Growing the bank

Betfree247 made an interesting comment to my last post, prompting me to think a bit more about what building a bank actually entails and how to go about doing it. I started trading primarily to see if I could generate a full time income from it and 'retire' from the rat race. Some four years on I can safely say that, yes, you can generate a full time income from it.

You can. I can't.

I simply don't have the right mindset to do it ~ and it's no good trying to pretend otherwise. Although my trades are generally speaking profitable I still, with monotonous regularity, get in too deep, let a loser run, panic out of a winner for fear of it becoming a loser etc etc etc. Sometimes, having committed one of those crimes I chase to recover. The reason I carry on is because I enjoy it and because I'm NOT dependent on it to help with my domestic finances, at all.

Having said that, who couldn't use a few hundred quid a month, tax free? So what's the best way of doing this and what do you need to to do to achieve it?

Other bloggers have written about the dangers of setting short term targets. The theory being that if you have a target of say, £20 per night, and the first trade loses £10 that you then enter another trade for the wrong reasons. The converse is that if the first trade makes £50 you then enter another trade for different, but still wrong, reasons. In both cases the smart thing to have done would have been to take the plug off your pc and sit with the missus watching Eastenders, tomorrow being another day. It would seem you can't win if you approach it in this way. I'm not 100% convinced by this argument, but as time has gone by I am concluding that there's a lot to be said for it.

So if you aren't trading to a financial or percentile target, how else can you make long term gains? The only other way, surely, is to only enter the right trades and to have in your mind one of two outcomes... 1) that the trade will either win or it won't and you'll live with the result or 2) that at the outset you set pre-determined exit points so that you make or lose an acceptable amount. If your immediate reaction is that 2) is similar to setting short term targets I'd have some sympathy with that viewpoint, but if you stop and think about it they are totally different in terms of mental approach. Both approaches, to be successful, depend on you making enough on the winners to outweigh the loss on the losers. That sounds like stating the obvious, but it leads nicely to my next point...

The other point that I would make is that to succeed long term, like it or not, you need to put  effort into choosing your trades. Spraying money around across lots of different sports and markets without some clear strategy is a no hoper in my opinion. I know that IF I just restricted my trading to my favourite trade I would make money in the long run. I've honed and tweaked it just about as much as I believe I can now, although to be honest it hasn't changed in essence that much. My problem is, always has been and probably now always will be, a lack of discipline. I don't seem to be able to stick to the straight and narrow.

As Betfree247 concludes in his comment: 'Trying to work out the right theory for yourself really is the key to this I believe, we need to find out what we're comfortable with and try to implement that. It's definitely not a one size fits all scenario.' 


I couldn't agree more!