Mental Barriers

My on-going inability to move up a gear is something of a mystery to me. One would think, having started with £10 and built that up to nearly £8K (albeit taking 18 months to do so), that I'd be able to push on. Unfortunately, I don't seem to be able to do so.

Something is holding me back and I do not know what, or even how to identify it.

While I am delighted to have seen my initial investment increase by some 80,000%, it has been a tough road involving long hours parked in front of my computer. Make no mistake, that £8K has made a big difference. I wouldn't have been able to replace my car without it. However, I find it worrying that I am unable to increase my average daily takings given the hours I put in.

I am far to erratic at the moment and my confidence levels are such that I dare not look to increase my returns simply by 'scaling up'. Having made the money I have made, I now maintain a fund of £2K in my Betfair account, but I use only a fraction of that on each trade. I can afford to increase my stakes which should see an immediate increase in profits, yet I cannot seem to get past that mental barrier that would allow me to use larger sums.

Granted, the place and the greyhound markets don't lend themselves to huge sums, but I should be able to increase my stake in the former at least. I'm never going to be a trader that uses the ridiculous sums that the Webbs and Heathcotes of this world seem to use, but I'd like to get over this mental block I'm having that prevents me using anything higher than what I'm using just now.

Much of this lack of confidence stems from the way I trade. I sit and watch numbers bounce up and down. There's no form study and little market analysis. After 18 months, I'm not sure I could give you an accurate description of what I do and how I do it. "Badly and inconsistently" some would say and with some accuracy. It certainly isn't scientific, or the least bit structured.

Despite the fact that I have scientific training; have two engineering qualifications from university; I'm a self-taught Microsoft Certified Systems Engineer and designed communication antennas for eight years before becoming a self-employed IT consultant for the last 15 or so, I don't analyse what I've done or what I'm doing. I don't record my trades or take notes.

My scientific brain switched off a long time ago for reasons I won't go into and trying to teach myself new tricks becomes more and more difficult as the days, weeks and years pass by.

I need to do something that will enable me to step up a gear, but I'm at a loss as to what. One thing is for certain. Sitting for eight or more hours a day in front of a computer in order to earn £14.68 (my daily average since I started) is not sustainable. Either I increase that tenfold, or there's little point carrying on.

6 comments:

Mets said...

Hi,

This is an interesting and frank post.

I'm just starting to trade and have many of the same reservations. Everyone who is successful at it have said that you need to just 'hang in there' and remain positive.

At this stage, I'd be elated to be getting your average, as at least then it wouldn't seem like a lost cause.

Being a qualified engineer myself, the lack of science in just watching the numbers ping up and down seems a bit of a pointless exercise, especially when so many of those rises and falls appear to be from spoofing activity and traders trading out.

Are you hoping to up-the-ante with a view to going full time?

Best regards, Mets

Alistair said...

Hi Mets and thanks for your comment.

I want to 'up the ante' in order to lend some justification to the long hours I spend trading. When I started this business, the intention was to earn 2-3 hundred pounds a month as that would make a difference. There wasn't, and still isn't, a desire to do this full-time.

Having said that, although I'm clearly not earning a full time wage from trading, I'm certainly putting in more than a full time shift. That's what concerns me.

If I suddenly found myself making £500/day then yes, I'd make this my career, but that's unlikely to happen.

At the moment, I'm just not convinced that the rewards justify the effort. This was meant to be a hobby after all.

Alistair

Mark Iverson said...

Hi Alistair,

Well done on continuing to post profits.

I can't remember reading it, but do you re-invest any of your monthly profits to your trading bank?

If you do this then it should be pretty straightforward to get over the mind barrier by increasing stakes but ensuring you reduce your maximum exposure.

e.g.

Your current bank is £2k and your maximum exposure is currently 30% (£600)

If you make £600 profit during the month then re-invest a % (my % is now 50% but when I started trading this was 100% as I wanted to grow my bank as quickly as possible).

Let's say you reinvest 75% of the £600 monthly profit (£450).

This means your new bank for the following month is £2450 but to get into a positive mental state you want to reduce your maximum exposure. You do this and bring it down to 29% (£710).

In one swoop you've been able to reduce your risk but increase your stakes.

Don't think about the stakes - think about the % of maximum exposure.

Hope this helps buddy.

Mark

Steve said...

It's a hard one Al, without that confidence in your own abilities there's no point in stepping up stakes for now. It'd only take an early losing run at higher stakes to put you back alot more than you gain.

If you look at alot of the 'successful' traders you'll see the overriding attribute they have is a belief in their own ability to win long term. You need to work on that positivity as no one can teach you that but yourself.

If you look at your trading record you've yet to have a losing month which really is a big achievement. No idea what your ROI is but most months seems consistent apart from the odd blip so I'd guess that ROI may also now be consistent also. If you look at Adam Heathcotes ROI it's only around 0.2% so you don't even need a massive edge but you do need that positivity and belief in your abilities in order to place those sort of bets thru the market.

There aren't too many 'eureka' moments with trading but confidence in your trading is one of those, try to work on cracking that and the staking etc will all fall into place.

Anonymous said...

Hi,

I think you've answered your own questions in the post. You probably need to step back and work out if the trading is worth it, I don't understand the trading lark, whether there's the amounts to be made from it that are claimed is questionable imo - especially for those who don't have the clout to move the markets, but 18 months is more than enough time to know what you can potentially make.

I'd say stop the trading, look at your experience and spend your time on either some statistical modelling of sports and/or designing a bot, having read your blog for while, loss aversion and the ups and downs of straight betting seems to be your archilles heel (the trading almost feels like a fudge), but I think you be better off going down the gambling/value betting route (it also makes more sense since the PC).

If not go back and have a proper go at arbing (the bet365 bonus stuff was probably masking how much you were really making), it doesn't seem the most invigorating pastime and is probably getting harder but I think you could do OK with it.

Best of luck, Nick

Alistair said...

Hi chaps and many thanks for the comments.

Mark: Very good to hear from you. It's been a while and I trust your trading is going well. More importantly, I hope your son has fully recovered.

For the past few months, I've been leaving all my winnings in my BF account, but I haven't been increasing my stakes by much. I wanted to increase the available funds so that I could do more than one thing at once.

Steve: As ever, sound advice. We talked before about my mental attitude and my personality. More than anything, that's something I need to work on, and not just from a trading point of view.

Nick: Good of you to pop by, though I'm not sure I agree with your suggestion. Gambling/value betting is not something I want to return to. I know, indeed can guarantee, that I would go on tilt at the smallest of losing runs. I just cannot handle them.

The exercise I did earlier in the year on identifying runners that shorten in-play is an example of that. It showed an ROI of some 30% (if memory serves me correctly) if I just left them as a straight bet to win. The trouble was, there was long losing runs in that, which is the reason I haven't done it with real money.

The bottom line guys is my problem isn't one of stake size, or even trading style and markets. It is purely all in the head.

You're perfectly correct Nick in saying that loss aversion is a problem. It stems from my pessimistic nature where I always look negatively on life. It is something I battle with every day.

Yes, I'm proud of the fact that I have never had a losing month and turned £10 into a near 80,000% profit. How many traders can say that? Yet, in life, I have always taken my successes for granted. My problem lies in the fact that I let my failures bug the hell out of me.

In the context of sports trading, that failure could simply be a losing day, or even a bad trade that limits my profit. When things are going well, like last night, I'm as happy as larry. When they are not, or more importantly, I perceive them as not, I head down hill quickly.

It is THAT that I need to sort out more than anything else. Not just from a trading point of view, but from a 'life balance' stand point. I need to get that in a better place. How I go about that is another matter.

Even these little discussions help, which is why this blog is so important to me.

Many thanks once again chaps for popping by.