US Open lessons: Inconsistant thoughts.

The US Open is over again for another year, Roger wins it... again, and I'm down a bit for the tournament, but up mentally after a good 2nd week. 

The frustrations of trading and gambling never cease to amaze.  You can learn everything there is to know about a market and the sport, but if susceptible, the same mental errors will jump up and take you by surprise.  Mental consistency.  This must surely be the holy grail of trading, that elusive thing that can turn an up and down (but mostly down) loser into a less variable - winner.

I've spent long days and months learning a lot this year.  Technically I'm as good as I've ever been, and I'm confident I have some sort of explanation for almost anything going on in a tennis market.  I know my strategy almost inside out, and I know when to execute.  But none of this matters, if I'm not thinking consistently and in week one of the US Open, I paid for it!

Had someone been watching my trading during that week they would not have recognised it.  They would most probably have been having a laugh at the amateurish mistakes I was making.  But that's what a poor mental state will do to you.

For me it's about tempo or rhythm to my trading.  Some might call it patience, others maybe greed.  But for me, technically I find relating it to the tempo of my trading and thinking more accurate and easier to analyse and hopefully correct.

I have a tendency when I've taken some time off to dive in too quickly.  Especially if I've had a good run before taking the time off - I tend to think I know it all (or at least, most of it) and I'm overly confident.  I get stuck in these feelings and the result is a need to make money in order to fulfil these emotions.

When I'm like this I tend to put too much emphasis on making money in each match.  And trying to make a lot of money as well.  I play too big, and I can chase - because I don't want to lose. 

I've done a lot of work in recent times on ensuring I have objective reasons to place a bet.  Solid, easy to spot, reliable reasons.  If 'this' happens then I place 'this' bet, and if 'this' ceases to apply, then I get out, and that's that.  But when I'm over confident, I begin to place bets and trades for reasons other than those that are objectively thought out - and this is no way to bet.

When I'm confident, I form opinions, very strong opinions in some cases.  I think I know what will happen next.  A book that I read recently (which I will feature on the blog at some point) states that, "the degree by which you think you know, assume you know or in an way need to know what will happen next, is equal to the degree to which you will fail as a trader" ("Trading In The Zone" by Mark Douglas).  Very heavy words, which hit me hard when I read them.

The key for me begins before I begin trading.  It's sitting down with the right attitude and the right amount of alert calmness.  I have to begin my trading session with the idea that I'm going to look intensely for my triggers (my reasons for placing bets) and then simply execute my staking plan and move on.  I have to think in probability terms, and not concern myself with losing (staking amounts you don't mind losing will do this).

The next important part is my first bet.  Execute this well, within my plan, and the rest simply takes care of itself.  The rhythm of my trading will be an unemotional one, not powered by adrenaline.  If for some reason I don't execute this trade within my plan, then the door is left wide open for the next bet to be based on emotional reasoning.  That bet will most probably only be placed because I had the first bet.  And not because there's a reason for it.  Always ask yourself, whether a trade is placed as a result of having a previous trade or because of a clear objective reason.

It's clear that your first bet must be within your plan, otherwise it is impossible not to do something about a position that wasn't taken objectively.  And I wouldn't suggest you not cut a position you took mistakenly.  The important thing is the realisation of how important each bet is and how they affect your actions afterwards.

There's no rushing in gambling.  You can't try to make money, or make an amount of money.  You have your plan and you have to play it through the same way each day.  Good runs will come, as will bad runs - but they'll never be as bad as they might, if you are consistent with your thoughts.