Still Alive

You'd be forgiven for thinking this blog was toast... over, done with, fineto. I have done a terrible job in the last 10 days, by not writing even so much as an update to state that no more posts would likely be appearing for a while. Work has been extremely busy and I have family visiting. Put those two together and time to trade has been non-existant. I haven't executed a single trade for 9 days, and I'm not likely to for another week. Oh well. Things were not going well anyway, so a break like this was never going to be a bad thing from my perspective.

I look forward to getting back into the swing of things and hopefully beginning to climb back towards profitability.

Until the next post...

Back on the Horse

It's been quiet around here for the last few days. Here's the reason... Losing over $40 in a single day was the final step in a series of disappointing steps and one that led to me taking a break from trading and some time out to think. It's not a large sum, but relative to my test bank it was a significant percentage.

I was trading races when I had too much on my mind, and too many things going on in the background. My other problem was over trading - opening too many mediocre positions that were by no means strongly favourable. On top of that I was regularly partaking in one of the most common mistakes in trading - holding on to a losing position only to watch it get worse and worse. Not good!

One thing I have been conscious of for a while, and have briefly commented on in a pevious posting is the terrible charting within BetTrader Pro. The scaling makes for a virtually useless visual aid. Bet Angel, on the other hand, understood the importance of charting from an early stage in the software's development and they appear to have more of what I am used to. Of course I still have way over 1000 minutes left with BetTrader, which I feel I shouldn't just throw away.

Yesterday I traded 6 races, making a small profit in each of the first 5, to be sitting with over $13. Then in the last race of the day I blew it and handed back $5.80 of that. Still a profit, but once again I was too slow to exit a trade. I put my hand up on this one though... truth be told I was using the Grid interface rather than the Ladder interface. I wrote about sticking purely to the Ladder a while back, but there was a reason today. I was trying to slow down the process of entering a trade. I know that sounds crazy as speed counts, but I was trying to combat my tendancy to over trade. It worked on the entries, but wasn't so good when the market moved rapidly against me.

Eliminating the Bias

Today I took steps to remove the bias I wrote about in my last posting - "An Opening Bias". This involved depositing more of my "test bank" funds to enable me to open a trade with either a bet or a lay without having to dramatically reduce stakes. Before starting the blog I allocated a total trading bank fund of £1250 (about $2250 Canadian), made up of the main bank (£1000) which would be used if I decided to go ahead after initial trials, and £250, which would be used for "test" banks during that initial trials period. So basically I am willing to risk up to 20% of the funds I have set aside to help make a decision on whether or not I believe investing the remaining 80% will likely result in long term profits.

Today I stumbled a little after making the deposit that finally cleared me of that "open with a bet" bias, but then things started to click a little and I made a profit in the last 8 races I traded. Those races included the 17:15 at Newcastle where I was tracking Speed Dating. It had been on an outward slide when suddenly a huge bet came in which swept up everything all the way from 6.2 to 5.3 and the remaining money (around $2500) sat there at 5.3 with nothing between that and 6.0. It was a clear signal to lay at 5.2, which I did to my usual $40 stake. It took quite a while, but eventually the $2500 was eaten away and the price then took off. It hesitated a little at 6.0, so I got a bit nervous and closed out at 5.9. In less than 30 seconds 6.4 was easily available. No matter, it was still a nice trade to call correctly, even if I didn't extract the maximum benefit.

An Opening Bias

When so many trades had been turning sour and me along with them I scaled back and have only been doing a handful of races a day. I did 5 yesterday and closed the day on a high note when Inchpast in the 20:00 at Yarmouth constantly bounced up and down within ranges. I placed 6 trades, taking 1 tick once, 2 ticks four times, and closing out the race with a 3 tick winner. The second trade was only about 70% matched, but I still greened up for $7.57 on the race, which at stakes of just $40 is a decent number.

One thing I feel is clear from trading a small bank is my bias towards opening a trade with a bet. That way I can open a position for $40, $50, $60, etc, while laying can see me drop to $10 / $20 depending on the odds. This is not good. Even if I could eliminate the mental bias, there's still the fact that if I open with a losing bet trade (say $50) which turns against me, then jump on an outward trend with a lay (say $10), I am going to have to make roughly 5 times the ticks I just lost on the opening bet trade just to get back to even! It's important to have both sides of the market benefitting or penalising you in equal proportion. I know I could just drop the bet stakes to level out the bet and lay sides, but whilst I believe in starting out with smaller test banks, I also believe in trading at a level where the winnings or losses amount to more than a few cents per trade. That's not meant as a criticism of anyone who adopts that approach. They will lose a lot less than I will given a similar run of losing trades, but my losses may be more likely to trigger the kind of emotions I'd have to deal with given a similar run using large stakes. I just personally believe in trading in a test environment where the parameters are a little closer to what they would be if I was to move out of test mode into trading my intended starting bank.

The Slippery Slope

I only had time to trade 3 races on Sunday all of which brought small profits. Monday saw me erase double the profit I had chalked up on Sunday, so the slow but sure downward slide continues for the moment.

Losing is never a great experience, but this is a learning curve and at times like this I think back to the stories of many incredible traders who lost their entire bank many times before ultimately getting on to a winning path. Michael Marcus is one of those traders. He started with $1000 and lost it all in the space of 3 days. His next stake was $500, again lost in a a short period of time. He then started again with $3000, trading it up to $30,000. At that point he borrowed to add a further $20,000 to his bank, and quickly lost $42,000 of that $50,000, and eventually all of the remaining $8,000 as well. He summed up in his own words the period that followed that "It was the same old cycle of borrowing money and consistently losing it". Ultimately Michael Marcus became a phenomenally successful trader, growing a stake of $30,000 (plus a further $100,000 added a few years later) into $80 million over the course of 10 years, and that was with the fund managers withdrawing 30% of the fund every year for expenses!

There's a Lesson to be Learned

On Friday, rather than start off well and only later pull the plug out, I thought I'd get the big loser out of the way nice and early. I ended up trading Desperate Dan in the 16:10 at Wolverhampton (remember 4:10pm UK time is only 11:10am for me) and after opening with a successful 1 tick winning trade I quickly followed up with a 4 tick loser and then the daily monster... a 7 tick loser. Damn! My final trade scraped 1 tick back, but I had started the day with a $7.61 loss. I only managed to trade another 7 races resulting in 6 winners and 1 loser to end the day in profit (just!).

Yesterday (Saturday) was a disaster. Before Saturday my trading volume was just over $39k for a loss of $12.02 or just 0.03%. Saturday's figures were $5403 trading volume for a loss of $24.39 or 0.45%!! It seemed that no matter what I did the market quickly went against me. My confidence was dented and I should have stopped as soon as I began feeling that way, but I kept on going, ultimately losing in 7 of the 19 races I traded! Keeping with the silly multi-tick losers I have allowed to happen lately, 90.4% of Saturday's losses can be attributed to just 2 of the 19 races. Almost 79% of the losses came from just 2 trades!

My test bank has taken a bashing, but this is exactly why I am trading a test bank (possibly multiple test banks). If I'm going to lose money for any period of time, losing when playing to small stakes is the time to be doing it. And of course if I can't win using small stakes, increasing the stakes will only mean greater losses.

It means nothing coming from someone with almost zero experience, but the markets felt slightly different yesterday. Maybe I was the one who was different, or maybe the Saturday markets are indeed a little different from the remainder of the week.

Another day, another lesson learned. I'm not actually sure what the lesson is at this stage, but the greatest lessons tend to come from the worst experiences. It's at moments like this I wish I was capturing all of my trading sessions for later review. I am sure the benefits would be immense.

Tick...Tick...Tick... BANG!!

Well I did my usual again yesterday - making a tick or two here and there then BOOM! One trade on Aleatrics in the 16:00 at Beverley saw me lose 9 ticks!! This is a pattern which clearly has to stop. One bad trade should not regularly be allowed to wipe out all, or a significant chunk, of the winning trades executed that day. I read up on the stop loss functionality within BetTrader Pro, though I am not sure how much use it would be in the situations I have experienced. I could easily see the trigger price being reached, the order executed and by the time it hit the market it would be sitting there on it's own, outside of the current price action. I will also be looking to see what options Bet Angel Pro offers.

I have to say I am disappointed in the charting within BetTrader Pro. I feel the scaling is all wrong, and as a consequence you don't see much of a change when the price is changing, even during a significant upward or downward trending move. Bet Angel Pro looks much more powerful in this area.

Today I again experienced something I have experienced several times in the past when using the Betfair website (so I know it's nothing to do with BetTrader Pro). Take a look at this screen grab...


On a single scratch trade I somehow ended up with 1 cent profit. The only thing I can think of is the effect of rounding during the conversion from Canadian dollars to the "base" currency of British Pounds, then back again.