Purposeful Practice

A post on the topic of the effort required to make a success of trading over at Interactive Sports Investor. I am still reading Matthew Syed's "Bounce" which comes up with the number of hours required to achieve excellence in any pursuit as 10,000, something I mentioned earlier this month. Malcolm Gladwell's "Outliers" came up with this same number in his earlier book, and in December 2008 I wrote about the apprenticeship that we all need to go through. Here's the latest on the subject:

We talk to people all the time that want to make money trading/gambling on Betfair as they love Sport and they see it as an opportunity to give them an enviable lifestyle and release them from the shackles of their boring 9 - 5 life.

What never ceases to amaze us though is that the vast majority of these people are not willing to put the time and effort into becoming successful. More often than not, they will deposit a couple of hundred pounds in their account and after a few weeks, they have lost it and they become disillusioned and then think that its just not possible to make a living trading on Betfair.

Now, consider this, how long does it take to train to become an accountant, a doctor or a vet or in fact, how long does it take to become proficient at any well paid job - the answer is typically measured in years and definitely not months.

Consider also, in any other profession would you not have some sort of formal education to become proficient? Well why do people undertaking a career (even if its part time) not take advantage of the education and help that is available? I can only guess that it comes down to the fact that they are not willing to pay for this education - but what about the saying 'speculate to accumulate'. You will lose far more money than it costs for the education by trying it on your own and you will probably give up - denying yourself the opportunity and lifestyle that sports trading undoubtedly gives to those willing to master it.

The 'we' and 'us' is somewhat pretentious, but our gentle ribbing of 500 to 50s blog name appears to have been a little closer to the truth than we thought, with his confession today that his initial £500 deposit is now down to £100 and that when that goes, the dream will be over. Credit for honesty, and credit if he really does close his account and move on if that £100 evaporates, but the thing that strikes me is the complete lack of any focus with his betting. We all laughed at his betting on German football based on alphabetical order, but it's really rather sad that anyone would put real money on an event without doing even the most basic research. Making money on the exchanges is not easy at the best of times, but laying 0-0s and betting on teams with no form makes that goal highly unlikely if not impossible. "Bounce" refers to the importance of the 10,000 hours being "purposeful practice" - in other words, practice has to mean something rather than be simply for the sake of it ('junk hours'). Picking on seemingly random football markets during the poorest quality time of year is just junk. Watching how a market moves when football of a higher quality resumes would be far more purposeful and beneficial. Compare the approach of 500 to 50 with the effort invested by The Football Analyst or this one from Soccermetrics. Which approaches are more likely to reap long-term profits?

Learning how to trade is not as simple as depositing some money, randomly selecting markets in which you have no knowledge, and blindly betting away. It takes purposeful practice, and usually lots of it combined with a disciplined approach.

To end on a positive note, I know from personal experience that £100 is more than enough to experiment with and find a method that works. There's no big rush to make profits. It's far better in fact to spend a couple of years making peanuts but developing a method than it is to get lucky and win big early on. Look at O'Dwyer and his delusional belief that he has an edge when he clearly doesn't. Teach a man to fish and all that.