Tuesday, 28 April 2009

Five Years

I was planning on writing a post to mark the fifth anniversary of opening an account with Betfair later this week, but I have just discovered that the occasion passed quietly by last month. So rather than have both my readers wait another five years for my words of wisdom, I’ll write my post anyway.

How time flies. It’s quite remarkable how something completely unknown to me just five years and a few days ago has transformed into an almost all-consuming activity. I started with £2 bets. I’m not reckless by nature, and it seemed to me then, as it still does, that you only need a small bank to start with. If you have a winning approach, then the bank will take care of itself, and if you don’t, then better to learn the lesson with a small bank than a big bank.

I read on the forum about people depositing money into their accounts time and time again. Why? If you’re losing, give it up. From small acorns, big oak trees grow, but they don’t grow quickly. I spent hours back in 2004 and 2005 studying the markets, learning how they reacted to certain scenarios. I spotted one or two things and made a little money, but nothing to get too excited about. I made mistakes, and usually learned from them too. Some were small, some weren’t so small, but the key is to learn from them.

I soon realised that the only way to consistently win was by trading. With thousands of people pricing up a market pre-game, who am I, an outsider, to think that I can consistently beat the market? I can’t. But what in-play trading offers is an opportunity to pit wits against others, and combine a knowledge of sports with an understanding of the emotions of trading, and hopefully come out ahead. I recommend the trading books* by Dr. Van K Tharp if anyone is serious about trading.

There is a lot of nonsense written on the betting forums about fast ways to make money from gambling. There is a way to make money from gambling, but there is no holy grail ‘system’. There are opportunities out there though, if you put in the effort to learn.

Specialise. Learn how the markets react. Be fearful when others are bold, and bold when others are fearful. When a team is winning, it’s often hard to see them finishing up as losers, and other people think the same. What happens when lots of people want the same thing? The price is driven down too low on the leaders, and the value is in laying them. You may lose more often than you win, but if your bets are not value, then you will lose in the long run. End of story.

Keep records. They don’t need to be not hugely detailed records, but enough to let you know what is working and what isn’t. It’s enormously helpful after a bad loss to be able to look back and see what happened before, and how the bank eventually recovered. It can be tempting to go on tilt after a bad loss, with the attitude that you’ve already lost £500, what’s another £200, but if you can look back at history, it’s very reassuring.

I have learned that when it comes to trading, everything should not always be about ‘today’. Trading is nothing more than a series of wins and losses strung together over a long periods of time. There is no way to eliminate risk or loss, because risk is an equal part to reward in our equation. Focus on keeping loss controlled is a very different aspect than fixation on avoiding all losses, period. One is a normal part of the operation, the other is a path to failure.

* Tharp, Van K. (1998). Trade Your Way to Financial Freedom. McGraw-Hill. ISBN 0-07-064762-3.

Tharp, Van K.; June, Brian (2000). Financial Freedom Through Electronic Day Trading. McGraw-Hill. ISBN 0-07-136295-9.


Loocie said...

Hi Roberto,

great blog post! Can you mention the title of the book of Van K.Tharp?

Cheers, Loocie

Lewy said...

Great Post.

I myself was a complete novice when i joined betfair and i can relate to the amount of time it can consume but if you are wining it does'nt seem to matter. It's just finding something you are good at and improving. I found trading suited me more than gambling also and after trading tennis for a couple of years i am now attempting the pre-race horse trading as it is a faster pace which i enjoy.

Here's to another 5 years and all the best for the future.

Steve Lewis

PhilipH said...

Loocie, you can find books by Van T at http://www.amazon.co.uk/s/?ie=UTF8&keywords=van+tharp&tag=googhydr-21&index=stripbooks&hvadid=3223815039&ref=pd_sl_9dtaagodim_b

Cheers, PhilipH

Anonymous said...

Looks like you have at least double your estimated readership Cassini.