the horse Flyinflyout. I backed it for £250 and it drifted badly, so hoping it would come back, I back it again for another £200. It didn't come back; it went in play and ran poorly. Yesterday, just 5 days after its poor performance, it ran again, and this time it was being backed. I took it on as a layer. It scooted up – I should have known. – How I hate that horse :-)
    Why did I switch from a trader to a layer? Knowledge of the horse, or the past gambler in me that is dominating the novice trader?

  5. I did much the same last week and backed one for £250 right at the off (didn't have pictures) much the same as your's I guess, bad break and never had a chance to get out, think I g0t £7 of it back in running :(

    Don't think we'll ever curb the gambling in us just have to hope we limit it. I even let a couple go in play early on today and they cost me £180, annoying thing was I then traded perfectly for the rest of the day and even came out £38 up on the day so kicking myself for throwing it away. Dunno if I'd have been as reckless if any later trades had gone bad and let them also go inplay. Always easier to tell people what they should do rather than stick to it ourselves I suppose.

    At least it's a new month so we always start them with a clean sheet :)

  6. "I'll reduce my stakes and my bank as the temptation with a £1000 bank, which is what I was playing with, is to let potential £450 losses go in running.

    Thats what i did i set my bank at £150 and would take out profits at the end of the day, thus resisting the temptations to go all in, i did this for many months then started to build the bank up, best advice take the loss as soon possible, dont watch it go -£1.00, -£2.50, -£4 and so on, chances are it will never return, then letting it go in play is a no no, small loses are manageble and can be clawed back in other trades.