Visually appealing to male readers, CTC features pictures of some very attractive lady tennis players. Having wrested my eyes away from them I read further and found a couple of interesting interviews with quite contrasting views about the trading mindset.
One featured a gentleman called John O'Dywer who seemingly had some very good times on Betfair a couple of year ago before losing his edge and his bank. The interview is worth a read, as is Cassini's detailed examination of what O'Dwyer has to say.
The second interview features the aforementioned Cassini himself, and again makes interesting reading. Several things caught my eye, some of which I'll return to in a later post. The one comment which really intrigued me is this one below:
What do you think are the biggest mistakes that new traders make when attempting to become successful?I don't know about you but both 'caps' definitely fit this trader.
A couple of mistakes come to mind, one in the preparation, the other in the execution. One is over confidence. Too many people seem to think that profitable trading is just a matter of sitting down at the PC and that somehow the funds will simply roll in. They think that in a sport like horse-racing (something I never touch by the way) they have an edge over insiders and full-time traders with years of experience. Really? Optimism is good, but so too is realism. The other is the need to let winning trades run and cut the losing trades short, whereas the tendency is to do the exact opposite.
When I stumbled across Betfair, through reading 'What Really Wins Money' for those interested, I definitely thought I'd breeze my way to millions. Watching Adam Todd and others make loads trading the nags made it all look so easy. Several blown banks later I had to take stock and decide whether to quit whilst behind or to actually sit down and plan a strategy to make trading work for me. Whilst what I do now is far from perfect it does provide me with a usable second income, and more importantly for me, a hobby that requires a bit of thinking.
Of more relevance to me, and, I suspect, to most semi seasoned traders is the comment about cutting winning positions too soon and staying in losing positions too long. How many times, with the benefit of 20/20 hindsight, have we wished we were still in one position and out of another? I would try and count those that apply to me but am acutely aware that I don't have enough fingers and toes!
The bigger of the two issues is that of staying in too long in what is clearly a losing position. I believe this stems from the natural human trait of wanting things to be all right, and believing that they will be all right. We often ignore all evidence to the contrary. I can even remember when I was young enough to still believe that an England football team would win another major tournament switching from BBC to ITV to see if they were winning on the other side! How daft is that? But a similar attitude still occasionally invades my trading mindset.... 'Hang on a few minutes more, Dave, get that red down a bi........F@@@! All gone now!'
An old sales manager of mine used to say 'if you can identify a problem you're two thirds of the way to solving it'. Sage words. So why, why, why do I still do it? I can count on the fingers of one hand the number of times it HAS been ok.... but the losses, with those few 'ok's' taken off, outweigh the red screens that were available I'm sure.
Which brings me to closing winning positions too early. I suppose the problem with football is that there is no script. Anything can and does happen. I'm writing this having just witnessed Man U go out of the Champions League to little Basel. Not that I'm crying about it, you understand :-), but I'm sure most people would not have expected that to happen.
A couple of nights ago Botofogo were drawing 1-1 in Brazil after 15 minutes. I did my usual little lay of O2.5. A nagging voice in the back of my head was telling me that I'd marked '1-1' as a highly likely result pre-match and I'd structured my Correct Score trade (as usual) around that. True to form I ignored the voice, took the green on O2.5 at half time and exited my SG as well. That brilliant piece of trading made me about £30. But cost me over £100. My total exposure was a mere £17.
I can't explain why this should be so. I'm not unintelligent - I managed to get a good degree back in the day - but I have concluded that I must be stupid!
On my little trading pad that sits to the left of my PC I have written Cassini's words, verbatim (hope there are no spelling or punctuation errors - he don't like them! :-)) and will write them at the top of EVERY fresh page as I tear the old one out. They say you have to do something nineteen times consecutively for it to become habitual. Let's see.
