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.

Comments

[Paul]

Hi Matt,

I found this really interesting. I run a small betting blog over at http://selectabet.wordpress.com and was wondering how you go about disciplining yourself? How do you stop yourself from betting for fun or out of boredom as a professional gambler?

Anyways, all the best.

[Matt]

Thanks for the comment Paul, nice blog.

The first question is a very interesting one, which probably requires more thought than I can muster right now.

I think partly the answer to these questions is that, given that my living is earnt by gambling, I know the importance of making sure I don't throw money away. I'm not one to have a bet unless I know it's going to have a positive expectation value wise, and that requires research and knowledge of what I'm betting on. I think this pretty rules out betting for fun - though I have been known to enter the odd poker tournament, honestly I'm not a good poker player and I play for peanuts, that's definitely classed as fun and it can last for hours so I guess it's value for money.

Saying this, I'm not overly thrifty with my money away from betting, so perhaps that makes me even more disciplined when I am working.

Boredom is a different question and can tie in with lots of different agendas. For example, the person that hasn't been making much money lately or coming accross decent bets can find him/herself getting involved in things they shouldn't be betting on. I guess you have to just stay on top of what constitutes a bet going by your rules and finding other stuff to do in the meantime.

The waiting and the discipline are part of being professional, they are part of the job and are things to be constantly worked on. To not see these as a considerable portion of the job (easily as large or larger that placing the bets themselves) is a huge mistake that most people will make. It's what will keep you in the game when others are falling by the way side. Quite simply - if it's wrong, don't do it!

Matt

[Paul]

For what its worth I keep two pots (in theory), one for my main bets and another for my long-shot, multiple, fun bets. That way I can still have a bit of an interest on TV games or if a big outsider takes my fancy.

Anyway, keep it up (as long as your winning!) I'd like to hear more about any systems or research you use. Feel free to drop me an email.

Cheers, Paul.

[Rakeback]

Thanks for a very interesting read - glad to hear someone is doing well and wiinning all the time, maybe you could drop some tips :-)