Monday, 16 July 2007

Deflated bank

Bank: £62

I'm not a happy bunny. My bank is down to nearly half. What happened?

I took two £19 losses and made some little gains and a little loss (which could have been nasty, but I turned it around, just).

My first trade looked very promising. I got in early on an obvious trend. I was quite pleased with myself and was letting it run, when the moment of horror struck. I hadn't checked the software I was using properly before starting and had left on some automatic settings. Each of the backs I had put on had been getting automatically generated lays put on. I checked the matched/unmatched queues and saw several unmatched entries. I was rather exposed and after kicking myself for not paying enough attention I had to go full out to avoid a bad loss. I pulled it back but still made a small loss.

Next up, I did a couple of trades and made some small gains, then I had another bad one. I had put on a lay and was watching the price slowly rising, ready to get out if it turned against me when suddenly, in the blink of an eye, the price dropped a huge amount, at least ten ticks and I was suddenly losing. I sat in shock a couple of seconds, double taking the numbers I was seeing. Time was running out and I needed to take a fair loss and get on, but I didn't. I fell into the trap again. I sat there thinking it'll turn back. It didn't. I ended up letting the bet run and I lost. Stupid. £19 down on that. Okay, not a huge sum, but in proportion to the bank, it is almost 20%.

The final loss was again me getting myself in trouble by not understanding the software. I was making multiple trades on a race and had a few quid in the green. I allowed myself 3 ticks stop loss, which I was handling manually (mistake, I will do this automatically in future). The price moved against me and I hesitated, letting it roll passed my self imposed stop loss trigger (always stick to your rules. Lesson hopefully learnt (again)). After the price moved around, going up and down, with my heart rate matching it, it finally returned to my stop loss value and I tried to get out. I thought I had done it but when I looked at the stake, it was only half what it should have been. I had left the auto hedge fature on (changes the stakes so that you automatically get green ups) whilst having an unmatched back in the queue from earlier. It used the unmatched amount as part of its stake calculation. The price had then moved on again and I was still exposed. For some reason, when I make a silly mistake like this I act like the system no longer applies and once again I let the bet run and I lost.

Lots of lessons to take on board. One big one is that I can't always be trusted to stick to the rules I have set myself. How weird is that. When it comes down to it, in certain circumstances, I feel "above the law"! I hope now that I have noticed this, I can fix it. It's funny but all these reactions are covered in some of the books I have recently read, so it's not like it is new stuff (behavioural finance, kahneman/tversky, etc). It's just different reading and understanding it and then doing it. I hope this lesson is finally learnt. I think I will try and mechanise the process more, using software driven stop losses etc.

1 comment:

Talkbet said...

Hi, Just found your blog today and enjoyed reading through it! Its nice to see someone else going through the steep learning curve of trading horse racing! I went on the BetAngel training course back in May and although it gave me a few pointers I have found that the only way to learn is through experience.
I am in a similar situation as yourself, also in IT and therefore have a dayjob to try and keep the money coming in! I am off all of August though (looking after kids during Summer hols) so I am using that time as full time trading as well. I am using the Betfair API (I pay £200 a month for access to it) and write my apps in Java, I have also thought about trying to do an app purely for showing graphs of the trends.
Would you mind putting a link to my site in your links and I'll do the same for yours ?