« May 2007 | Main | July 2007 »
Rain at wimbledon. It's boring. So, some tennis lookalikes to pass the time, some are a bit of a stretch, but work with me...
Novak Djokovic & Screech Powers of Saved by the Bell.
Justine Henin & Champion Jockey Tony McCoy.
Roger Federer & Golfer Johan Edfors.
Shahar Peer & Bagpuss.
Ana Ivanovic & Bad Guy "Jaws" from Moonraker.
I want to expand on something I posted in my chart patterns entry where I mentioned that I got too heavily involved on Roddick at short odds. Firstly let me say that I don't have a problem getting on something that's short odds, if it represents a good bet / position, then I'm going to take it regardless (though I do drawn the line at backing at 03 or less usually - it's needless effort for little reward). What I did in the Roddick match however, has made a dangerous mental trap much clearer to me, and this weeks trading has been much more fruitful because of this.
I had the realisation that had I not overstaked on Roddick at those odds I would not have felt the urge to mess around with the position later on - cutting my loss, then beginning to trading at a higher frequency without much thought to make back the loss.
This might seem pretty obvious, but the actual nature of the problem has really hit home for me this week. Over-stake past your threshold and you open yourself to the possibility of a problematic market if things don't go perfectly right for you.. and lets face it, how often can you say things go immediately your way as soon as you get on? Not often enough!
This also touches upon a few things in my expect the unexpected entry about acceptance of risk. When you enter a trade you may feel you have accepted it, but if you get in too heavy, you'll quickly find out whether you really did accept it or not when you begin to panic about how quickly the odds are moving against you. This is the true test.
Overtrading is arguably the worst problem a trader faces. It's usually (but not always) caused by a fear of losing. You might think you can grab ticks here and there quickly, or you have a bad position so you will trade lots in order to improve your p/l ratio... Either way, it's usually as a result of not accepting risk in the market place and being fearful of losing.
For me personally I have found this to occur when I began with a position that was too big. It's beyond my pain threshold to lose this amount, I would be very uncomfortable with that loss. Under such circumstances I can freeze and stop thinking until finally I cut the position... normally this is at a market high or low, corresponding with my moment of most intense panic (there's a reason highs and lows are usually spikes or crazy prices that correspond with market panic).
After this has occured, I'm usually rather annoyed to put it mildly and will begin to look for more and more positions to take, perhaps even guess which way things will go, when I get them wrong I cut quickly and look for another, and another. I'm now, overtrading. It doesn't take a genius to see that there's a very high probability I'm going to keep losing more and more money each time, and that it'll take a lucky break to get close to getting out alive.
That's a fairly extreme example, but contrast it to a position I take where I'm actually comfortable with the stake size. An amount that I don't mind losing and that I think is appropriate for the position I'm taking. I'm happy and prepared for this not to go my way because I don't mind losing the bet, I've accepted the risk in the market and the match I'm betting on and most important - the risk of this amount of money.
Mentally I'm secure and calm. There's no panic, or possibility of panic entering my head at any time in this match now that I have staked it properly. I'm free to follow my plan, I know why I entered the trade and I know what reasons would cause me to exit it and I'll act on them - no freezing here.
It's amazing how easily this can go unnoticed. Yes I've known for a very long time that going in heavy at short odds is potential trouble, but the exact reason why has been elusive to me. And it's not just short odds this applies to, it's all odds and bets. If you overstake them beyond an amount you mind losing, then you are opening yourself to all kinds of trouble.
How do you know what the right amount is? Tricky question. It's easy to give answers such as, 2% of your bank, or a specific amount and or some amount specified by the many staking plans out there. I don't disagree that you need to stake things ina technically correct manner, but to get the right size I think has to come from yourself. You know instinctively when the urge rises to tamper with a position (because you are fearful of losing) that you have too big a position. Cut down the size of the position and re-assess comfort levels. When you find the right size, stick with that until your bank has grown enough to facilitate a raising of these comfort thresholds.
The last two weeks have been kind to me, because I've been placing positions where I've been in control and acceptance. And on top of that, I've cut when I had reason to and run the rest of the positions, most of which have won thankfully. I've placed bets with a specific size at various times of the matches and I've stuck to it, it's been a breath of fresh air really... not having to grip the mouse with white knuckles all the time!
Remember this, if the only reason you are cutting your position is because you don't want to lose that amount, you got in too big in the first place. Make sure you stake correctly so that you cut only when there's a real reason to do so.
It's here! Wimbledon is by far the most fun tournament of the year for me. It's close to home, it happens during the daytime, it's on terrestrial tv and interactive and the green of the grass is most refreshing.
I was lucky enough to go and watch the first days play, my second time to Wimbledon. Apart from the rain it was great. We had centre court and ground passes, though I have to say if you ever get the chance it's well worth getting a ground pass on it's own, or a court 2 ticket. You are extremely close to the players, sometimes on both sides of you (stood between courts).
Not too many thoughts on play so far, I have one play on the outrights and that was entered into a couple of weeks ago. I have Henin at 3.7 on average, I began backing her at 3.9 and kept doing so. The major obstacle in her way is Serena Williams, who she meets in the Quarter finals if they both make it that far. I was able to watch Serena on Monday, she looks to be very fit for this tournament - although there is talk of a tight hamstring. She had the usual unforced error wobble to begin with but then sailed through her first round with some very impressive hitting.
The surface will suit her much more than it did at the French. The fast grass allowing her to hit through opponents, potentially with more effect than she did in Australia.. this is a major danger to Henin and the only one I can see stopping the small Belgian from taking it.
Henin is a nightmare to oppose. Frankly, I'm tired of it. When you have backed her, those mouse-like squeeks of "Allez!" are one of the best sounds in tennis... when you are against her, it rings in your ears and you know it's about to be over. She won Eastbourne last week defeating Mauresmo in the final.. It got close, Mau had match points I think, but Henin didn't play her best, if she had then she would have cruised the Final.
In the mens I have a very small bet on Nadal. The surface is slower than queens, he has matches under his belt and will continue to get more matches.. He looked confident against Fish yesterday, a very small wager on one of the games greatest competitors at 8/1.. there's worse bets out there. Certainly nothing to compare to my Henin opinion though.
Good luck today if you are trading..
A long time ago I subscribed to Fool.co.uk's daily news letter. I don't normally read them much these days, they arrive in my inbox and I just delete, but one came by the other day that I thought had some good words in it. Those that have read here for a while will know my liking for all things zen, especially relating to trading. This article by them - Zen and the art of portfolio maintenance, has some points relevant for investors and traders / gamblers alike. Namely, seeing doing nothing as doing something - in other words don't over-trade.
It's not a long article, but is worth a quick glance.. Quote: "It's a busy, fast-moving world. Sometimes, you feel the need to be dynamic, to keep pace with life; in short, to do something. As far as investments are concerned, this is a fundamental mistake many of us make regularly...."
Thought I'd post up this pretty chart pattern from Roddick's match with Bogdanovic last week at Queens. I think this snapshot was taken near the beginning of the 2nd set, Roddick being broken early in the 1st and the market formed a near perfect trending price as the set continued. It's not often you see it this perfectly formed. Apologies if I have the match details wrong, I don't have any match notes from the time and I should have posted this up straight after it happened, but better late than never. What's important is the pattern itself. (Click on image for full size)
As the set progressed each high was higher than the last and each low was also higher than the last - as both players held serve and Bogdanovic got closer to securing the set. It's easy to look back on this as a "traders dream", but when you are in the midst of it happening, the ease with which you spot the pattern is affected by your position and the effect it's having on your mind.
For example, I was foolishly long Roddick at very short odds (I wasn't the only one to struggle) and being in the bad trader mentality that I was in I didn't cut my position until most of the way through this trend. I was too heavily involved - If I had a small position then cutting would have been easier mentally, I would have accepted the unexpected, see previous posts... Moral of the story - don't get too heavily involved early on, especially at short odds. Let the match develop and make it easy to keep an open and aware mind. You might also want to get the heck out of someone who's been broken on grass! Had you (and I) done that then there's a variety of ways we might have traded this. Here I've highlighted the trend with some blue lines:
I suppose you might notice first the volume spike early on, someone's had £250,000 on Roddick at really short odds!! Thankfully, that wasn't me.. nightmare!! But the focus here is the blue lines, I've drawn these in myself to show the band within which it's trending. You can see as Bogdanovic holds serve the chart shoots up to a new high, as Roddick holds, the chart goes down, but not as far down as it did the previous Rod service game. This is correct price-wise since Bog was ahead by a break.
What this does show up is the near perfect trading opportunity - that is, if Bogdanovic is going to continue to hold serve for the rest of the set. A lay of Roddick after he held serve the game after Bogdanovic secured the break would have been an excellent spot to enter a trade. This would then be closed out as the set ended - see where the chart exits the band.
Of course, there's no guarantee that the match will follow the perfect path to form such patterns. It's only looking back that we find these things, and this one is fairly unusual, though more likely on grass where the players hold serve more easily. The important thing is the higher highs, and higher lows.
If you are new to trading, I recommend doing some learning about the technical analysis of charts. Find out what the various chart patterns are, and also why these occur. It can greatly help you understand the markets. A link to some basic info on technical analysis.
There comes a time, inevitably, when you get on a bad run. Mistakes are made and occasionally you are plain unlucky, or so it would seem. Either way, it's in the face of a bad run of results (and the losses that come with it) that you need to remain positive in the way you view markets.
It's easy to get down, particularly when there's a serious amount of money involved. You can dwell on it too much. Dwelling leads to a need to make back that lost money, but it also leads to confusion and fear of losing more money. It's the later we're looking at in this entry.
Fear can do funny things to a trader. It masks sensible thought patterns. It clutters your head with conflicting messages about market activity, distorting your views. You second guess everything and suddenly your trading plan is being questioned or even worse, forgotten about.
It's quite incredible the difference between a confident trader and one who is racked with fear. Traders that are in the zone simply act without thought and money arrives at their doorstep with apparent ease! Those that are operating in fear of the marketplace are buried under a quagmire of conflicting thoughts and emotions..
How do we prevent this from happening in the first place? I believe it's by accepting the randomness of the markets and events we are betting on and the risks involved - then doing this consistently from day to day. The markets can't and won't be consistent, the way you view them can be.
There's hundreds or thousands of participants in the markets. They all want a slice of your bankroll and they all have their own opinions, plans and varying weight of wallets. There's big fish and small fish, and, being human, they have emotions and aren't always logical, reasonable or sensible!
With this in mind then, the key is to set out with a view of the markets that accepts the risks involved. The market won't always act the way you think it might, prepare yourself for this and make sure you have an exit strategy for any positions that don't go the way you expect them to.
Don't try to micro-manage your positions, it's very rare you will execute the perfect bet at the best odds the market hits. At the same time, don't try to own the big picture - never expect it to go your own way. Just execute your strategy when it applies - without too much thought, with an idea of where you get out, in good scenarios and bad.
Any time you begin to hope or guess in a marketplace, exposes you to the possibility of fear in the future when the unexpected happens. You will also find you are less likely to deal with the situation quickly / properly - more likely to freeze, hold the position, maybe add to it more and hope you can somehow get out of it. This is not the pattern of a winning trader.
Cold, calm and collected is the winning trader. He (or she) has a healthy respect for the market and the unexpected. If something unforeseen happens, the reaction is quick and decisive and dealt with mentally - it's part of every market, when it doesn't work it's closed out and when it goes in favour, it's run till it's time to close. It's the same reaction to a win as there is to a loss and this is probably the subject of my next entry.. good luck !
Rafael Nadal took the French Open, beating Roger Federer in 4 disappointing sets. Neither player playing at their best, it was Roger that played the worse of the two, clocking up an incredible 60 unforced errors compared to Nadal's 28 - Roger had no chance to win giving his opponent this many points. A match that was so eagerly anticipated was stunted by player nerves, Nadal conquered his, Roger never did get rid of his fully.
There were the predictable great points and flashes of brilliance, but these were few and far between. The market for this was understandibly expecting the flow of unforced errors from Roger to slow, and for a while they did. In taking the 2nd set, the market looked poised to go all in on Roger, but it wasn't to be and the poor play returned.
As often is the case, Break Point stats tell a story. In the first set Roger was unbelievably 0/10 ! Nadal... 2/2. Roger finished the match 1/17, Nadal 4/10. 16 points which might have changed the course of the match, particularly in the 1st set when Roger was very much on top in the rallies, he should really have been up 2 sets to 0.
There's little margin for error in the Federer game against a player as quick as Nadal. Nadal's strokes on the other hand allow for so much top spin that he rarely has to push hard to win the points. In the patchy periods of solid play, Roger looked to have the better of him.. His backhand down the line controlling the points and setting the tempo, just like it had in Hamberg. Unfortunately today was all about Roger and his gremlins... ahead on winners (18 - 13) as well as unforced errors. He wants it too much for his own good.
The French Open Quarter finals begin today with some mouthwatering clashes, including the eagerly anticipated match between Serena Williams and Justine Henin. This is a replay of the 2003 semi final in which the French Open crowd gave Williams perhaps their harshest treatment in recent years - they love a good booing... this is of course when they can be bothered to turn up to watch their Grand Slam - empty seats a-plenty at Roland Garros for the early matches, it seems a case of Food over French Open..
Ana Ivanovic is up first (in the empty stadium) against Svetlana Kuznetsova. Ivanovic is on something of a roll at the moment. It appears a lot of the shots she normally hits long of the baseline are somehow dropping in, and that's dangerous - cos she hit's that ball rather hard. 2.76 is her price for this match, might turn out to be value. No bet yet though, she's inexperienced at this stage of Grand Slams, Kuznetsova isn't, and can I honestly bring myself to trust Anna? Not sure I can..there's 20 unforced errors in a row in her somewhere.
Jelena Jankovic takes on Nicole Vaidisova. 1.37 on JJ at time of writing, I think this is a bet - I'm not on yet though - it's unlikely to be televised here and I don't like going in heavy on these. Vaidisova may, in time, have the game to win this match, but her mentality sucks. Anxious looks to her coach everytime she misses a shot - even 2 minutes into the match sometimes. She may have game, but she ain't got brain.
Anna Chakvetadze takes on Maria Sharapova. Somehow I've missed every single one of Anna's matches to this point. She's a good player, lots of variety, and I'm convinced someone will eventually see off Sharapova (please!!!). Maria's been anything but impressive so far, unless you count her ability to wail like a banshee (volume in proportion to importance of point), which she seems to have taken to an entirely new and unwelcome pitch this tournament. I felt sorry for her last round opponent Patty Schnyder who's like a door mouse in comparison, she really did crawl into her shell (or hole in the wall) under a barrage of screams, shreeks, shrills and wails... anyone outside the court may have thought someone was getting stabbed in there.
Quote of the week might well be the rather obscure "It’s tough playing tennis and being Mother Teresa at the same time", wailed after the match by Maria, clearly she lives in some sort of strange abstract fantasy World. Patty did have match points against Queen wailer, so hopefully Chak can finish the job off today. 2.9 is the price for Chak, looks a cracking bet given Maria's serve isn't screaming on full lungs.
Serena Williams and Justine Henin. As John Lloyd has been overly pleased to pronounce all week - this is for many people the finals. Jelena Jankovic would like to disagree with you John.. but it is a bloody good match... there may well be blood left on the court after this one. Justine begins 1.6 favourite at time of writing. Personally I would be surprised if Serena can win this one today, but then she always does come up with the surprises. It's tough to quantify Serena's chances here, she is the ultimate competitor in Women's tennis, yes she has incredible talent, but her will to win makes up a large amount of her game - from this comes her movement etc. It's a slower surface, she'll need to be timing it well to get it past Justine... it's going to be fascinating. Hope it lives up to John Lloyd's hype, he's rarely right on anything.
Roger Federer takes on Tommy Robredo. Bye Tommy. And two walls face off later on - Davydenko and Canas. Davydenko's wall is made of silicon and various other metals - he's cold, he's robotic. The other wall, Canas, is like a more muscley version of pong, but shaped like a bull. They may well be playing until Thursday afternoon these two. Good luck if you are trading today.
There's a tendency among traders and gamblers to just see the prices and the volumes. It's something I sometimes get caught up in. We're all on an endless lookout for value prices, but what about the people behind the prices we're looking at. Who are they ? And why are they offering that price ? How often do we actually acknowledge their existence on another computer somewhere, betting against us, or with us...
These are very valid questions, ones you can't afford to ignore. We all know there's a variety of different types of punters and levels of skill. On a more basic level, there are winners and losers. Putting it slightly obviously, you want to be betting against losers (and with the winners)!
Whether you are a trader or gambler, there's a series of questions you ask yourself about each situation before you come to a decision about a bet or trade. Among these questions should be, why has this person made this bet or offer ? What do they know ?
There's hundreds of possible answers, some of these bets will be clever, some of them won't be. Try to size up the intellectual quality of the bet that faces you. This will depend on your own intellectual knowledge and betting experience, if you can't figure them out, then it's healthy to remain cautious and observe closely.
In fact, it's a good idea to watch as much of everything that goes on in the markets as you can, pure trading particularly is all about pattern recognition. Within these patterns will be some of the answers about why certain people place the bets they place. It will help you to begin to categorise the bets you are observing. Think along the lines of emotional / mathematical / systematic / reactions - over and under / pre-emptive / pro-active.
Some of these categories have strong intellectual depth. They deserve respect in the marketplace, to begin with at least. Bets that are systematic or show good maths and are pro-active and seem well planned are tough to go against - you need to out think them and disprove their credibility. This isn't always possible. These are likely to be placed by knowledgeable and profitable people and often - in fairly large size.
The areas that offer the most interest to me are emotional bets and over/under-reactions. They're closely related. An emotional bet is very often poorly thought out and rushed. They're less likely to be placed by excellent traders. Reactionary bets are almost as bad, but often caused by general market movements, they can quickly turn into the emotional kind if a market is going against a group of vulnerable traders.
Spend time looking for these bets and devising methods of spotting them within the markets. One very obvious attribute to other people's bets are their size. Large bets are to be treated with caution. These are likely to be placed by knowledgeable players, likely, but not a certainty. One thing that is almost certain is that 99% of other people will back off these big bets - rightly so, and another pattern worthy of note.
Before placing your next trade, make sure you question your opponents motives and qualities first. This can open up completely new avenues of investigation in the search for profitable bets. Among some traders it's arguably as important as finding that elusive value, for some - it's the alternative. At the very least, you should pay the other market participants the respect they deserve before taking them on.
