Betfair Trading Mind Games

A 4-Star day for racing

2011-11-21T08:07:00.001Z

Fantastic to see Kauto Star leading the field a merry dance from the front around Haydock to win his fourth Betfair Chase.

It's such a great story from many angles and perhaps mostly because of the comeback at age 11 from the disappointments of last year after some calls for his retirement. The Telegraph lead with the angle of Nicholls' decision to keep him in training being vindicated - and boy did he look happy after the race! Many congratulations to him, great to see the level-headed Master Mind punching the air in excitement.

Registered RUKwebsite users can relive the moment here (free).

Hughes in a Huff

2011-10-14T11:51:00.000+01:00

From Racingpost.com: RICHARD HUGHES who handed in his riding licence with immediate effect midway through the card at Kempton's evening meeting on Thursday stuck by his decision on Friday morning. www.racingpost.com

I don't get it. The new rule states they can whip the horse at most 2 times before the furlong pole and 5 times after. Hughes has jacked his careeer in because he wants to whip his horses 6 times in the final furlong. Come off it Hughes, 1 extra time in the final furlong doesn't make you the Messi of horse racing.

And he doesn't HAVE to whip his horse 2 times before the furlong pole. If he's got the exceptional finesse to put him at the top of his sport like he states, then he should be happy that the inferior jockeys no longer have the crutch of beating their mounts to the line. He should have an advantage.

I think Hughes reckons his ultimatum will win the day, it'll be interesting to see. I hope the BHA hold their nerve. With even controversial people like Big Mac saying the whip should be banned completely, in the long run it's only going in one direction - on the jockeys arse.

Goldman Sachs Rule The World? HoaxilyDokily

2011-09-28T11:33:00.002+01:00

A self-proclaimed trader, Alessio Rastani, has stated on the BBC news channel that he is relishing the prospect of a far bigger stock market crash than the last and that he has been "dreaming" about this moment for 3 years. The reason of course being that he could make huge amounts of money.

At least he goes on to try and "help" the man in the street by saying that not only traders can profit from it.

The reaction of the interviewer to this myopic prophecy of doom is quite amusing and at least as candid as Mr Rastani is making out to be.

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According to BusinessInsider.com the guy is a hoaxer, but either way I think it is a wake-up call to people generally disinterested in the shenanigans of the city. Whilst this guy isn't affiliated with any of the institutions, like he says, they're all waiting to pounce on any pain we're likely to be enduring in the future economy. We shouldn't be letting the bankers off so lightly - back to business as usual, backed by our money.

The part where he says that Goldman Sachs rule the world does make me think he is a hoaxer, but it doesn't mean that this kind of thinking isn't really going on in the institutions. A bit like the "Two John's" maybe.

Personally, I think even if this guy is serious, he's only one trader in a vast market (and we all know what that feels like!). Even if he's salivating at the prospect of the biggest "swing-trade" of his life, it doesn't mean it'll happen. The markets have a unforgiving habit of burning traders who think they know better. I expect many members of the public who saw this interview will indeed wish Mr Rastani burns somewhere very hot, and soon!

I'm still kicking myself for not lumping on and shorting the FTSE at 5,800 a couple of months ago when the US political machine was bringing the President to his knees and got mighty close to the deadline for paying the national debt. Even though it was obvious that common sense would eventually prevail (my reason for not lumping on) the damage was done and then trouble in the Euro zone compounded it to swiftly thump the index below 5,000. It's still swinging between there and 5,300 nowadays, but I think gambling on another rapid 800 point fall is risky given the inexorable rise of the index generally. Not that I want market plunges, you understand!

I think I'll just keep an eye on it and maybe have a nibble at Bank of America - if it's good enough for Warren Buffett then it's good enough for me.......................

Betfair lifetime results - how to make sense of them

2011-08-29T12:29:00.000+01:00

I was contacted by the author of the excellent Mets Trading Diary blog asking about importing his lifetime Betfair P&L into his copy of Results Summary spreadsheet. Whilst Betfair offer up to 3 months of Betting Profit and Loss data download from "My Account" area on their website, if you require any more than that, then you need to contact the helpdesk at info@betfair.com or by phone. They will provide a report of the entire "lifetime" P&L of your account. I received mine in about 4 hours - and my account has been active for 10 years! It's probably a good idea to contact them in the morning though to get such a quick response.

However, I was surprised to learn that Betfair will not provide this "lifetime" P&L report in the same format as the one you can download from your account area. Confusingly, they don't seem to have a standard format either, as Mets & I initially got reports in totally different formats and level of detail. The key is to be specific what you ask them for (more on this below).

The good news is that I have developed a spreadsheet to convert the lifetime report into an identical format as the standard P&L report....AND I'm giving it away for free with the Results Summary spreadsheet! The standard format means that you can then import your lifetime P&L into the Results Summary spreadsheet (as well as any other compatible system you may have, if you want). Of course, going forwards, all your results are stored safely in the Results Summary spreadsheet and you won't need to ask for them from Betfair again - so long as you download your P&L at least once every 3 months.

I'll soon be making this conversion spreadsheet available to previous purchasers of Results Summary spreadsheet (for free), please bear with me.

So - what format do you need to get your lifetime report in? Here's what the headings looked like on mine (just one row of data is showing):

The key points are that:

The report must be at event level (i.e. total profit for a market, not each individual bet you placed on the market).
It must have the following columns: "Event settled date", "Sport", "Event menu hint", "Event name - long", "Net p&l". Any additional columns do not cause a problem, they are ignored. The column order of the report doesn't matter.

When you contact Betfair you could just copy and paste the above criteria into your email, maybe even include the screenshot.

It's really simple to use the conversions spreadsheet, here's what it looks like:

You can buy the Results Summary spreadsheet here (the above spreadsheet is included free in the bundle).

If, like me, you've had results in the past that you'd rather forget about (!), it needn't be all bad. This experience has actually been useful for me to also remember all the profitable periods I've achieved over the lifetime of my account. I tended to only remember the bad ones! I've actually found it quite positive to know for sure which areas I've won at over time and to have continuing confidence with those whilst reminding myself why I'm avoiding others.

I hope you find this useful too. Cheers!

New videos

2011-08-03T16:27:00.003+01:00

Hi, just to let you know that I've posted a couple more videos for the Results Summary spreadsheet. One is on the more advanced filtering and sorting you can do and the other shows the data export feature.

The Results Summary spreadsheet processes your P&L into meaningful summaries without any need for you to have any Excel programming knowledge. So you can easily see where your trading & gambling is going right and, *cough*, needs improvement!

If you have any questions, please either leave a comment or email me (address on the profile page).

Check out the videos by clicking the "Videos" tab at the top of the blog or just click here. Cheers!

Get Results Summary spreadsheet now before the price increase!

2011-07-28T10:17:00.008+01:00

Many thanks to all the current purchasers of the Results Summary spreadsheet! It would be great to hear more from traders and gamblers who've used it to improve their profits.

For me, I was hemorrhaging money on flat races (in-play trading) which I wasn't aware of - a classic gambler's case of remembering the big wins and forgetting all the losers! Because I was only looking at the overall P&L things looked good. I also had a major "leak" on maiden hurdles at certain courses (in-play trading). Both these problems were very easy to see once I developed this functionality in the spreadsheet - at the press of a button your horse racing P&L is split between flat and jumps, you can then see splits by racecourse, distance, race type, date and you can also filter all of these. For example, you could see all the maiden hurdle races split by racecourse, or distance, sorted by profitability. The flexibility is really great and enables you to see what's really going on.

It's also invaluable to be able to compare profitability across all the sports you trade. Sometimes when there was a big tournament on, for example, snooker or darts and they clashed with racing I wasn't sure if it was worth my while to trade them - but now I do! I can see that my average return on snooker is way higher than racing - so I give snooker preference when it's on. It's not that I have made more in total on snooker than racing - but on the days it's on, it's more profitable for me to trade it than the horses - and it's a nice change of pace too! For you it may be tennis for example, it doesn't matter, you can see all the sports you trade compared in the Results Summary spreadsheet. You can even compare year-on-year results to see if you did better on this year's tournament than the last ones!

How much is it worth to you to find out a way of radically reducing your losses and increasing your profits? £5? £1000? Well the spreadsheet doesn't cost that much!

As stated when I first published V2 of the Results Summary, the initial price was reduced for all the early adopters and it's now time to remove the discount. The price is going up on 1st August! Get it cheaper while you can!!!

Frankel franks a remarkable day!

2011-04-30T20:03:00.001+01:00

Wow, that was quite a time to take my first visit to Newmarket! It was remarkable to see Frankel putting the field to the sword by halfway. It was audacious to see him pushed clear so early and clearly connections hoped that this was going to be a tremendous win. And that it was.

It was a great atmosphere at Newmarket and I got to see all the key players in the paddock before the 2,000 Guineas.

Frankel before his 6 length blitz.

It was great to hear some banter between some Irish punters next to me being taken in good spirit by Tom Queally.

Cool to see the legend that is Aidan O'Brien leading round Roderic O'Connor.

I lost overall on my bets - 1 winner (not Frankel, I couldn't take those odds!), 1 placed, 2 losers and 2 unplaced. I even studied the form for a few minutes before each race(!). Back to trading on Monday - FAR easier!!!

Videos - Overview of Results Summary v2

2011-04-05T17:13:00.010+01:00

I've recorded the first couple of videos to show features and benefits of the Results Summary v2 spreadsheet - hopefully more useful to see what's going on this way than ploughing through huge blog posts!

You need 'Flash' to see the videos. There is a full-screen option accessible via the button at the bottom-right of the video screen once you've selected it.

There's a quick overview of all the screens so you get a flavour for what the spreadsheet can do for you, or if you're ready to get started then check out the 'Importing your data' video too.

(Please note the video window does not appear in Google Reader, so you need to view this post on the actual blog).

If you'd like to read more about the features check out the original post by clicking here.

I'll be doing more videos soon showing each screen in more detail and talking about the benefits of having all these different views on your P&L data.

I hope you find them useful!

_______________________________________

Click on the 'Buy now' button for an instant download of the spreadsheet.
£2.49
(yes, that's barely more than a minimum bet!)

Price includes any future updates FREE!
(Be sure to supply PayPal your correct email address for updates.
PayPal do not disclose your street address for this purchase.)

Now includes Betfair Lifetime Report conversion spreadsheet, FREE!

For more information on this check out this post.

Requires Excel 2007 or Excel 2010 for Windows
Please check the detailed software requirements below for use of this spreadsheet before buying.

No account needed.

_______________________________________

Software requirements (not included!):

Excel 2007 or Excel 2010 for Windows. Tested on XP, Vista and Windows 7 (see note below about Windows 7).

WILL NOT work on Excel 2003 and earlier, Open Office or Excel for Macintosh.

International users may have to alter their Regional settings due to Betfair spelling out the dates in English text format within the BettingPandL file even for non English-speaking countries. Go to Windows start button > Control Panel > Regional and Language Options > Formats (tab) - Current format and set to "English - United Kingdom"

Windows 7: There is a new security scan in Windows 7 which can prevent 3rd party Excel files such as the Betfair P&L file from being opened. When trying to open the Betfair P&L file in excel you will get the error message,"Run-time error '1004': Method 'Open' of object 'Workbooks' failed". Please download a Betfair P&L file and make sure you can open it before purchasing the 'Results Summary' spreadsheet. If you are using Windows 7 you can open the Betfair P&L using Open Office (free software) - then by saving it without any changes it should be openable by Excel under Windows 7. Equally, if you have access to another PC with XP or Vista you can re-save the file before transferring it to your Windows 7 PC. This is a known issue which Microsoft have no plans to rectify http://social.msdn.microsoft.com/Forums/is/exceldev/thread/69434b37-a3ed-4970-a929-89e03ee01aaf

No refunds will be given under any circumstances, please make sure you have the right Excel software and can open the BettingPandL file downloaded from Betfair.

All rights are reserved by the author.

All the best with your trading!

Results Summary v2 spreadsheet is here!

2011-04-02T16:00:00.024+01:00

'Results Summary' version 2 spreadsheet is ready for download!

See and understand your Betfair and Betdaq profit & loss data like never before.

One major enhancement is showing Betfair P&L results by sport:

The 'Total by Sport' tab

I'll post some videos soon to explain the benefits in more detail, but in the meantime here's a description of the main highlights:

Betfair P&L

Profit & Loss reporting summarised by sport
Horse racing summaries by jumps, flat and place market results
Win market results can now be summarised, sorted and filtered by:

race type
course
distance

FREE conversion spreadsheet allows you to import your entire lifetime Betfair P&L in one single import (i.e. more than 3 months worth of data). See this post for more info.

Betdaq P&L

Now supported!
Horse racing markets automatically separated from other sports (where Betdaq state the racecourse in the P&L file)
Horse racing summaries by win, place and each-way market results
Racecourse totals (where available)

General

Quickly 'drill-down' from summary-level figures to individual markets
Extensive filtering and sorting options
Graphs:

Totals by sport and monthly totals by sport
Running totals by sport
Comparison of monthly running totals
Overall running total
Average daily profit and loss per market
Daily strike rate

Totals by day of week and hour of day as well as date, week and month

BUT! This spreadsheet isn’t just about keeping a record of your trading using tables and graphs. It’s been developed over the past two years to help with becoming a more profitable and consistent trader. I wanted to find out how to have less risk, less stress, less wasted time and more profit.

Of course you need to adapt your trading according to what you find out. There’s a saying I really believe in which states, “If you keep doing what you've been doing you'll keep getting what you've been getting”. Only about 5% of Betfair customers make a long-term profit and that’s mostly very small. If you can take responsibility and own the fact that the results you see are because of the actions you’ve chosen to take, it means that you are in control. Find what aspects of your trading are working and hammer them hard! Reign back the stuff that’s increasing your losses. Simple, eh?!, so how come most people aren’t doing it?

All the best with your trading!

Update: The first couple of videos are now ready. There's a quick overview video and also a getting started video. Click here to see them. Or, scroll down to see screen-shots of the other screens.

_______________________________________

Click on the 'Buy now' button for an instant download of the spreadsheet.
£2.49
(yes, that's barely more than a minimum bet!)

Price includes any future updates FREE!
(Be sure to supply PayPal your correct email address to receive updates.
PayPal do not disclose your street address for this purchase.)

Now includes Betfair Lifetime Report conversion spreadsheet, FREE!

For more information on this check out this post.

Requires Excel 2007 or Excel 2010 for Windows
Please check the detailed software requirements below for use of this spreadsheet before buying.

No account needed.

_______________________________________

Here are some screen shots of the other tabs:


'Total by Sport' tables showing a drill-down

Racing summarised by race type & distance (and then racecourse)

Running totals

'Graphs' tab

'Monthly comparison' tab, with a filter showing 4 months data only

_______________________________________

Click on the 'Buy now' button for an instant download of the spreadsheet.
£2.49
(yes, that's barely more than a minimum bet!)

Price includes any future updates FREE!
(Be sure to supply PayPal your correct email address for updates.
PayPal do not disclose your street address for this purchase.)

Now includes Betfair Lifetime Report conversion spreadsheet, FREE!

For more information on this check out this post.

Requires Excel 2007 or Excel 2010 for Windows
Please check the detailed software requirements below for use of this spreadsheet before buying.

No account needed.

_______________________________________

Software requirements (not included!):

Excel 2007 or Excel 2010 for Windows. Tested on XP, Vista and Windows 7 (see note below about Windows 7).

All the best with your trading!

All green on the baize

2011-03-29T16:07:00.001+01:00

After following the jumps season intensely for several months and then the spectacle of Cheltenham, I've been needing a change of pace and scenery. So I've given the racing a break and have been following the snooker at the China Open, showing on Eurosport, as a nice build-up to the World Championship in a few weeks.

As I became a fan of snooker many years ago, even before betting on the horses, I still really enjoy it now and having the opportunity to trade the volatile markets is great.

I've read some blogs pointing out the 1.01ish laying opportunites in tennis, but snooker can present some good opportunities too - and they don't have to involve finding a 1.01 drifter. I don't trade tennis as I don't follow it closely enough and, unlike racing, there are no jockeys aboard to give you a clue about how the participants are feeling!

Also, it strikes me that the serve in tennis is so significant to winning a set that when trading you can quite quickly get caught with your pants down, so to speak, when a break happens. I'm sure there are many who view this as the whole point but I think to succeed you need to be a very sharp customer with a good ability to hold your nerve to profit in the long run.

Conversely, with snooker, one bad miss is not so likely to be curtains for your match odds trade. Losing the frame doesn't statistically affect the player's ability to win the next, as they're not 'facing the serve' next time, so to speak. In fact, one player making a stupid miss can sometimes encourage the opponent to get sloppy too. Snooker is so psychological that being a couple of frames down to the outsider can be quickly rectified by the top players.......

However, this doesn't mean that the odds are slow to move. I'm often surprised at how far the match odds shift early in a match. Take a look at this from the Shaun Murphy v Joe Perry game earlier today (match odds on lower left):

The above screen-shot was taken with Perry at the table 2-1 up. Murphy's odds have already gone from 1.5 to 2.5 and back again before returning to evens, but Perry still needs 3 frames to win the match! The impression I have of Murphy is that he often has a slow start but even when his back is against the wall he never gives up and frequently works some magic.

Against an opponent that he was originally 1.5 to beat, I'd be happy to take a punt at 2.25 / 2.5 so early in the match. Either small stakes looking to lay off if/when the match is levelled, or to larger stakes taking profits gradually or laying off some if Perry had got in first, carefully observing the potential opportunity first (i.e. how many reds he needs to seal the frame and how many are already safe against the cushion etc). Even just running out of position can cause a panic in the odds for the entire match.

The above screenshot shows what happened when the match went 1-3 to Perry and then levelled again at 3-3 (Murphy is so good at coming back!). Murphy is 1.69/1.71 to back/lay at the start of the frame, but only one shot later was 1.6 as the momentum was then firmly with him - a trading opportunity in itself as even if he'd missed the pot he was still favourite for the match.

As the match is broadcast on Eurosport and being played on the other side of the world, the picture delay is obviously going to be significant, so personally I wouldn't be trying to do really short-term trades, just sticking to finding these points that I consider value and with plenty of time to get out. But it'll be a different picture for the forthcoming World Championship matches that are on BBC (terrestrial for those of us lucky enough to still have fast pictures!). Frame betting then also comes into the, er, 'frame'......

Sports Personality Of The Year

2010-12-20T11:48:00.000Z

Great to see AP win the oddly named SPOTY, getting an impressive 44% of the total vote. Nice one! Hope he's not going to retire too soon, he's talking about going out whilst on top.......

Well done to anyone backing him before the cat was out of the bag (touched 120).

I was really pleased with Phil Talyor getting 2^nd, darts is great for trading, and all-round action-woman Jessica Ennis coming 3rd, I just enjoy watching her for some reason.

Money and Emotions

2010-10-13T10:39:00.000+01:00

(image copyright The Open University 2010)

I've been enjoying a little look around the "iTunes U" online university and found some podcasts from The Open University and in particular thought this one had some relevance: Money and Emotions

They are looking at how emotions affect financial decisions and as well as discussion from the people carrying out the research they interview a few city traders including a Forex trader. It's interesting to hear from the Forex trader that he feels a lot more comfortable with his positions when they're going the right way rather than against him. It doesn't sound much different to someone sitting in hope watching their Betfair trades!

As is all too often the case when it comes to successful trading, the piece doesn't offer any solutions, but there are some surprising points. For example, one observation they made from their analysis is that contrary to popular belief, people largely devoid of emotion but with all their logical reasoning in tact were not better at making financial decisions. Furthermore, one of the traders' managers at a bank felt that outbursts of emotion such as banging the desk / throwing the phone etc was helpful! Her reasoning was that she felt they need to let off steam and can subsequently make better decisions if they've got it out of their system.

Personally, when I've "had a moment" I have frequently gone on to have a winning day, but very often at the (potential) cost of taking far greater risk. So, yes, sometimes I've just made things worse. What I have noticed though is that I've made several of my most profitable trades in this mindset. Trading is inherently risky but, particularly when I'm happy with the way things are going, I naturally start becoming more cautious - and hence limit my potential profitability. I guess the ideal balance is to remove the fear of taking a reasonable amount of risk whilst not needing to get steamed-up to do so!

Has anyone found any other research into this topic which may be useful?

Automated trading

2010-08-13T10:30:00.003+01:00

I've been lacking any inspiration to write new posts for some time but a kind comment asking me to get on with it has prompted action!

A good part of the reason for having no trading-related ideas for posts is because I've been spending all of the day outside of racing working on automated (Excel) trading spreadsheets. It really is a joy to have your criteria systematically executed without loss of concentration and emotional distraction. One of the things that frustrates me when I'm having a really good day trading (manually) is that I tail-off rapidly, I just don't have the killer instinct to keep on hammering the markets when I'm well up on the day. However, with an automated strategy, the spreadsheet shows no mercy! It's really something to have 3 great winners at the end of an evening's racing whilst you're out having a beer. Of course it doesn't always happen like that at all but you get the idea........

For anyone struggling with "mind games" in their trading I would highly recommend them considering investing some time looking into ways of writing automated betting spreadsheets. If your trading is going nowhere then at least investing time into this will progress you in other ways even if your system turns out to be unprofitable in the long run, for instance, you learn a new skill - i.e. Excel and programming principles, which could be useful for your job. Also it makes you think about the reasons for making trades and what might be the best conditions for entering / exiting trades which could perhaps help in your manual trading.

So far as I'm aware Gruss Betting Assistant and Bet Angel are the only two trading applications that offer Excel linking. I have used both extensively but have used Gruss exclusively for well over a year. Back then its Excel functionality was well ahead although since I think Bet Angel has closed the gap somewhat and added some alternative features. The support on Gruss is just so superb I wouldn't go elsewhere though.

The Gruss forum, which non-subscribers can join, has loads of discussion about Excel trading ideas and technical help (search for keywords or look in the Discussion, Suggestions and Help sections) as well as a dedicated section for requesting professional help from Excel developers, including getting them to write all the code for you.

As well as implementing automated betting using the standard Excel interface, you can code much more sophisticated strategies using the built-in Excel programming language called VBA (Visual Basic for Applications I think it stands for). One post that gives you the basic framework of code for the start and end of your own code can be found here.

You will be amazed how often people on the forum will assist you and maybe even write whole chunks of code for you (for free) - often what might seem complicated to someone who has never written an automated sheet before is really straight-forward to someone experienced (and has probably been thought of and written by many people before you!). It's a great way to learn how to write the spreadsheet code - you can start by just tweaking an existing one to fit your criteria - that way you don't have to give away your idea for alchemy!

I was thinking about writing some posts about specific coding techniques and examples but am not really sure that is what my blog is about so haven't got around to it so far. Lets see if anyone's interested.

All the best with your trading!

Recreating your moment of triumph (or otherwise!)

2010-06-04T08:09:00.008+01:00

Last year I realised the benefits of recording my screen whilst trading prerace http://betfairtradingmindgames.blogspot.com/2009/07/video-your-trading-with-screen.html

Now I have realised the possibility to watch back my trades on in-running markets in sync with the race replay (archived races are now free on the RUK website as well as ATR, no need to pay 20p to the Racing Post). It's great to be able to review and replay the betfair odds alongside the action - it's a lot cheaper than learning about the behaviour of the in-running markets by sticking some money in and hoping for the best!

I bought a second monitor for my laptop last year which has been worth every penny. I use it as the main monitor for trading and use the smaller laptop screen for ancillary information such as graphs and the bets manager. However this is also great for replaying videos as I can have my trading screen recreated on my main monitor in full-screen mode and have the race replay on my laptop also in full-screen. It took me a while to work out that on the ATR replays, if you double-click the replay it jumps to full-screen mode - doh!

For anyone looking for a new monitor now, my top tip for what it's worth, is to consider the resolution of the monitor as more important than the size of the screen. My 19" monitor has a higher resolution (i.e. shows more information) than many of the common resolutions for 21" and 23" screens. And it fits better on my desk!

When I first started dabbling with the in-running markets, it was quite amusing watching the replays - it was a bit like being at a pantomime where the audience is trying to warn of impending danger - "HE'S BEHIND YOU!!!!!" - I would be shouting at the screen, "NO, don't back that horse now, he's done for!". It's funny how the heat of the moment can make you see things very differently. Watching replays with the betfair market "live" can help you become more accustomed to what can and does happen.

Of course, nothing beats real experience and putting real money into the market, but at the very least it can be a useful tool to get up to speed before starting the day, or when returning from a holiday. Sometimes after a break I feel quite disconnected from the markets before starting the day. Often this goes quickly, but watching some videos of my trading first helps get me back in the swing of things.

For some reason my laptop clock drifts a few seconds between the weekly checks with internet time. This article shows you how to set Vista to automatically check every day. This means that you can accurately sync playback of your video (looking at your countdown timer recorded on your screen video) to the clock in-picture on the ATR/RUK race replay.

Whilst I haven't posted for some time the number of people reading hasn't gone down and it has been enjoyable to have more of a two-way dialogue as I have been replying to helpful and interesting comments from readers, especially regarding the spreadsheets. Thanks to all who commented!

Should Sports Exchange Traders get a "real" job?

2010-02-08T11:30:00.000Z

When I get asked, “what do you do?”, I don’t tend to say, “oh I place an average annual salary on every horse race throughout the day. I don’t even glance at the form beforehand. But it’s really not like gambling”. I tend to mention my part-time businesses or what I used to do.

When I have mentioned sports exchanges in reply to this oft-asked ice-breaker, I have almost succeeded on occasion to keep the conversation the right side of respectable, but then as soon as I have to mention the word “horses” I can feel a cavern opening beneath my feet taking me back to burn in hell where I belong!

I have felt this unease from many people and at times from myself. Why is this?

I think at its simplest, any link with betting on horses has a very negative connotation for the majority of people. When I explained in detail what trading on horses is about to a friend, she pointed out that her father lost a fortune betting on the horses and I suppose this indirect negative experience of gambling is typical.

When I started dabbling with Betfair trading in 2005 I believed the sales blurb from the software maker that it wasn’t gambling. Now I am sure that it is gambling. But I do believe that trading is a subset of gambling that probably has a higher likelihood of success (albeit still very small).

When betting, you only need to produce your stake for the next bet, whilst when trading, you are intentionally using far larger amounts of money than you intend to risk. The problem is that if it goes badly wrong, then a form of Parkinson’s Law can rear its ugly head – Losses expand to fill the size of the bank available! Looking at the path I’ve taken in the past 5 years – and losses along the way – surely does mean that trading is gambling and the losses can be horrendous. Just look at how many blogs spring up from traders only to disappear in total bank loss within months or less.

It is gambling that has the negative connotations, not horseracing per se (but the search suggestions on Google are quite shocking) although obviously the two are inextricably linked. According to the British Horseracing Authority, “Racing remains, by a clear margin, the country’s second biggest sport after the modern commercial and social phenomenon that is football, with core industry expenditure now exceeding £1 billion per annum and a total economic impact of £3.4 billion”. So we’re part of a huge tax-paying industry (£325 million in 2008) with over 100,000 direct and indirect employees. That’s a good thing isn’t it?

Furthermore, Betfair stated last July that for the financial year 08/09, "Betfair paid £6.16m of the reported £6.2m paid by “exchanges”. We also paid more than 90% of the £1.35m which has been reported as “voluntary levy from offshore operators”. This payment was paid at the full levy rate – 10% of gross profits.

Our total contribution to the Levy in the period is therefore approximately £7.5m, up 7% from last year.

............Betfair would like to thank its customers for their continued support which enables us to make significant contributions to British racing."

Football doesn’t seem to have the widespread negative connotations about gambling (although I think the same or more may now be gambled on it than horseracing on Betfair). Betfair’s M.D., Mark Davies, states on his blog, “80% of Betfair's revenue came from UK horseracing eight years ago, and less than 25% does today”.

Here's something I've been mulling over for some time. What is gambling? Just betting? What about hedge-funds, Forex traders et al? Is that socially acceptable gambling ? It is after all, gambling. British taxpayers are all the owners of several banks to prove what goes wrong when their bets lose. What do those traders do that is so superior? Why are they "Masters of the Universe" and horseracing traders are something to be frowned on?

What about the millions of people following a traditional career path who "invest" chunks of their life-savings in shares? My opinion is that they’re gamblers too. In some ways that is quite reckless as it is not their full-time job to research companies properly, albeit that as the stock-market goes up over time then with a portfolio you should be on a winner eventually. But if getting a steady return is the objective then why not stick savings in the bank or government bonds etc? Because, I think, it's a gamble to make more.

What do you reckon, traders?!

Book a free holiday now!

2010-01-08T11:15:00.005Z

If, like me, your trading has been taking a well-earned break due to the abandonment of so many horse racing meetings, then you might want to consider booking a Betfair holiday to prevent your commission discount from reducing.

When you book a Betfair holiday (penultimate option on "My Account" page) then you don't get the 15% deduction on Sunday. HOWEVER, you also don't get credited for any points for the week either so you need to make sure the 15% deduction is more than any points you have accrued this week.

The other consideration is that you only get 4 "holidays" per year, so if you are lucky enough to swan off on "real" holidays to the Caribbean regularly then you'll have to weigh up the pro's and con's. Chance would be a fine thing!

I've been taking the opportunity to have the whole week off, rather than trying to scrape something from 1 or 2 meetings a day. I don't really like such days as the long gaps between races stops me getting into a rhythm and sometimes leads me to increase my risk by trying to milk every tick from every trade - sometimes ending in disaster!

Yesterday I started to get worried about how much trading I'll be able to complete this month as the latest forecasts are for the cold spell to continue for up to 2 weeks. Once the cold weather lifts, I expect it could take a while for the racecourses to thaw out too. Hey ho!

As a consequence I've been looking at other markets. I looked at the in-play "leg" markets for the World Darts last night and wished I hadn't! The markets are so thin that I got royally screwed. I might lick my wounds and have another pop tonight with a different approach.

Also, on Sunday afternoon the Masters Snooker tournament breaks-off. The frame-betting markets do have a higher volume than the leg-betting for darts (not surprising really) but the spreads can still be very wide. Played the right way though this does present some good opportunities.

Good luck and may the sun shine soon!

Analyse your horse racing P&L in 3 ways!

2010-01-06T11:22:00.011Z

Update: April'11. The much improved Results Summary v2 spreadsheet is now available for download! Including support for all sports as well as horse racing (summaries by course, race type, distance as well as all combinations of these), 'drill-down' from summary to details, Betdaq support and much more. Check out the post about it here http://betfairtradingmindgames.blogspot.com/2011/04/results-summary-v2-spreadsheet-is-here.html

_____________________________________________________

Following me putting up my Results Summary spreadsheet to download on previous posts, I have been contacted by a reader who has very kindly offered his Trading Analysis spreadsheet for everyone to download. Click here to get it. All he would like in return is feedback and any bugs/problems found so please leave comments on this post and I will pass on any replies.

(Note: the P&L figures are random and not the author's or mine!)

Click on the "About" tab to get info about why the spreadsheet was created and some tips on usage. The spreadsheet works on Excel 2000, 2003 & 2007 which is a real bonus.

You need to turn macros on if they aren't by default on your version of Excel (more on this at the end of a previous post). After you have done an import (click on the red "update" button in the top-left of the screen), the data for that import will be visible on the "Recent Results" tab. You can double-click on a date, track, race type or distance and your P&L will be summarised by that on the right-hand side of the screen.

The level of detail offered by the spreadsheet is fantastic and the more historical data you have on your trading the more use this spreadsheet will be in revealing patterns. The separate tabs for all of your previously imported data (including the current import) can be accessed by clicking on the buttons to the right of the screen or on the tabs at the bottom of the screen. Again, it is summarised by date, track, race type or distance.

I think that the level of detail available here will make it especially useful for in-running punters/traders, for instance, being able to split your P&L by distance or track for a whole season of data could be pretty revealing.

Whilst the distance of a race or track wouldn't obviously be a factor for traders who purely trade pre-race (and don't slip in-play!), have a look, you never know! Don't forget to leave a comment once you've had chance to use it, a lot of work has gone into this spreadsheet so I'm sure the author would appreciate it.

Cheers & Happy New Year!

Version 1a of Results Summary spreadsheet

2009-12-24T16:19:00.008Z

Update: April'11. The much improved Results Summary v2 spreadsheet is now available for download! Including results summarised by sports, Betdaq support and much more. Check out the post about it here http://betfairtradingmindgames.blogspot.com/2011/04/results-summary-v2-spreadsheet-is-here.html

I've made a small improvement the Results Summary spreadsheet. Save it to the same folder as your current version. After opening it and turning macros on, press the new button, "Import records from previous version" next to the "undo current import" button. Then you're up and running!

Firstly, the weekly totals now have the date that each week started on rather than the week number.

This is a bit more meaningful and also has the benefit of sorting correctly - as the weeks numbered 1 to 10 were previously sorting incorrectly with 1 appearing before 19 and 2 before 29 etc (I hadn't noticed as I've only been using this spreadsheet since last May). But you'll be ok until mid-March next year with the old version!

The second little improvement is that the data import macro will now work even if you rename "Results Summary" to something else. The Betfair P&L file must still have the default name of BettingPandL.xls and be in the same folder as Results Summary though. This will be useful if you want to have separate instances of Results Summary for different accounts, or simply to call it something else.

Any questions, let me know! There have now been over 100 downloads of the first version. Hope you are all finding it useful.

The original post about Results Summary can be found by clicking here.

Have a great Xmas & New Year (particularly on Boxing Day and New Year's Day racing!).

More on the Results Summary spreadsheet

2009-12-02T17:24:00.009Z

It's great to see the spreadsheet being used by a few people, I'm glad its been of use posting it up. A couple of bloggers, that I'm aware of, have posted screenshots of their results using it. You can check them out here: JS' Betfair Trading Journal & Fight The Inner Demons Good reads both of them.

I thought I'd mention a couple of things for the people that have downloaded the spreadsheet (a lot more than 2 - let me know if you are finding it useful!) which may help get more out of it.

The reason that there is no grand total on the table with the daily results is that by selecting any of the columns you can then get total, maximum, minimum, average and count for that data without the grand totals being included and messing it up. To do this put the cursor just above the column header until you get a black downward-pointing arrow, as shown here above the P&L column:

Clicking will then select the whole column and the summary figures I mentioned will be displayed along the bottom of the excel window:

If you don't get all the summary figures shown here, you can choose which ones you want by right-clicking this bottom part of the Excel window.

Another thing is the warning message that you get regarding macros every time you open the spreadsheet. You can get avoid this happening in Excel 2007 without lowering your security for other spreadsheets by digitally signing this spreadsheet as your own.

To do this go to the start menu, select "All programs" find Microsoft Office, then click on the sub-folder called Microsoft Office Tools then select "Digital Certificate for VBA projects". Give the certificate any name you want, e.g. "Fred's supa dupa certificate" & click OK. Then open the Results Summary spreadsheet, right-click on the "Summary" tab at the bottom of the Excel window, select "View code". A new window will open and at the top there are several menus. Select "Tools" then "Digital Signature". Under "Sign as" press the "Choose" button and select the certificate you have just named. Click OK x2 and then close the Microsoft Visual Basic window. At this point, save your spreadsheet. The next time you open it you will not be prompted about macros.

Sorry that got a bit technical, but over the course of months this will save you tens of irritating warning messages!

Denman, you beauty!

2009-11-28T15:55:00.007Z

What a performance by Denman today! Seeing Paul Nicholls choked with emotion after the race brings home how much this horse means to people. Being a trader it is easy to let most horses pass you by, but the rollercoaster-ride of results with Denman make it a special horse to follow and I was really rooting for him to win.

Harry Findlay had said on ATR and The Morning Line that its fate should be clear after the first few fences and after brushing through one of the early ones the odds did drift a little and I made a small profit on a trade. After 6 or more fences I thought I was missing something because it still wasn't clear to me whether things were 100%. In the end I just had a little tickle as he jumped the last - I couldn't see him losing then, top weight or not - as I couldn't bear to miss having a bet on such an historic win! I was pleased to hear that Harry Findlay was also surprised by how Denman raced, only getting his rhythm in the latter stages of the race.

Roll on the Cheltenham Gold Cup! I see Kauto Star is still favourite so it should be an absolute thriller. I hope they both arrive in peak form so there are no excuses, but a fabulous contest.

Download spreadsheet & graphs for your Betfair results

2009-11-18T17:16:00.025Z

As I've mentioned before, it was Matt over at Punt.com that originally got me into looking at my P&L results by average profit per race, average loss per race and strike rate (click here to read that post). This is a good indicator of whether I'm closing my winning trades too soon or getting better and also whether I'm taking too many risks (ever increasing average loss!).

I'm making the spreadsheet that I use available for anyone to download. It's pretty simple so maybe this will only be of use to those who currently don't review their results much. Anyhow, even if only a few find this useful then it's worth it!

(note: the screenshots show randomised data, not my real P&L!)

Here's how to get it up and running:

1. Download the past 3 months P&L data from Betfair. You need to save it to the same folder as the "Results Summary" spreadsheet to for the automated import to work. The Betfair spreadsheet needs to have its default name of BettingPandL (and the default extension of .xls).

2. Open the Results Summary spreadsheet. You will need to enable macros. Excel warns you of this when you open a spreadsheet to protect you from spreadsheets that have come from an unknown source. You can open the spreadsheet with macros disabled and look at the code to see that it's nothing naughty and then re-open it and enable macros. Also, your computer probably has a virus scanner and will scan the file when you download it. I understand that some may be a little weary so if anyone out there with some Excel knowledge could post a comment to say it's ok then thanks!

3. Click the blue import arrow. That's it!

If you want to undo the import you've just done then click the red undo button. You need to make sure that the data file you are importing doesn't have P&L data for the dates you've imported previously, so you can just overwrite the Betfair P&L file each day when you download the new results (or rename the old ones if you want to keep them).

Click on the "graphs" tab at the bottom to get the bigger P&L graph and the Average P&L per race and also strike rate. Beyond the obvious appeal of a P&L graph pointing in an upwards direction, I find the Average P&L per event graph really useful.

If the trendline of the average profit per race is pointing upwards, then you're getting better over time (unless you've just increased your stakes)!

If the average loss per race is getting smaller then you really are getting it nailed! If this is increasing but more slowly than average profit per race then you are taking probably taking more risks than before but it is paying off with larger profits (for instance, maybe you are now doing more swing trading than scalping).

If the average loss per race is getting larger faster than average profit per race then you probably need to look at reducing the risk of your trades -UNLESS - you happen to have a high or increasing strike rate - that is the 3rd graph. For instance, if you have 1 or 2 fairly big losses in a day but have traded 20 other markets successfully then you're probably still in good shape.

Everyones style is different so you know what applies to you, hopefully you'll find these graphs revealing and helpful to keep in mind for your trading. I make a note on the "notes" sheet of my averages for each month and then set targets for the coming month - not so much overall monetary targets - but for average P&L per race and strike rate. This is easier to see if my trading is improving. Hopefully some with find this useful, let me know. Cheers, MG.

If you are going through hell, keep going

2009-11-01T11:02:00.006Z

There are so many great quotes from Winston Churchill I'm going to abuse a few for my own purposes!

Following on from my last post about the personal considerations of going full-time trading Betfair, I think the quote in the blog title is very apt. It has taken me years to become successful on Betfair and I'd like to think I'm not that thick!

In my case, I think winning was only possible once I developed a winning attitude. Maybe that is why some people can become successful way way quicker than I did - they already had a winning attitude.

If you are trying your luck at trading Betfair for a living because you've just been sacked then it's likely your self-esteem is not at its highest. This wasn't my scenario - I've been self-employed for a long time - but then again I probably became self-employed because I couldn't stand my manager so I wasn't filled with positivity!

I got so used to reviewing my losses most days and being really angry about them that on winning days I would feel like I cheated or got lucky (especially if I got out of a losing trade in-running).

I'm very happy to say I've just had my best week ever (apart from those freaky gambling wins I've had in the past, I'm talking about trading here). I still sometimes catch myself at the end of a good winning day feeling a bit "empty". It's odd, I think it relates to all the mass of emotion I used to feel after losing days that now things are going well it almost feels like I'm missing something! Maybe in some ways losing made me feel "alive", as perverse as that is. I'm really aware of this now and I consciously do some fun stuff or something constructive (going to the gym, anyone?!) after winning days to make sure I enjoy these winning days.

Sometimes winning can seem a bit flat because after all, the money is just spent on living expenses, like a salary would be. I'm sure I got into gambling all those years ago when I was 16 because I wanted disposable income, and lots of it, to lavish on truly hedonistic adventures. Paying the mortgage and buying the groceries just doesn't cut it!

This "normalcy" of income from trading is also something I'm trying to get past by winning a lot more! I can't help but compare trading profits with job salaries I've had in the past and it is a real kick to make a weeks wages in a day. I've noticed that many of the (few) very successful traders leave trading after a couple of years or so, so making hay whilst the sun shines is a good idea. Personally I don't think I'll quit that easily - it's been too long and hard a road to get here!

Here's another Churchill quote, "Continuous effort - not strength or intelligence - is the key to unlocking our potential". I believe that applies to trading successfully. If you want it, there's no reason why you can't get it, but it may take an awful lot more effort than you expect.

Now I've got a trading mindset worth building on I've also been trading some other sports I know a little about - snooker and F1 - and it's been going really well. I'm also looking at spread betting on financial markets. I've never had the capital to invest properly in shares but the margins on financial spread-betting are 5-10% or even less in some cases so it makes it much more accessible with a small bank.

Given my sometimes horrendous losses back in the day when I just gambled on horses, I've consciously avoided spread-betting as I feared it could result in some truly catastrophic losses. I'm still not going to use it for horses, but for financial markets I think I can put my trading skills - and more importantly, mind-set - developed on Betfair to good use. Time-wise it works well with the UK markets being available to trade in the mornings before racing, or what I prefer is to research US stocks and get my orders put in in the morning before their markets open in the afternoon. I'm not day-trading but looking for trades anywhere from 1 week to about 3 months, so I don't need to be panicking about the markets whilst I'm trading the racing.

Anyhow, it's time to make the most of my well-earned day-off now, glad to see it's absolutely bucketing down outside. Still, at least I'm not a jockey!

Going full-time trading Betfair

2009-10-07T12:35:00.003+01:00

When I started trading on Betfair I very quickly wanted to go full-time as making a small amount seemed so realistic (little did I know!). Once I'd mastered making small amounts then I reasoned that it'd just be a small matter of whacking up the stakes, and, Bingo! Instant part-time riches!

Sometimes I do regret being full-time (days I've gone on tilt mainly!) and I didn't consider it properly, but as I have been self-employed for most of the past 15 years it's not so difficult for me and not as cut-and-dried as it is for people quitting their job to trade. There was an excellent post on this written by thebetfairtrader a couple of years ago. He was (is?) a very successful part-time trader who was asked all the time by his blog readers why he didn't go full-time and this was his response:
http://thebetfairtrader.blogspot.com/2007/02/going-full-time-on-betfair.html

It's pretty sobering stuff when you're caught-up in the excitement of bringing the gambling gods to their knees!

Overall trading does offer me what I want, one important benefit for me is the ability to pick-up sticks and live abroad with the same income (my wife and I are aiming for Spain). The additional time you have available over a full-time job is a real and most precious gift that is rarely achieved by most working people (once you don't need to spend every waking hour working out how to trade successfully!).

For me, the only better option in this respect would be owning your own business that is large enough to not require your presence for more than a few hours a week or so. Then you can spend your afternoons trading! In fact, this kind of business has other benefits as even if you're ill, need time-off, injured etc then you are still making an income. You can also get a mortgage if you still need one. Residual income is unfortunately not one of trading's benefits - you're only as good as your last trade. However, for people reaching the dizzy heights of £350k a year that does still give enough flexibility for plenty of time off and house purchases!

Weekend starts early today!

2009-09-18T12:14:00.003+01:00

I've done my daily skim through the markets and there are a lot of weak low-volume markets later on this afternoon, so I'll be shutting down the computer and getting ready for the pub early today!

At the time of writing, the highest traded markets on betfair are at 2:45 and 4:45 with £77k and £80k respectively. Contrast with the fact there are no races from the 4:50 (£5k) until evening racing that have more than £10k traded, except the 5:25 (£12k). Some of this is probably due to the earlier races in the day attracting slightly more attention early in the day, but not that much.

Obviously this makes these weaker markets different to trade - more risky and probably more jumpy. Personally I really like the jumpy volatile markets but it does become more like gambling so I steer clear of the really weak ones. It is much much easier to have a large loss because if the market turns sharply, there will be a lot of traders desperately chasing the same limited money to get out of their trades.

These weaker markets tend to be later in the day (and the Irish courses), so don't kick yourself when you always seem to cock-up your P&L and strike rate for the day - maybe just consider avoiding these races.

Whilst the 5:25 might have enough volume when it comes to trading time and actually represent a good opportunity, I think I'll be knocking it on the head for the day after the 4:40 as waiting 45 minutes for one more race to trade isn't much fun! All the best for today.

Keeping tabs on your trading

2009-09-10T08:42:00.002+01:00

I do a quick analysis of every race at about midday and note my expectation on a spreadsheet. A side benefit of doing this that I hadn't thought of beforehand is that when I've had a losing race, I can read my comments for the next race. Even if my mind is steamed-up, at least I have analysis for the next race which was done with a clear-head. I can also see when there are several opportunities later in the day for swing trades etc. When I didn't do this pre-race analysis and I had a losing race, the time I had to make-up my loss was always the NEXT race! Sometimes I'd get lucky, but if the next race was a poor trading opportunity then I'd be much more likely to do daft things like doubling-up and going in-play.

After having a session where I went on tilt I always used to eventually come to terms with it and soldier on. Now what I try and do when I have a losing race despite my best trading endeavours is not beat myself up. I try and blank it from my mind in the same way I used to do with much bigger losses. Obviously I can do this much more quickly for these smaller losses! I then move on to the next race. It so often surprises me how quickly I can get most or all of the loss back. I then have a chance to make a little more. In the past I'd have no trading bank left to trade with!

After each race I note my P&L and make comments about the market. In combination with the screen video I record, this makes a useful review tool. I've thought long and hard about the pros and cons of constantly being aware of my P&L throughout the day and I've read many other traders' blogs about this. The danger is of course that when things aren't going well that focussing on the losses may make you trade worse.

On balance I find recording my P&L as I go along useful - for a start it's more up-to-date than my Betfair balance which may have unsettled markets to come into my account. It also enables me to have more perspective on the day than just a total P&L figure. After I've done my pre-race analysis I write a one-sentence forecast for the day - after all if there don't appear to be a lot of good trading opportunities ahead for the day, I shouldn't be beating myself up when I'm not making much money later on!

Scary stuff

2009-09-09T19:03:00.006+01:00

"Do one thing everyday that scares you." (Eleanor Roosevelt)

Trading used to be a world of wonder and mystery. Now it scares me and it is still largely a mystery. I still do it everyday though so hopefully that counts for something. I think taking time off now and then helps maintain the element of wonder.

"What's meant to be will always find a way" (Trisha Yearwood)

I hope that means laying low and backing high and not the other way around.

"You're never as good as everyone tells you when you win, and you're never as bad as they say when you lose." (Lou Holtz)

Funny that. No-one has ever told me I was good at winning. When I have a cracker of a losing trade I expect to get a call from Betfair right afterwards with someone laughing so hard they can't speak.

"Ignore those that make you fearful and sad, that degrade you back towards disease and death." (Mawlana Jalal-al-Din Rumi)

I now ignore those who continually make out that trading is straightforward and even by randomly sticking trades into the market he still finds it hard to lose and so by implication (the 95% of traders) losers are sub-chimp level. And then have a one-way dialogue on their blog......

"If you treat an individual as he is, he will remain how he is. But if you treat him as if he were what he ought to be and could be, he will become what he ought to be and could be." (Johann Wolfgang von Goethe)

I like this guy. He also wrote my favourite ever quote:

"Whatever you can do, or dream you can do, begin it. Boldness has genius, power, and magic in it. "

After a long journey I've been making a profit for 6 months.

Blowing your bank

2009-08-22T20:02:00.003+01:00

Turned out that it only took 2 sticks of dynamite to open the safe at my local Nat West, then like a muppet I laid Johannes in the Ripon 4:35 like there was no tomorrow. Of course it trotted up by 2 1/4 lengths so now I'm back to square one.

Only joshing, but there was someone laying Johannes so much that I was tempted to jump on myself in-running, but a swift self-inflicted crack over the knuckles stopped that. I was a bit frustrated because it cost me a chunk of the biggest trading profit I had built-up today when I was riding the steamer. Hey ho, it was still my best result today.

I was really pleased to see all the votes for the poll on the right-hand side of my blog about how many times you have blown your bank. Thanks everyone! Early-on the result was split between "Never" and "Three or more times" but now the result is much more what I expected, sadly. At the time of writing the latter has over 60% of the vote, mine included (althought not recently, wayhay!), and this is a big reason why long-term profitable trading is so difficult. When someone says, "oh, you only need to make £3 a race to do over £100 a day", it sounds so easy but anyone who has traded knows there is a lot more to it than that.

I've been experimenting with closing my trades within 10 seconds of post time, regardless of how close to the off the race is. It felt very strange at first, but it has advantages. For instance, much less stress! I am doing this experiment to see if I actually do profit in the long-term from trading past the post time. I have always enjoyed this volatile period of trading, but maybe it's not profitable even if there are only occasional large losses? What do you think? Should I put up a poll?

The Big Question: Are you trading better than yesterday?

2009-07-30T09:50:00.003+01:00

Hi, I've been away to sunny Spain for 10 days so it's the first break from trading I've had this year. I'm feeling really refreshed!

I did have internet access but it wasn't that fast and also as I didn't have t.v. pictures of the racing I resisted the temptation to have a go at trading. I thought the additional risk wasn't worth ruining my holiday!

I did wonder if I'd have forgotten how to trade by the time I got back, but it seems it's a bit like riding a bicycle and I was soon back in the swing of things yesterday. In fact, I was on for a real cracker of a day (increased my bank by 60% by 6:20 p.m.) so I was even trading a few early evening races which I don't normally bother with. At that time I decided to finish on the 6:55 p.m. as there was an o.k. favourite there, but I got badly caught out beforehand in the 6:35 p.m. by the very weak market and kept calling it all wrong. I did close my trades but temptation got the better of me and I decided to red-up in running - bad idea! I lost a big chunk of my day's profit.

Over at the excellent Tim Ferriss blog, his latest post is entitled,"The Big Question: Are you better than yesterday?" (www.fourhourworkweek.com). Today I am still reeling from the stupidity of not redding-up yesterday and was wondering if it will effect my trading today. After reading his blog post, I feel that is applicable and all I need to do is make sure I trade better than yesterday. That seems pretty easy - just red-up!

In his post, he mentions that it is easy to become demotivated by large complex problems (I would say successful trading is one of those!). For me, successful trading is comprised of many small solutions. In his post, Tim states that because these can be difficult to measure it is hard to see results. He uses the example of trying to get in better physical shape - he can go to the gym every day for a week and at the end he might not appear to be in better shape.

However he realised that by focussing on making today better than yesterday that it was possible to "be enthusiastic about taking real, tangible steps toward a distant goal".

For a long time I simply judged my improvement on how much I'd made (or lost) in a day / week which I don't actually think is very useful (what if you lost a bundle on trading and then made a lot backing or laying a horse in-running, or you didn't red-up and got lucky). Nowadays I simply compare my average loss per race, average win per race and strike rate. It is then easy to see if I'm on the right track, regardless of the daily P&L. I mentioned this in more detail in my previous post "Part 2 of Ending your pre-race trading career by going in-play" (it's a very long post - scroll down to the bit with the graph).

Trading better than yesterday - that's my aim for today!

Video your trading with screen recording software

2009-07-15T10:42:00.009+01:00

Videoing my trading has helped me hugely. It means I can track what I am doing well and not well, I can analyse how different markets behave. I often watch some of the previous day's trades before starting my afternoon's trading to get my mind focused and ready for the first race.

The software I use is free because it's Open Source software, it's called CamStudio (http://camstudio.org/). Apparently the best software available is Camtasia Studio (http://www.techsmith.com/camtasia.asp) which has a free trial but is then $299 to buy. It has loads of features but the only one it has that would be useful to me for recording my trading is the animation on the cursor when you click the mouse button. For $299 I'll do without!

One thing that wasn't good was the filesizes it generated - about 250mb for 6 mins of video. However, thanks to Google, I found out that you can use these things called codecs which are alternative methods of compressing video files and are legally free to download. I use one called Xvid MPEG-4 codec and now a 10 minute file is about 22mb and the quality is much better. I can record 2 hours using less than 300mb. I could probably tweak the settings further but I'd rather spend the time trading!

Disclaimer: Proceed at your own risk! I didn't know one end of a codec from my elbow before doing this and it was all fine, but obviously I'm not a computer nerd so you may have a different experience - don't blame me if it goes wrong! I'd recommend creating a System Restore point first as a good way of undoing anything that doesn't work, and of course, you have a backup of your computer files, right?!

For anyone wanting to download, I think the codecs are available at quite a few different sites. I used http://www.free-codecs.com/download/Vista_Codec_Package.htm
and did a custom install to just install the Xvid codecs (there are so many in the package that some of the other codecs may well cause conflicts with other software installed on your computer. Apparently codec conflicts are a common cause of software crashes, so just install the one you want). Obviously this is only for Vista users, but the identical codec is also available on the same website in an installer for Windows XP.

I didn't used to be able to run screen recording software because I used an old laptop which wasn't up to the job. I recently bought a Dell Intel Core 2 Duo laptop for £400 and it has been well worth the investment. With my trading software running as well as some websites, it still runs at under 50% processor load when I'm trading and recording the screen.

I find it very motivational to watch back some of my good trades as well as learning from the poor ones. Part of the reason my average profit per trade has increased is because when I reviewed my winning trades I realised I was leaving huge amounts of profit on the table - i.e. getting out of trades way way too early.

Yesterday my best trade increased my trading bank by 13% fully greened-up. If I could do more trades approaching that level and some better, then over a good afternoon I should be able to easily hit my target of increasing my bank 100% even with a strike-rate of 75%. This wouldn't always be scalable to the stakes that the big traders are using other than on Saturdays and other high-volume markets - I only use a few hundred, but this strategy suits me far more than risking thousands to make smaller percentages.

Betfair Market Suspension Problems

2009-07-11T18:41:00.003+01:00

How many traders today lost money due to the technical problems experienced by Betfair? They failed to suspend the markets for 4 of this afternoons races at the off (Curragh 3pm, 4pm, 5:30pm and the Nottingham 5:40). Their policy is to then void any bets matched after the official off-time IF the race is never placed in-play at any time. The official blurb is:

"If a market is scheduled to be turned in-play but Betfair does not suspend the market at the time of the ‘off’ and the market is not turned in-play at any time during the event, all bets matched after the scheduled time of the ‘off’ will be void (in the case of horseracing and greyhound racing, bets will be void from the official rather than the scheduled ‘off’ time)."

This is very scary for me as a trader who likes to trade right up until the off (I just love the volatility in the last few seconds!) as potentially they could void one half of my trade and leave my whole balance exposed to the result of the race. If you have a trade matched very close to the off it wouldn't be possible to determine if it had happened before or after the official off-time as even if you are watching on Sky TV, you need to factor in the delay of the pictures (which also varies across the channels).

Out of the four races concerned, I traded the 3pm and the 5:40pm. My green-up trade was cancelled on both races. Fortunately the favourite obliged in the 3pm and I made far more than the greened-up profit I then lost on the 5:40pm. But I was really sweating it on the 5:40pm as I had closed my trade with a lay bet very close to the off and I didn't know whether it would count, fortunately it did.

I guess this is further incentive for anyone having trouble letting their trades go in-play to close well before the off!

I wonder if this is a new policy with Betfair because I've seen the market suspended late on many many occasions in the past without them taking any action. I've also previously been able to back at 1.01 several seconds after the winner had passed the post when they didn't suspend on time.

Looking at the "Market" section of the forum, I see that they also had this problem on the 4:10 at Ascot yesterday. Before that the only other instance was on the 29th June and they have posts dating back to September 2007 (unless they delete some after a while? I'm not sure). So this feels like a change in policy to me. Watch out!

Let me know if you gained or lost from this today.

Part 2 of Ending your pre-race trading career by going in-play

2009-06-27T13:25:00.005+01:00

In my last post I explained that I have in the past lost huge amounts of money when I have not closed my trades before the market has gone in-play / in-running. This has normally been because I have made a loss from my trades pre-race which I haven’t been willing to accept and so in the heat of the moment I’ve decided to gamble by not closing the trade, in the hope I can close it in-play at a break-even point. Or by some miracle my lay-bet comes good when the favourite falls at the first hurdle, etc. This has of course then resulted in me losing far more money than if I had simply accepted the loss pre-race and redded-up.

Looking through my results in the database I keep, these catastrophic losses almost always occurred the next race after having had a loss that was large relative to the average profit I make per race. I was on-tilt from the previous loss. Then, if I had a losing trade on the next race, the “red mist” of gambling would descend on my mind and - bingo – I put my whole bank on the line, win or lose (and nearly always lose!). There was something very final about doing it, a threat to the market gods that they weren’t treating me right! Maybe subconsciously I wanted it all to end?

I’m sure a psychologist (or is it psychoanalyst, I’m never sure of the difference?) would be able to explain this behaviour and maybe one day I’ll read-up about it. The reason for calling my blog Mind Games is because I feel that in these situations, my mind has played games with me. I mean, I KNOW I shouldn’t go in-play with my whole balance on the line, but I’ve done it. Repeatedly.

I’ve read enough self-help books on various subjects to know that one question they would ask is, ”in what way does losing by going in-play serve or benefit you?”. Now my first reaction to that would be are you f*ing insane?! But, if I really had to find a reason, I think the most significant one could be to end the pain of not winning. Another might be the thrill of gambling, which I miss. Another might be because I feel that it is wrong that I made a trading loss on that particular race – because of a spoofer, or because the weight of money was pointing the other way, or because the race commentator didn’t mention all the horses were in the stalls etc etc etc. All excuses.

In the meantime, I have found that by changing a whole bunch of things just by small amounts that I am now able to break this destructive pattern of behaviour.

From reading other blogs and comments I know there are other traders out there who are having the same experience. I think it is the same mindset that gamblers have where “just one win” will get them out of the financial hole they are in. I have the feeling that the non-traditional gamblers out there who are traders may not really know what we are talking about and simply say, “don’t go in-play, you’ll end up losing your bank”. Of course they are right and I wish I hadn’t had to go on this long painful journey to stop doing it myself – I envy their ability to not think / behave in this way.

Anyhow, for me at least, there is not a magic answer but a whole series of factors which when taken together produce the desired result. Some of them I am probably not consciously aware of, but over the past few days, I’ve noted down the ones I’ve thought of as I’ve been trading. I really hope they are useful to other traders out there, but I’m certainly not saying I have all the answers or that what I’ve done will help curb this behaviour completely, or even a little bit, for other people. Obviously I hope they are helpful but I am not encouraging anyone to continue trading who wants to stop / has no money left etc. I don't know whether anyone can become a successful trader given the right circumstances, but apparently 90% or 95% of traders fail.

I mentioned at the end of my last post that, for me, I feel the most important factor in becoming consistently profitable was finding an edge (err – sorry for saying the obvious!). Of course, you can take the time to discover what works for you whilst using very small stakes. I was too anxious to start earning salary-sized amounts and I escalated my stakes way, way too quickly.
After trading on-and-off for 2 years, I started using stakes TEN TIMES smaller. For a couple of races it felt ridiculous, but then I actually started learning how to trade instead of wasting effort in abject fear of losing money I couldn’t afford.

By using small stakes you don’t have the pressure of taking a loss that is a significant amount of money in the real world, so you don’t need to risk going in-play to get out of the hole, so you don’t end-up blowing your (small) bank. That in turn gives you confidence and belief that you are indeed a successful trader, that in turn means you can start taking a profit most days from your trading, that in turn gives you respect for your money and trading stake, that in turn means that the last thing in the world you want to do is squander your hard-earned stake.

I actually think that, for me, it was important to earn my trading bank rather than just lumping it into my account from a bank card.

Treat it like a job! Hard work pays-off, it also gives you perspective on the money you are using. If your expectation of a good day is to make less than 50% of your bank, then remember it will take more than 2 good days of trading to recover from a total loss. If you normally make 20% a day then that’s a whole week wasted to get back to scratch. Why throw away all that time?
Can you imagine being in a job as an employee and telling your boss that you just threw away a week’s earnings for the business because you got a bit steamed-up?!!! Well, you are the boss, so don’t do it to yourself!

Do not put yourself under pressure to make a certain amount a day, week or month until you have proven you can make a profit for a period of over a month or so (only risking small stakes). If you’re like me then you won’t want to wait a whole month proving your edge, however I can say from bitter experience that it will be expensive using the maximum stakes you can afford whilst experimenting!

At first, just concentrate on trying to make a profit of any amount each day. Once I stopped trying so hard to make a set amount and just enjoyed being in profit, I found that after a few weeks the profits on some days started far exceeding the expectations I used to set. My strike-rate and consistency improved and I could enjoy my trading too. I felt safe to gradually increase my trading bank slightly, but I'm still way off what I used to use. Nowadays I concentrate on increasing my % profit for the day, not my trading bank size.

If I knew back at the start what I know now, I would have borrowed the money for my living expenses instead of for my trading bank and not expected to make a living from trading right away. The pressure of trying to make a living by trading must have been one of the factors that made it hard for me to accept losses.

It is a vicious circle that leads to blowing your bank and it starts with a loss. If you made a profit before every race then you’d never go in-play! Other than by genuine accident – and that can happen...

Did you know that AtTheRaces has a much larger delay than Racing UK? It’s only something like a couple of seconds extra, but relative to the overall delay from live that’s quite a bit. If you like trading right up to the last second then this could be one reason why you end-up going in-play by accident.

Furthermore, if you use the red-button feature of ATR, the delay is increased again. Just bear this in mind when on this channel and it may save you a chunk of your bank! Watch a couple of race finishes whilst on the red-button and see how much sooner Betfair suspend the market than you see the winner cross the line. Scary!

I really like the red-button feature as you can skip the diabolical daytime TV adverts!! If I hear Michael Parkinson say, “I’ve met thousands of interesting people”, or that old fart in the garden blabbing on about being organised, or Anne Diamond selling her soul for some gold, one more time I’ll be throwing my nice new lcd tv out of the window onto the lawn!!! It’s enough to put you on tilt. No, really!

The best way of avoiding large pre-race losses has to be to close losing trades quickly (okay, the best way is to get the market direction right!). Closing losing trades quickly, before your mind kicks-in saying,”ooh that loss is going to be big, don’t take it, gamble, double-up your stakes and really put your whole week on the line”! Just do it quickly, automatically, as a part of your trading style and it saves a lot of pain down the line. I am so often pleasantly surprised that the loss amount is less than I expected before closing the trade, that it actually gives me a boost. Then I hammer the next opportunity hard.

It has taken me a long time to get good at closing losses quickly and at the same time to learn how to let winning trades ride-out. They are two different disciplines and it is fun trying to master them, essential I suppose.

Keeping records is also really important to gain perspective on your trading. I’ve kept a database of all the spreadsheets I’ve downloaded from Betfair P&L and the Bet History pages for years. I made all sorts of weird and wonderful reports. A couple of weeks ago I started making a totally new system in Excel, it is really simple and at the moment I’m finding it very useful. There is an excellent article on punt.com about analysing results, particularly average profit and average loss per race, here is a link http://www.punt.com/2008/06/gambling-profit.html

Personally, I find that average loss per race is a very revealing stat. It is like a barometer of how consistent / on-tilt I was on any given day. Here is a graph from my results this month – just as well my strike rate is high!

You can see that my losses have been much more volatile for the past two weeks. This is partly because I’ve been trying to let my winning trades run for longer (with some success), however it is a totally different mindset to closing losing trades quickly and I’ve been slipping in that department.

Also, all the thinking I’ve been doing to write this post about going in-play has affected me a little, I think it has brought the old demons back to mind and also perhaps I felt over-confident that I don’t go in-play anymore and hence I’ve had some scrapes with some small liabilities going in-play which have increased the trading loss slightly. I’m not perfect! I need to be constantly vigilant.

Next up is “Respect”. No, I’m not trying to “get down” wiv da yoof, but when I started using stakes of £2,000 to £3,000 after only trading for a few months, I lost respect for that money. I forgot what it represented. I was supposedly only trying to nick a tenner or so a race so it felt safe and non-risky.

When I gambled, I built up my stakes very gradually (from the age of 16!) and a normal bet was £200, the largest I ever had was £400. Then I started trading and hey-presto, before long I ended up with £1,500 on some dodgy favourite of which I hadn’t even glanced at the form. Even I wasn’t that reckless when gambling!

It’s a funny thing this trading business, it appears to offer a safer form of gambling, but if you don’t “respect” it, you are going to have losses that you could only dream of previously.

The thing about losses is that not only have you lost money but you have wiped-out the profit potential of the day for the next day too. It may be obvious but it is significantly worse to lose on the day than to break-even for the day, however, I used to take more and more risk towards the end of the day when I wasn’t ahead – similar to when I was behind, crazy!

Looking at the markets before the start of racing is helpful as you then can set expectations for the day. If the opportunities for the day weren’t great then you shouldn’t be blaming yourself if things aren't going so well.

If there are lots of strong favourites and loads of money in the markets then it will probably be a fun day. If there isn’t then you can’t change that fact, but you can adjust your expectations.

Be aware of the next race – another reason why you shouldn’t go in-running is because you may miss a good trading opportunity for the next race. Not all races are the same. The "get-out" stakes at the end of the day may be the worst possible time to try and recover losses as they tend to be low quality and have low liquidity - leave it until tomorrow. Try to see the day as 20 races, not 1. This is the hardest part when the "red mist" of going on-tilt / gambling descends!

The final piece of the puzzle for me was trading bank management.

If you start with £100 and lose 50% on the first day, you need to make 100% (i.e. double) of your remaining bank of £50 in order to get back to where you were. If you accept on the less good days that a small profit is okay, then at least you have moved forward, albeit slowly, but you don't have any losses to recover the next day. You still have your whole bank to work with and the potential to have a great day tomorrow.

Without any form of bank management you are seriously weakening yourself with losses. If you use 100% of your trading bank throughout the day then if you have a significant loss your ability to recover is weakened, simply because you don't have as much money left to trade with to recoup the losses.

Some traders seem to have very strict bank management and use only 5% on any one trade. Whilst this is very prudent, the problem I had when starting out is that I couldn't afford to have 95% of my trading bank sitting around unused.

The compromise I use successfully now is that I have an amount twice the size of my trading bank in my Betfair account (the Australian wallet is useful for keeping the extra safe). This means that if I have some losses at the start of the day, I can continue trading with my normal stake size, even if the worst possible scenario occurred (i.e. going in-play with my whole trading stake exposed and this went on to lose, or a Betfair crash – last Tuesday at 5:15, anyone?!).

As I've said, I don't do that anymore! But I do find it useful if I have a bad start to the day that I can continue with my trading and not have to worry about reducing my stake size. Equally, when I have a good start to the day, I don't increase my stake size. I always withdraw my profits for the day unless I lost the previous day in which case I only withdraw once the loss has been exceeded (hopefully the next day). I find it very motivational to see regular amounts coming into my bank account!

The name of the game is to be consistent and not take more risk than necessary, keep a level-head and come out at the end of the day with a smile on your face!

I'd like to hear from other traders who have ideas (or proven strategies!) on how they have curbed this temptation to go in-play. If you found this post useful I’d really appreciate you linking to it from your blog / putting me on your blog list, I want to get more comments going and I need more readers for that!

Cheers, MG

Ending your pre-race trading career by going in-play (part 1)

2009-06-19T08:38:00.006+01:00

No, I haven't blown my bank by accidentally/on-purpose going in-play (this time!), but this is definitely a major problem for some traders. How many I'm not sure, so I've started a poll, it's on the right-hand side of my blog just under my profile. Please vote! My guess is that this blights the traders who come from gambling backgrounds - they have experienced the highly addictive lure of getting out of a sea of losses with one whopping great big winner (or in the case of trading, hoping to duck the pre-race loss from trading). It is way more exciting than a whole raft of things I can think of, probably as addictive as crack-cocaine I would imagine, but I personally wouldn't go as far as Mick Fitzgerald (autobiography, "Better than Sex"), ok he was talking about riding winners not backing them......!

Disclaimer: I don't recommend the following course of action for anyone who wishes to keep their bank-balance / sanity etc......

My most memorable get-out-of-jail-free was one Wednesday three years ago, 14th June 2006, when I had already wiped-out my bank twice earlier in the day (-£5,500). Having hit my credit-card for a third bank of £1,500 (oh yes, there was NO way I was going to quit!), I arrived at the Beverley 4:40. I opened a back-trade on the favourite just before the off, got matched for my whole bank, then before I had chance to blink the race was off. Now, I certainly did not mean to go in-play, but as I was chasing my losses and I had seen good scalping opportunities, I wasn't going to sit and do nothing even though I knew it was close to the off. I was gambling that I wouldn't get caught in-play and that I'd make a few quid on the scalping opportunity I saw (basically taking advantage of the volatility that occurs as more prudent traders close their positions!).

The race was a 5f fillies' handicap with 19 runners, the (joint) favourite that I'd backed was 5-1 SP. Well, by now you know it won (+£7,211 after commission) but the way it won is hilarious considering what I had staked on it (you can see the replay on the Racing Post website for 20p if you're interested, I've just watched it again for a chuckle!). The joint-fav I'd backed, Muara, broke poorly from stall 19 and got crossed by the runner from an adjacent stall, so its odds shot-out. If this hadn't happened, I'd have definitely redded-up for a small loss, but the odds were so ridiculous that I just resigned myself to losing another bank. The jockey, a 5-pound claimer, was the first to start pushing his mount along - after only 2 furlongs! Not surprisingly, the odds drifted further. In the closing stages there were 5 horses in contention and a fast finisher coming down the outside. Somehow (willpower from me hoping?!), Muara put a spurt on and won by a neck coming out of the pack.

I was too busy jumping up and down like a lunatic to remember to take a screenshot of the odds, but I would imagine that there was very little money matched at low odds on this winner as it just looked so unlikely all the way. If it had, I'd have redded-up. Of course the other outrageous piece of good fortune was that I happened to trade on the winning one of the two joint-favourites. Totally and utterly ridiculous. Incredibly lucky and of course I wasn't always so lucky - before this day I had lost my balance on 2 other occasions. The first, and therefore most significant to me, was after having opened a trade close to the off only for my software to freeze (and the bet went on to lose). I now have a couple of back-ups and don't use the same software. The second occasion was pure gambling. I think the "unfair" loss of my bank on the previous occasion affected my trading negatively for a long time afterwards as I tried to regain the money. After losing my bank for a second time I was in real trouble because it was going to take a long time to recover.

One aspect of my trading that I've improved significantly is to make a much higher daily % return. Back in 2006 I was only making about 10% on a good day. That meant that when I lost my balance I needed to work 10 days to recover it. Coupled with a poor state of mind, I found this very hard to accept. Nowadays I use a much smaller bank - only a few hundred - but I make about 30%-40% on a good day and I believe I can improve that more and I aim to average over 50%. On Wednesday I made 12.5% on one race (fully greened-up) - a new record for me. It makes losses on individual races much much easier to bear when you have a realistic chance of recovering them. It negates the reason for gambling.

My reason for explaining this in such detail is because there are several reasons why (losing) traders go in-play with their whole bank on the line and in order to try and arrive at a solution, I've really analysed my reasons. It can be totally accidental, or gambling with how much time is left, or even intentional once a substantial pre-race loss has accumulated from trading. The lines are perhaps more blurred than that too - if you go in-play "accidentally" were you sub-consiously wanting to gamble your way out of a hole? I think this has been the case for me.

There are some (winning) traders who don't seem to be affected with the trait of going in-play with huge liabilities, it would be interesting to really find out why. My guess is that it's because they do not have a background of gambling. If you go in-play when you were in profit on your trades pre-race, is that the same as going in-play when you had accumulated a loss that was so big it threatened a chunk of your day's profit?

I'm happy to say that I have now put this behaviour behind me and that is why I think I have some partial solutions. There isn't a magic answer, but a whole set of inter-related factors, at least for me. I still go in-play occasionally (more on that later), but never after having backed a horse for my whole balance. After 14th June 2006 I knew I'd had my luck.

The funny thing is that I've chased losses many times in the past and had some big wins (when I was a pure gambler, before trading), but on this occasion I got out of the hole by accident. Having had these experiences with gambling, when I was a novice trader I found it hard to keep a level-head with my trading when some trades turned into large losses. This was when I got tempted into trying to avoid the losses by going in-play - a fatal flaw for successful trading and a guaranteed route to the poor-house.

In my next post I'm going to try and explain more clearly how I've changed my trading to stop this destructive behaviour. I believe that this is the second most important aspect of my trading that I had to improve in order to become profitable in the long-term. The most important was to find an edge. After that the rest became easier.

£7,000 to £7,000,000

2009-06-03T09:31:00.003+01:00

No, I'm not trying to outdo the £1,000 to £100,000 challenges! This is the story of a self-taught day trader Rajesh Gill, known as the “seven-to-seven man” because he turned £7,000 into £7 million in two years (don't tell Adam Heathcote or he might push-up his challenge target again!).

What's even more extraordinary is that he was awarded £20 million last month after his broker was deemed to have defrauded him by lying about the value of his account. He found out when his usual contact was on a day-off and he spoke with another employee at the brokerage. Here's a transcript of the awful moment when the penny dropped:
http://www.timesonline.co.uk/tol/news/uk/crime/article6237285.ece
It's quite laughable that even when the sums of money are in the millions the conversation is handled like he's buying a packet of fags in a newsagents! The broker that had lied to him apparently did so to earn commission on the "successful" trades and pocketed £500,000 himself. Makes you wonder if these city firm ever check-up on what their employees are actually doing!

Trading Software part 2 / Gruss Betting Assistant

2009-06-01T11:14:00.008+01:00

In my last post I was reviewing some of the features that I like about Gruss Betting Assistant Betfair trading software. I highlighted the first 4 areas I feel that Gruss offers advantages over some of the other software available. OK, so here are the remaining 4 points.

Of the 3 software applications I've used, Gruss and BetAngel are the only 2 which offer integration with Microsoft Excel. When I started using Gruss about 6 months ago I noticed right away that the Excel integration offers significantly more features. The first most obvious one was that the last traded price is available for each selection. This is particularly useful for in-play automation as this figure can be quite different to what is currently on offer on the back / lay columns, it may also give an indication of which direction the market is going.

As you can log your bets to another sheet in the workbook you can use the "update" command to automate the moving of partially unmatched or unmatched bets towards the new market level. I also use the "MyBets" sheet to work out my new P&L when there has been a horse withdrawn from the race just prior to the start and Betfair haven't had time to remove it from the market (I hate ending up in the red due to late withdrawls when I've had an all-green market prior to the withdrawl!).

In Gruss if you have several markets open at once on different tabs, you can connect each of the markets to a different sheet in the same Excel workbook (and also have a seperate "MyBets" sheet for each market). This is really great for creating triggers from one market and applying it in another (e.g. win / place markets, football markets, tournament collapse triggers in tennis / snooker). You can control the refresh rate of each market independently from Excel and this can be automated (e.g. increase the refresh rate when the market goes in-play).

As from the recent 1.1.0.61 version, you can now select to have any of the additional information linked to Excel:
SP
Saddle cloth
Form
Days since last ran
Jockey
Trainer
Age/weight
Jockey claim
Wearing
Stall draw

There is so much functionality available I'll not duplicate it all here, you can find out more on the user forum and especially the "New releases" category. The main guy behind Gruss is called Gary Russell and posts on the forum regularly.

This brings me neatly onto the next point which is the superb development support. New ideas and suggestions for improvements are monitored closely by Gruss and in some cases, for minor improvements, I have experienced them being implemented on the same day! Now that is what I call service!

The penultimate point I want to highlight is the user-definable green-up option, or "Alt. level profit" as it is called in Gruss. Firstly, as a bit of background, I really like the BetAngel "Trade calculator", it is excellent if you are leaving a trade open to go in-play (intentionally or not!). You can then select the odds you want to try and close the trade at and the calculator will work out the relevant stake to close the trade greened-up. Gruss doesn't have this specific feature (I should get around to requesting it on the forum!), however as well as the standard green-up button, the Alt. Level Profit enables you to green-up any number of clicks from the current back or lay price that you want. I personally have this button set to reverse +1.

Let me explain. If I have traded a market successfully pre-race and I have zero P&L on all the runners except the favourite which I am +£50. After the market goes-in play, the back price goes to, say, 1.7 and the lay price is 3.5. If I green-up normally, I will have a profit across all runners of 50/3.5 = £14.28, whereas if I green-up one tick in-front of the current back price (so I am at the front of the queue) I make £29.24 (50/1.71) across all runners if I get matched. Do that several times a day and you are making a lot of extra money.....

Clearly this takes some judgement, but wide spreads in the odds can also occur at the very start of races and if you've gone in-play by accident then the last thing you want to do is green-up your entire bank at 4 in a panic when the back price is 3 - very expensive!

The final feature that I think is worth a mention is the integrated notes section. This enables you to record notes about selections so that the next time they run an icon appears next to the horse/selection to remind you. Even if you don't study form and bet in-running, this is useful for pre-race traders - you must have seen horses reluctant to go into the stalls / refuse to race. Next time out you can be on the right side of these market moves. It can save you a lot of pain and money if you know the favourite you are trading on can be reluctant to race - make especially sure you exit all your trades well in time for these ones!

Well that's all I can think of for know, I hope this helps because there isn't too much info on the Gruss website itself, I'd recommend looking at the user forum and downloading the software for the free 30-day trial. Happy trading!

Trading software (and Google Reader)

2009-05-29T19:07:00.016+01:00

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Firstly, before I get onto Trading software I want to mention Google Reader. Sorry if everyone reading this is using Google Reader to do so, but just in case I'll mention it! In Google Reader, you can consolidate all the blogs that you follow to read in one place, rather that bookmarking them all. The massive time-saving advantage of this is that you can instantly see which blogs you follow have new postings since your last log-on without checking every blog from your bookmarks. This is great if you follow blogs that don't update regularly (cough, wink, who me?, cough), also great because you may only be interested in certain posts by a blogger, you can quickly see if a post is of interest from the title (each post is displayed on one line, rather like an e-mail). Finally, you can group related blogs into folders (e.g. trading, hobbies, news, tech, etc.) and see which folders have updated since your last log-in. You can bookmark/star favourite posts and share them with friends. You can visit any blog post at its original location if you want, just by clicking on the title.

I found a vid on youtube that shows you what it's about:

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You'd be forgiven for thinking that BetAngel is the only option for trading software but there are other options which are well worth considering. I used BetAngel for a couple of years and started out back in 2005 on some other software. For the past 6 months I've been using Betting Assistant made by Gruss Software (http://www.gruss1-software.co.uk/). Knowing these 3 applications intimately helps give me an appreciation of what the differences are. For clarity, I'll refer to Betting Assistant as "Gruss", as "BA" could refer to BetAngel!

Gruss has been around since 2004 and is a very solid piece of software. Like BetAngel, I have never had a crash with Gruss, which is certainly not my experience with the other software I started out on in 2005. I lost my entire trading bank on a couple of occasions due to software crashes, which was ludicrous. I should have ditched the software after the first crash but I was reluctant to change what was familiar to me. Very bad strategy. Above all, software stability is surely the number one requirement for trading software.

In my experience, the main advantages of Gruss Betting Assistant over other software are mainly:

(rock-solid software)
Price
In-running trading, due to user-configurable Grid-interface
Some additional features in the Ladder interface
Superior Excel interface
Superb development support
User-definable Green-up option, e.g. one-tick in front of current back price
Integrated horse/selection notes section

The first point regarding stability I've already covered. The next point covers price, which is always a consideration. Gruss Betting Assistant is £6 for a month or £6 on a recurring payment basis for convenience via PayPal. Although I think for full-time traders if the software were to cost much more it should really still be a no-brainer, however the cheapness of Gruss I think could be significant for weekend traders or new traders. Starting-off £30 down for the month is a bit of a downer when you are just trying-out trading. Gruss offer a free 30-day trial for new users.

The next point is really a unique feature to Gruss which is a massive advantage for In-Running trading. The grid interface is user-definable and has the capability for 24 custom columns! You can select which existing columns you want in preferences and order them any way you want and mix-in your custom columns too.

This may sound confusing, so here are some screen-shots. Here is the default grid interface (click on image to enlarge):

Most of this is fairly similar to other software so I won't explain it, if you install the software for the 30-day trial then you can use the help pages to explain it in detail, there is also an excellent user forum.

Here is the grid interface after I've set it up for in-running trading:

Looks quite different to the default doesn't it! Being able to define the layout and columns is a really nice feature, you just set it up how you want it.

Briefly, the columns for each selection/horse are as follows:
Rev - ability to swap the back and lay columns individually for each horse (you can do this for the whole market in preferences like in BetAngel).
Saddlecloth number
Name
Silks
Projected Betfair SP
A custom column - here I have a back column for £10 at odds of 1.11 (small profit but you will get matched at the best available price & can click as many times as you want!)
Standard back columns - I've chosen to have just 2 instead of the normal 3 to save space - this screenshot was taken on my laptop with quite a small screen.
Profit - your current P&L for each selection
Level profit - the green-up button
Alt level profit - I like the option of trying to green-up 1 tick ahead of the current back price in-play (instead of the current lay price, if there is one) as the spread can be huge - this can increase your profits substantially!
Standard lay columns - again, I've chosen to have just 2
Custom lay columns x 6 - this way I can lay just ahead of the current market back price at whatever seems like good value. I have fill-or-kill set to zero on the low-odds columns (these would only be used close to the finish of a race, so you don't want to hang around!), on the odds-against columns I don't use FOK so I have more chance of getting matched - if I change my mind I can just press cancel. The final two columns are the stake sizes selected when pressing back or lay on the standard columns.

In-running trading is all about speed and having these custom buttons set-up means that I can enter a bid into the market at the price I want with one click (rather than plumping for what is currently on offer, which can be expensive as the spread between the back price and lay price can be huge and very volatile). Each custom column has its own setting for fill-or-kill orders, this would usually be set to zero so that any unmatched part of your order is cancelled. This saves you from having an order sitting in the market which only gets matched when events in the race turn against you! Bear in mind that there is a 1 second delay imposed by Betfair for in-play horse racing markets, so by the time your order is in the market you may get matched even if there were no offers at your odds at the time you clicked your order.

The standard 3 back and lay columns need not also be set-up as fill-or-kill, but can be. They also have an independent stake button to the custom columns. It's really useful with all the information available to be able to order the columns as you want and you can also adjust the width of them all.

The refresh rate can be set as low as 0.1 second which is great for automation via Excel spreadsheets (more on that later in the post).

The fourth advantage regards the features of the ladder interface. What I particularly like is that the amounts already traded are shown graphically as well as having the actual amount superimposed on the mini-graphs. This means that you can see at a glance where the previous action has been, much easier than checking out all the figures. This gives you an immediate feel for whether this horse is trading in a tight band or whether a swing trade is on the cards.
Amounts available to back or lay beyond the 3 closest to the current market are also shown - this is a fairly standard software feature now - but you can also adjust the refresh rate for these. You also have the ability to have a column down the side showing your potential P&L for exiting your current trade at the various odds in view, I see the latest version of BetAngel has this feature now too. Personally, I don't use this feature because I'd rather try and make a decision when it is the right time to exit a trade rather than missing out on an exit point because it hadn't hit my desired profit level.

On the downside, the charting is pretty basic (although it does provide 3 moving averages with last price matched, you can choose between a line graph or candlesticks or both), more on a level with other software and nowhere near as sophisticated as the advanced charting on BetAngel. I find it interesting that some of the most successful traders blogs that I've read state they don't use charting at all or only a little.

You can choose whether to have 1, 2 or 3 ladders on view, either way you can see a mini grid-style view of all the runners to the right of the screen along with the total amount matched on each individual runner so far. I find this invaluable for quickly working out which horse I want to trade on when switching to a new market.

This has become quite a long post, so I'll split it up and finish-off advantages 4 to 8 in my next post!

Stop-loss pt.2

2009-05-27T18:29:00.004+01:00

Hello again! On my previous post I've added a comment that is a follow-up to my earlier post regarding stop-loss.

I've been trying out new software, new techniques and generally working on improving my trading since my last post, so I expect I'll find something to write about again soon. I'd rather find topics that haven't already been done over and over in all the good blogs out there.

Excelling in mediocrity

2008-08-10T19:00:00.004+01:00

I've been experimenting with the Excel automation capability of BetAngel Pro since May and have had several occasions when I've thought I've finally found The Answer! However, so far most of the criteria I've been using have resulted in variable results, normally ending up in a neutral result over several races.

I'm not a programmer, but I did used to be over 15 years ago and I've dabbled with bits and pieces since then to serve a purpose outside of work (e.g. Filemaker Pro was an easy way of creating a database to import and report on my betfair results). I soon found that the Excel macros wouldn't enable me to do what I wanted to try out and so I've delved into Visual Basic / VBA which is a whole bag of tricks included as additional functionality in Excel that I never knew about. It's all very well getting automated, but without a good system it's fruitless. I think the main downfall is that in order to be fully automated, stop-loss is required and as I discussed in a previous post, I'm struggling to find the long-term value of those.

If there is a solution to trading successfully in this manner, I think it would incorporate a mixture of automation and manual skill. I wrote a new automation system this morning whilst watching "Hollyoaks" (Darren has really chanced his luck this time, faking the death of his father, as if lumping his home and business on a roulette wheel wasn't enough before!). Once I got chance to start using it this afternoon, I found that I really needed to ditch the stop-loss and I used the automation to open the trades and I would manually close them unless they reached the offset I'd set (2 ticks).

The real advantage of the automation is that it is a lot faster than me (even on my trusty old laptop!) and it doesn't get bored of looking for the criteria. The fact that it can't deviate from the criteria means that it it possible to test the criteria (if you can be bothered to sit around for long enough) to see if you have an edge and also has the huge advantage of not going on tilt! One point that I noticed was that often after closing a successful trade the system would place another trade before I'd even had time to think about it - aka "striking whilst the iron's hot", which just happens so much quicker than doing it manually.

I was quite motivated to sit it out because the first race I traded, the automation produced 11 successful trades out of 13! I'd already worked out how I was going to spend the £4k I'd have earned next week before the 2:10 started! Of course it's never that simple, each market is different and the subsequent ones didn't work the same.

When I started this blog I wasn't looking for a "system", but I do need an edge to my trading. What I have learnt from reading about the psychological aspects of trading successfully is that I do need a definable "edge" to enable me to remain calm and ride-out losses when they inevitably occur so that I can reap the benefits of long-term profits.

I will be trying out the system further tomorrow, again with small stakes, now that I have had chance to refine it and see how it goes.

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tick, tock, boom - what's at stake?

2008-08-07T10:55:00.007+01:00

There's two things I'm considering - relative stake for backing and laying, and also what's a 1-tick trade worth as a % of my trading bank?

First up, the value of a tick. I made a fundamental trading error for years. When I was doing scalping trades looking for a 1-tick profit only, it took me a long time to realise that entering a trade right on one of the points where the odds increment changes on betfair has almost double the risk of a trade only 1-tick away and therefore I simply shouldn't enter a trade at these points. I think it's the gambler in me - I wouldn't enter the trade unless I was confident of a winning trade anyhow, so what does it matter if the risk is higher? Well of course anything can happen in the market and this is one of the many many routes to the poor-house.

In case I haven't explained that clearly, for example, if I enter a trade with a back order at odds of 3.00 and I successfully exit with a lay at odds of 2.98 then I have made 2% (0.67% if I green-up). But, if the trade goes wrong and I exit 1-tick higher, the odds are 3.05. I have lost 5% (1.64% if I red-up). My loose understanding of probabilities says that I should only enter these trades if I have over a 70% chance of success - but it would be unusual to be that sure if indeed it is possible in reality. A similar scenario of course applies at the 1.99-2.00-2.02, 3.95-4.00-4.05, 5.9-6.0-6.2 etc odds-increment changes.

What I do now is turn this on its head and bear it in mind when the odds have drifted towards the point of an increment change and are getting sticky. I'll try and lay 1-tick before the odds-increment change (e.g. 4.0). I'm certainly not the first one to spot this, as demonstrated by the huge piles of money that accumulate at these points, so sorry if this is old school to you! Because of the large amounts that tend to accumulate at these points I have found that they are relatively safe trades - if there is enough trading volume to get matched.

The second part of what I'm considering is how to allocate my trading bank to each trade. I'm aware that some only risk a minority of their bank for each trade and I can see some advantages of this, however personally I am in rather of a hurry to get to the gates of freedom and I like to put every penny on the line, every time. (I think Rik Mayall put it something like,"I'm on the last freedom moped out of nowhere city" in the Young Ones). I guess it's the gambler in me again.

Before I used BetAngel, the software I used required me to work out my stake for each race. I would work out the maximum I could lay the horse for that I was trading. That would then also be my stake for entering a back-trade on the nag. With BetAngel I found that I had the option to open a back trade for my whole bank and open a lay trade for my bank / the odds, not only that but it automatically calculates the maximum lay amount precisely according to the current odds. Great I thought!

It is kinda great, but the obvious draw-back is that if the horse I'm trading is at, say 4.00, then I'm opening back-trades for 3 times as much liability as I open lay-trades. If the odds are indeed shortening then this pays me the maximum profit I can make with my bank, however, if the odds actually drift then I lose 3 times as much by getting a back-trade wrong as I do by getting a lay-trade wrong. What would often happen is that I would make a couple of winning lay-trades and then only one losing back-trade would put me in an overall loss. Don't get me started on what happens when there's a rapid drift in the market..............

I've also heard that some people don't trade on odds above a certain point. I thought, why? I got to thinking, "am I being daft again?". After all, if you're being responsible and trading back and lay trades with the same stake, then the higher the odds the smaller the stake and that would compensate relatively for the higher odds (and the bigger odds increments between ticks in absolute terms). I think the answer is actually due to the smaller liquidity in the 6/8/10 odds range making it potentially more volatile and therefore risky, so fair enough.

However, it made me think about the difference in profit for trading 1-tick at, say 2.20 and 3.80. The answer for that example is that you make 0.78% trading a tick from 2.18 to 2.2 and only 0.48% trading from 3.75 to 3.8 (after greening-up). The average is 0.62% from odds of 6.0 down to 1.6.

The graph shows what % profit (or loss!) you make for a 1-tick trade at a range of odds from 10.0 down to 1.2 (after greening-up)

The greened-up % profit is shown on the vertical axis and the odds range from 10 to 1.2 decreasing along the horizontal axis.

The two lines represent different staking strategies. The blue represents a level stake the same at all the odds (and greened-up). This would be the case for back-trades if you always staked your whole bank.

The purple line is where you stake relative to the odds, i.e. the maximum for lay-trades (and also back-trades if you being sensible and also limit that relative to the odds).

What it basically shows from what I can see is that if you divide your stake by the odds, back or lay, then the value of a 1-tick trade is relatively consistent and the method I've been using for back-trades is multiples more risky, so I should stop. Equally, when I'm laying below odds of about 1.6 I should limit the stake to my maximum back stake to keep it consistent. Naughty me.

What's also interesting is the sharp differences in profitability around the points where the odds-increments change. But at the end of the day, who's only going to trade where the % is slightly higher? Not me!

It's a challenge

2008-08-03T10:13:00.001+01:00

It's a torrid time out there! I've stopped trading for a while as I'm going around in circles and have traded away a fair chunk of the money set aside. 2 of the few blogs I read on trading posted small losses yesterday (The Experiment & Don't give up your day job) and Ticksize has packed in his blog because of abusive comments.

I'm really new to all this blogging lark and have found it a really encouraging to read about other traders. I started trading 3 years ago and back then all I knew about trading was a handful of video's provided with the trading software. I was really winging it and was successful for a few months and then couldn't understand why it started going wrong. Reading the blogs of other traders has helped me understand more about what is needed to be successful long-term and also about dealing with losses.

I'm going do some more work on my trading methods over the next couple of weeks and won't be trading much if at all, but I'll post to my blog occasionally if I think there's anything that might be useful to post up and get your views on. I'm thinking about going on one of Peter Webb's "Masterclass" trading courses - do you know anyone who has done one and if it actually produced results?

Another reason I'm spending less time on the trading right now is because I'm doing the "Thirty Day Challenge". It is a free course in how to set-up a sustainable Internet business, i.e. Internet Marketing. It's run by a team of IM professionals who've made millions by building-up and selling website businesses. I've been doing the pre-course training for the past couple of months in my spare time and it's been fun and interesting, I'm really looking forward to finishing the course (It started on 1st August). Have a look at www.thirtydaychallenge.com if you're interested. In fact it was the pre-course training that taught me about blogging and Google Reader and what got me started reading the blogs of other traders and deciding to set-up this blog.

Hope to hear from you and I'll be back with some more ramblings soon!

All the best.

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Déjà vu maggots

2008-08-02T12:05:00.001+01:00

I found maggots climbing out of the kitchen bin this morning. Well slivering anyhow. Really gross. According to Wikipedia they're from the larval phase of flies and the such and not really anything to freak about, I just need to keep the bin closed when there's flies about. Anyhow, they were nice white ones, not like the ones in the picture. Kinda upmarket maggots. If only I could make some money trading I'd be able to employ a cleaner, because it's the last f'ing time I clean the bin.

I was listening to William Hill radio again yesterday whilst I was trading really badly and the pundits were bemoaning the price of an odds-on favourite before the off, saying that it wasn't backable at odds of 2-5, but that it didn't stop the "maggots" piling-on to take a piece of the action. I think he means our wonderful vocation. The cheek. Still, he is employed by a bookmaker. They were a bit of a boring bunch yesterday, it was much better on Thursday. So was my trading.

I hope they weren't an omen for today.

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Movin' on up

2008-08-01T13:51:00.001+01:00

A quick update as I'm running late after writing some comments and I actually had some other work to do! Then I couldn't publish post for some reason.

I made a 20% profit over 32 races yesterday with 69% of races being profitable and no scratches (no hanging about!), which I'm very pleased with. I have a loose target of 10% per day, but no longer set a daily target as I think that in the past that was one of the pressures that led me to take excessive risks. Come to think of it, I don't even have a weekly or monthly target yet either. Doh! Actually, I suppose my aim of not blowing my bank is my real target for now. If I feel I'm trading consistently in the future then I think I'll set a monthly target.

Does anyone listen to the William Hill racing commentary? Yesterday was very amusing, especially in the early evening when the presenters were wheezing with laughter. Interestingly I did my best trades of the day during that time.

All the best.

Progress at last!

2008-07-31T12:52:00.004+01:00

I made a steady profit for the first time since Saturday, which was a welcome relief. It almost felt strange seeing my balance increasing!

It was still a day of 2 halves. Until the 4:15 I was sticking to my strategy which I had tweaked from yesterday as I again had a losing day then (nothing major, fairly consistent but in the wrong direction!). I still defined the entry and exit points for trades but I was only looking for 3-tick profit instead of 6. This proved to work much better, but after reaching a profit of 8% of my bank by 3:30, I then gradually went into a 5% loss. At which point I returned to scalping 1-tick at a time. By the end of the day and a couple of evening races before dinner I made a 20% increase and an overall profit on the day.

I am weary of returning to a trading style much more like I used a couple of years ago (scalping 1-tick or so) because whilst it worked then, I would go on tilt occasionally and wipe-out my whole balance.

The new strategy I devised from the book I read has enabled me to be far more consistent, but I simply haven't been able to make it profit. It has been satisfying not to have gone on tilt and I haven't wiped-out my balance. But I still need a trading style that has an edge in order to profit long-term.

I have dug-out the old database I made back when I was trading in 2006. I was shocked to see that my average loss was actually 25% larger than my average win! My strike rate per race was 62.5% for wins, 12.5% scratches, 25% losses (all on horse racing). They really don't seem like very good stats to me, however I still made a decent profit on the trading.

I've thought about a revised way of doing the 1-tick scalping and I'll try it today. I will also pick the direction of the trade using the entry and exit strategy I've devised from the book. I have also printed out the main points to bear in mind when I have a losing race. The main one is that looking through my stats for 2,500 races, every time I had a large loss is was shortly after a much smaller loss (but one that was maybe double or more of my usual win amount) - basically I was on tilt from that point. I have thought about what I am going to do in future in this scenario and I will keep this printout next to my trading computer for reading at critical times!

The other points I've printed out are the stats above - if I can profit with stats that bad then I don't need to stress about a losing race. I've also thought about all the benefits that trading successfully can bring to my lifestyle outside of work - and also all the penalties for failure. Hopefully that will focus my mind!

I'd like to mention that I really started thinking about the trading v's proper job pros and cons after reading a post on The Experiment: Self-indulgent Bullshit which is an excellent blog.

That's it for now, wish me luck someone!

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So I need to know how to trade as well?!!!

2008-07-29T12:47:00.001+01:00

Another losing day! I have been so utterly focused on my new strategy and following rules to keep me from blowing my bank by chasing losses, that I seem to have totally forgotten how to trade. Fundamental problem.

Normally I expect to win on about 80% of races. I aim for 80-90%. 75% is still enough for an acceptable result with my trading style. Yesterday I LOST on 75% of races!!! First, the bad news. If I can't trade profitably then clearly this is a waste of time..........Second, the good news. I didn't blow my whole bank! What an achievement, I still lost money, but at least I have a balance to live another day.

In order to enable me to deal with losses as set out by the book I mentioned, I have had to create a new way of trading. This involves having criteria for entering and exiting trades and not just entering trades because it feels like a good idea. This worked fantastically on Saturday where I doubled my (small test) account balance. It didn't work on Sunday or yesterday, however I think I would have blown my whole balance in times gone past if I was having a 25% strike rate. I always used to find Monday was a poor day for me and I never used to trade on Sundays, so I'll stick with it on Tuesday - Saturday and see if my new trading method will show a profit for the rest of the week. I've made a big dent in what I have available to trade with so it'll be hard to achieve a significant amount of profit, but I'll be happy with 10%.

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The £1 that cost me £130

2008-07-28T11:01:00.001+01:00

Embedded Video

I can identify with the trader in that advert, that's how I used to react! A major aspect of getting on the road to long-term consistent profit is being able to handle losses. In my case I think it is by far the biggest challenge. So that's why I'm very happy to have kept pretty much on the level after a stupid trade lost me 25% of my bank. And this was on my first day of proper trading since restarting. I had a trial day on Saturday with a tiny balance and doubled my bank purely through trading (i.e. I didn't let a few trades turn into bets and get lucky). I'm pretty sure I've never made 100% in a day purely from trading before. I guess I went into Sunday full of confidence......

Whilst I'm happy with how I continued afterwards, I'm really not happy about how I ended up in the stupid trade. If I had been following my new rules to the letter I would have had a loss of around £1. Here's how it happened.....

I'd been having a tough start to the day and had 3 losing races on the trot. I then made my biggest profit of the day only for it to be voided as the favourite was withdrawn at post time. That's pretty unusual and I think that really put me on tilt. It's stupid, the amount wasn't that big, but after the three previous losses it was as if the market was conspiring against me, which of course is utter rubbish. I had prepared myself before starting the day for losing on some races so I was able to cope with those, but I hadn't prepared myself for this and it really must have tweaked me!

The stupid trade occured a couple of races later. I had got into a medium-sized loss situation after three trades had all gone bad. I then pulled it around and got back to only -£2 or -£3 which after redding-up would have been -£1. I had 10 seconds until post time and had just exited a profitable 1-tick trade. The same opportunity seemed to exist as the front of the queue on both sides were very small amounts backed-up by several thousand behind them. My rule is to not initiate a trade inside 30 seconds to post-time (I close an existing position up to 10 seconds before). But temptation got the better of me and I thought I could exit this race about £5 up after starting out like another losing race.

I put in a back order and shortly after the closing trade and - whoops - the race went in running. The horse I traded on must have been napping in the stalls and the odds shot up. I did resolve to take the hit and closed the trade. At that point the "reverse close" and "manual close" buttons were no longer available, so I had 0 liability on the favourite and £130 on all the other runners. At the closing trade odds of around 6 this liability was really only £22 if I could have "redded-up" fast enough. At this point I was just panicking and the odds were switching between 12 & 22. By the time I'd worked out what I should be laying the favourite for to even-out my liability it was too late as it was trading at 100+. I wondered about smashing my keyboard like the guy in the advert, but I'm glad to say I kept composed, took a break for the next race, grabbed a beer and traded through the rest of the day for a profit.

Hopefully today I'll do the the right thing and follow ALL of my rules and nothing unusual will happen to put me on tilt. That being the case I should be starting my first week with a winning day. However, I have to say I normally lose on Mondays................anyone else have that experience?

Good luck to all.

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Does a stop-loss save your bacon - or fry it?

2008-07-24T17:34:00.003+01:00

Have you used the stop-loss feature, e.g. in Bet Angel Professional and others, and found that rapid and short-lived shifts in the market trigger your stop-loss only to then see the market move strongly in the direction you expected?

This means you end up with your worst-case loss and also miss-out on the profit of the trade you planned. Double doh. Unfortunately I couldn't collect the stats to see if it is true, but I have the strong feeling that I have lost far far more money on stop-losses than they have saved me from potentially losing with trades that went against me (not because I have some fortune-telling ability of which way the market is going to move, but because of the "double-doh" effect).

I am trying to construct a strategy for my trading before I restart next week so that I can measure my results with consistency. The idea is that if I have an average profit higher than my average loss and a strike rate of 50% or better, then I'll make money in the long-run. To be able to predefine the risk of any trade I ideally need an automatic stop-loss. Safe in that knowledge I would then be able to accept the inevitable losses when they come as a hazard of the job. That's the theory anyhow, if I feel that some red-brace wearing yuppie has just ransacked my trading strategy with his "misguided" £10k wager against the market trend then I might just have to take revenge and show him the error of his ways. This is usually the point where I blow my whole bank and put my last £2 on the 100-1 outsider in the last. Hence me trying to look at things in a more structured way......

What do you think is going on here? When using fast refreshing on BAP such as 200ms, I occasionally notice bets entered that move the market down as much as 7+ ticks and then the market surges in the opposite direction. Now I'm guessing that anyone with enough account balance to do this isn't a complete muppet.

Obviously this can only happen in a fairly weak market - or more to the point one that is exceptionally weak at that moment in time. I'm wondering if there are bots monitoring this. The large swing in one direction would trigger any stop-losses that traders have - presumably at the point where their exit-trades are significantly larger than the amounts taken to swing the market. The "non-muppet" then puts in a counter-order to match all those lovely stop-losses at a much improved average price and then the market goes on its merry way for them to eat out at the Ritz every day.

Maybe this isn't the reason for these sharp spikes in the market, but it's the one I came up with (no, I don't like the X-Files!), do you have any others?

Perhaps the more important question is actually how to have an effective stop-loss strategy. Of course the more common scenario than what I have mentioned above is that major moves in the market can be preceded by an initial sharp move. This is another problem for stop-loss though as it is processed by the software on the trader's computer and not on the Betfair server. I'm sure I'm not alone in that I've also had my stop-loss unmatched because the market has moved too quickly through it, which then leaves the unpleasant task of scrambling to exit a trade with all the other red-faced traders.

I'm wondering if it is best to set "mental" stop-loss limits before trades and then place them manually when needed. I suppose it comes back to whether you can trust yourself to do the right thing...............

The Beginning - of the beginning or of the end?

2008-07-20T17:52:00.000+01:00

I don't know which.

Apparently 50% of traders on betfair successfully make steady consistent profits over many events which they then wipe out (and some) with one loss, then repeat the cycle. I have been trading for a few years, some full-time, and I fall into this category. My significant loss would normally be my entire account balance.

I am part-way to understanding why (f***ing software crashes are a good excuse, but really not for all of it). I'm writing this blog partly so that any of the other 50% I'm in with who care to follow my voyage of discovery can do so without risking anything! And partly because I've just found out how to create a Blog and it seems so goddamn fashionable.

I have found a very promising book which was mentioned in a comment of an excellent blog of another betfair trader. I am part-way through it and really feel it is offering something I need (no, I already have a large drinks cabinet). It is purely psychological. Hence the name for my blog. I'm not sure that I should mention the name of the book, because this blog isn't a plug for the book (yet!) . I expect some highly intelligent person will probably comment on it before I do anyhow (if in fact anyone reads this - oh please, the other betfair bloggers have hundreds!).

Reading the book has reminded me of the first few months after I had started trading daily. I was so much more disciplined and I could trade without fear because I didn't have the fear, self-doubt and emotional pain of a large loss in my memory. I could take the trades that went against me because I knew from experience that I had an edge and I would make it back before the day was out (and if it was the last race of the day, then there was always the evening races!).

I have gambled in bookies since I was old enough to look 15 (when I was 17, but Corals didn't seem to mind). Straight-forecasts on the Greyhounds was my speciality then. One Saturday on lunch-break from my Saturday job I won £105 from a £5 bet (normally I would wager £1 but I had a "feeling!"). This was at a time when I earned less than £20 for the day (many moons ago). I think I've been searching for a "system" ever since. Crack-cocaine step aside (metaphorically, don't get me wrong).

I started trading on pre-race horse racing because it seemed that if I could work out how to have more winners than losers that all I then needed to do was increase the size of the trades from my winnings and I'd soon be working from the office of my newly funded villa in southern Spain. Ho ho ho.

What I am learning now is that I seem to have fallen into all the classic traps of trading. It's a bit of an ego-basher! I thought flunking out of university guaranteed that I'd be challenging Bill Gates by now, not falling into utter mediocrity. Anyhow, I will endeavour to keep this informative, here are a few points that I am attempting to fundamentally incorporate into my thinking when trading:

• a better understanding of the competitors / horses in a trading event is not the solution to trading difficulties or lack of consistent results (I guess that wouldn't apply to in-running trading though, but I'm not getting into that).
• it is attitude and state-of-mind that determine results.
• long-term successful traders learn how to think in probabilities.
• the typical trader assumes that he already does think in probabilities, but he doesn't.

Here's a thought to end with. It takes no skill, knowledge or forethought to execute a profitable trade, but long term profitability through consistency despite losses along the way requires a winning traders mindset. It is this that I intend to learn.

My intention is to finish the book, maybe re-read it, for the first time ever construct a trading strategy before starting my trading day and to report back faithfully to my blog with results. I am not seeking to find or write about a "system" for finding successful trades, more an attitude that will enable me to consistently increase my profits without putting my whole balance at risk.

It has occurred to me that maybe in order to be a successful trader I will have to be so mechanical and dispassionate about my trading that I will find it mind-numbingly boring and it will cease to have the attractions that it held for me at the beginning - several blogs I have read cite the desire to get out of mind-numbing day jobs, but if this isn't any more creative and carries a considerable risk then is it a superior option? As I am self-employed this is quite an issue for me and trading would have to be a lucrative way to spend an afternoon.

I will re-start trading in a week and will update before then with any further illuminating insights!