The weekend couldn’t have come sooner for me. After a couple of poor decisions mid week as mentioned in the previous post, I was looking forward to drawing a line in the sand and continuing in my form of previous weeks.
I managed to claw back some of the losses with careful trading on the golf and tennis, although there was no avoiding registering my first non profitable tennis tournament. The ATP250 series in Montpellier was a bit frustrating, and looking back I can see where I entered the market before i normally would, and a couple of times where I could (and should) have cut the red short but chose to let it run.
I could easily have hedged for a loss and waited for another opportunity which inevitably turns up, but when it does you miss it if you are still involved in the previous trade. Lesson learnt (see lesson 5 below).
There is a decent post at Centre Court Trading about lessons in trading which is well worth reading. His list is as follows:
1. Don’t chase losses
2. Don’t get greedy
3. Don’t trade with amounts you can’t afford to lose
4. Don’t over-expose your bank on one trade
5. Don’t cut winning trades short or let losing trades run
6. Don’t get involved unless there’s value
7. Don’t trade when in the wrong frame of mind
Personally, I look at those and fortunately I can’t remember the last time lessons 1,3, 4 and 7 reared their ugly heads.
No. 6 is a tricky one, which i would change to ‘unless you believe there is value’. Hard to be certain of value all the time or not but if you have an edge then you have to assume your making the right calls enough of the time.
No. 2 is one that i sometimes struggle with, mainly because i feel it can conflict with No.5. Often when I am in a position where i can green up, I have half a mind to do so and take the profit, thus following the ‘don’t be greedy’ mantra, but half a mind to stay in, thus letting my winning trade run. It’s ambiguous for sure, but i think with experience the decision becomes much easier. If you revert to rule No. 6 at this point, you can then judge whether or not there is value in hedging or not and go from there.
Quick mention for the Super Bowl, which I stayed up to watch and ended up waking up midway through the 4th quarter on my couch! I do enjoy NFL but I don’t have the time at the moment to be able to follow the live matches. While I’m on the matter of US sport anyone know how one can watch live NBA? Can’t seem to find it on any SKY channels.
Final mention to Kyle Spencer who had a fantastic last round in Phoenix to take his 1st tour win, just a week after the meltdown in Torrey Pines. Seems like one to watch, guy was hitting 189 yards with a 9 iron. Youch.
Talking Tennis (and) Trading 
Hi,
interesting read.
Generally this list is not that bad, but it is not helpful, because you can not measure any of those aspects. Take for example number 2: Don’t get greedy.
When are you greedy and when not? Does taking one tick more makes you greedy, because the odds movement changed? Definitely not.
As long as you can not define your trading rules precisely, you have no trading rules (or a trading system).
Take the famous “Don’t cut winning trades short or let losing trades run.”: If you have exact entry and exit points you, then you can stick to them. If not, you will always blame yourself, if the market continued to move in you desired direction, but you are already out of the trade and you will blame yourself too, if you waited for another few quids of profit and the odds movement changed against you.
I also think “rules” starting with a “don’t” also will not help you. They need to start with a “do”. So you can change number “3. Don’t trade with amounts you can’t afford to lose” into “3. Do trade with a maximum amount of GBP100 per event and stop trading after a total loss of GBP50”. To change the rules like that you have a precise and measurable set of rules.
Cheers!
Hi Loocie, in response your to your post, these ‘rules’ are not a serious, precise set of laws, they were just a quick list done in 5 minutes off the top of my head. Of course, if I were to draw up something to follow seriously, I might do things differently but as a basic set of ideas of things not to do, I think it works. Greed is subjective but I think we can all agree that generally, if we start trying to grab more money than we’ve got, stay in the market too long or taking too much risk to win more money, then we can get into trouble and should be careful to not be greedy!
Don’t be too greedy. A crystal ball would be helpful. Especially in tennis where a match can turn 180 degrees in just a few points you don’t get that many situations where you can safely let it run to the end of the match. Sod’s law says that you get out of a successful trade thinking there’s a good chance its about to turn on you and that your player could well be broken in the next game. Ofcourse they hold to love with a couple of aces and then break serve in the next game. If you’re human you kick yourself for getting out 20 or 30 ticks too soon, forgetting the 90 ticks profit that you have just secured. When I am in this position if I have 20% ROI or better then I can quickly dismiss any disappointment and move on to the next trade.
Paul, thanks for the comment. re the 20% is that of your stake or liability? i tend to lay at low prices so the stake and liability isn’t the same usually. thanks