Discipline Essential

I'm sure I'm not alone among bloggers in that I enjoy receiving sensible comments, and the quality has certainly improved since I blocked Anonymous ones a few months ago. While the counter let's me know how many people are visiting each day, when someone takes the time to comment, it not only tells me that someone found a post worthy of taking the time to comment, but it also gives me a topic for the next post - something that doesn't always come easy for a blog that isn't all about daily profits and losses.

Before I get to the comment, but on a related subject, I fear for O'Dwyer, whom I wrote about a few days ago in my O'Dwyer Straits post. Although the post has now been deleted, he allegedly (see comments) admitted to having borrowed his £200 betting bank. Not the way to go. Money for betting should be your own, and money that you can afford to lose. If either of those tenets is not true, then the fear / desperation element means that you are not going to be making clear and logical decisions. Essentially, you need to have your act together before you are going to make any money long-term from betting / trading, and there's no hurry. Sports betting isn't going to go anywhere. Anyway, I mentioned that because it segues nicely into a comment from Gary on my Thursday woes post, and he wrote:

I've been following your blog (along with hundreds more I'm sure) for a few months now and always find it great reading. Funny, insightful, random, great obscure titbits, keeps us all interested(I think!,-me anyway).

One thing I've wanted to ask you about regards that greatest of attributes required to succeed at this trading/gambling game - DISCIPLINE...!

Have you always had the required discipline / patience when trading, which may be part of your make-up in general, or did you have to learn it along the way?

I've withdrawn my funds from Betfair yesterday as I feel the dreaded loss of control creeping in again (after a fairly successful couple of months trading) - not a huge amount but enough that, although I don't need the money at this time I also don't want to blow it all as I, and I'm sure many others have done before.

Anyways, if you had to learn the art of self discipline are there any good books / courses advice you could recommend?

I'm sure it's something that can be taught but My God it's hard.............Keep up the great blog - & take Thursdays off!..

So the question really is this - is discipline an innate personality trait, or is it something that can be learned? I think it is something that can be learned, at least by most people, but like many mental skills, it is something that comes easier to some more than others. A minority of people just don't want to learn discipline. They are your problem gamblers who are in it for the thrill, betting with money they can't afford to lose, and quite possibly have issues in other areas of their lives too.

Discipline is essential to being profitable long-term. What do I mean by discipline? It's simply the ability to wait until the odds are in your favour and staking a sensible amount. The most frequent trigger for losing discipline, (chasing or going on tilt), appears to be that of a 'bad' loss, and by 'bad' I mean a loss that was on a bet that you knew wasn't good value but you took it anyway (a gamble) or a loss that was a value bet, but you bet too much (greed). A bad loss might also be a bet you had on a market that you know nothing about, perhaps from boredom.

A good loss is a sensibly staked amount on a value bet. No one is going to win every bet, and losses are inevitable. They are acceptable, and shouldn't lead to a loss of discipline. Alcohol needs to be avoided when making any kind of financial decision, and that includes betting. And don't bet when the emotional balance of your mind is disturbed or you are distracted. It may sound silly, but if you've just had an argument with someone, or broken up with a girlfriend, lost your job, suffered a bereavement or you have any number of other issues that are occupying your mind, you shouldn't be betting. If you have kids that want some of your time, don't be trying to entertain them as you bet. You end up doing two things badly.

This is the theory anyway. Gary asks "Have you always had the required discipline / patience when trading, which may be part of your make-up in general, or did you have to learn it along the way?"

Tough question, but I'll try to answer it as honestly as I can. Have I always had the required discipline / patience? No, and I still on occasion bet on things that I have no business betting on, but having said that, I have never been totally reckless with my betting. Truth is, I don't like losing money. If I'm involved in a venture that is losing me money, I pull the plug on it. I'm sure I have written in previous posts about my betting career pre-exchanges, but it basically consisted of a few 'fun' bets, always with money I could afford to lose, and trying out various systems, some profitable, others not so, but all these bets were for entertainment. I never had any serious thought that it was more than fun, and hopefully not too expensive fun.

But when Betfair came along (they were the site I first tried in 2004), I saw betting as something that could be seriously profitable, although again as I have written before, it's not something that I would seriously consider going full-time on, at least not at the expense of giving up a 'proper' job.

Have I made some of the mistakes I said to avoid earlier? Yes - I have lost four figures betting after a few beers. The good news? That was on Aug 31, 2006, and I haven't combined alcohol with betting since. Lesson learned, a good loss in a way. And not drinking so much is good for your health too (so I am told).

Betting while distracted? Yes, lost four figures doing that too, but again, not an issue these days. I no longer try to combine trading with socialising or work.

Betting on markets I know nothing about? Yep - done that too, and occasionally I still do this, although I justify it as a Premium Charge reduction strategy!

Chasing after a loss? While I don't like to admit that I have done this, numbers don't lie and in early 2007 I was guilty of this. My biggest loss ever was on New Year's Day (£5k+), and by May 12th, I was even further down on the year. Interestingly enough, this period coincided with a major (positive) change in my life, so perhaps going on tilt wasn't solely to blame, but betting while emotionally disturbed was. Either way, it wasn't a good five months, and I didn't recover those losses until August. Again though, I learned from this, the point being that we all make mistakes which is fine. The problem is when we fail to learn from our mistakes.

I would be lying if I said that after a 'bad' loss, I don't feel a twinge that tells me to immediately recover the loss. It's there, but you can learn to control it. Get some perspective on a loss. Slice it down into how many days it will take you at your current daily average to recover that loss. Look back on previous disasters. It never seems so bad after looking at the big picture.

I still do make mistakes. Tonight I completely forgot about a £300 bet on the Koln v Hannover game, and never traded out. That was a new one for me, and I need to open a new 'senility' category for those mistakes. The truth was I switched over to the more interesting Brescia v Internazionale game, and just plain forgot about the Germany bet. Old age is a bitch.

I do find record-keeping essential for discipline. Numbers don't lie, as I said earlier, and it's easy for me to see where I go wrong, with the latest example in my post on Thursday betting. I didn't always keep records, but when I realised (albeit after more than a year - slow learner) that it was possible to make decent money, I realised that I needed to if I was to be serious about it.

I'll probably think of more things to write about on this subject later. Profitable betting long-term is really rather boring, or should be, and the more successful at it are, in my opinion, reasonably well educated people who understand that an ROI in the low single digits is good, and who can keep their emotions in check. But betting attracts many who are in it for the thrill, who have no concept of value, and are, without meaning to sound snobby, if not a little less well educated, at least mathematically challenged.

Good luck trying to teach discipline and patience there, but being cynical for a moment - would we want to? When we win on the exchanges, where is the money coming from? It's sometimes easy to forget that on the other end of the money we take out of the exchanges, there is someone losing it. I just hope they're losing money that they can afford to lose, unlike O'Dwyer who needs to take a step back and evaluate his situation.

As for Gary's decision to withdraw his funds from Betfair as he feels "the dreaded loss of control creeping in again", I question where this "loss of control" comes from. If it's after a loss, in other words chasing, then the inability to control this is one of the ten symptoms of problem gambling. If it's after a win, get a grip man! Do you spend all your wages on pay day? Does cash burn a hole in your pocket if you don't spend it?

The Ten Symptoms Of Problem Gambling

Preoccupation. The subject has frequent thoughts about gambling experiences, whether past, future, or fantasy.

Tolerance. As with drug tolerance, the subject requires larger or more frequent wagers to experience the same "rush".

Withdrawal. Restlessness or irritability associated with attempts to cease or reduce gambling.

Escape. The subject gambles to improve mood or escape problems.

Chasing. The subject tries to win back gambling losses with more gambling.

Lying. The subject tries to hide the extent of his or her gambling by lying to family, friends, or therapists.

Loss of control. The person has unsuccessfully attempted to reduce gambling.

Illegal acts. The person has broken the law in order to obtain gambling money or recover gambling losses. This may include acts of theft, embezzlement, fraud, or forgery.

Risked significant relationship. The person gambles despite risking or losing a relationship, job, or other significant opportunity.

Bailout. The person turns to family, friends, or another third party for financial assistance as a result of gambling.

Discipline is the bridge between goals and accomplishment - Jim Rohn