Confessions Of A Recovering Hothead Trader

[Wolf]

Part 1

I recently attended Peter's Trading Masterclass Seminar.

It was £400 well spent. I learned many things. For instance: when to swing or scalp or even make a market, where to find entry and exit points, a neat strategy to employ when there are two short-priced horses in a race, how to identify when the markets are behaving oddly (and that there can be order in seeming chaos), and so forth.

I currently work night shifts, so I can trade horse races in the afternoons.

My goal is to become a full-time trader in 2014. If it's okay with the forum admins, I would like to document my journey in this thread, including trading videos. By sharing my progress, I expect to improve at a faster rate. Hopefully others will also learn from this.

Feedback is very much welcome. Any insights you can offer will be sincerely appreciated.

Part 2

In terms of understanding the technicals of Betfair trading, I would describe myself as an intermediate trader. However, there is one glaring flaw in my trading makeup, which is my psychology. Every now and then, I let losing trades go in-play. I know it's destructive to carry losses in-play, yet I still do it occassionally. This is why I chose the title Confessions Of A Recovering Hothead Trader.

I have traded a £40 starting bank up to over £1700 and lost the lot because I took a trade in-play.

I have squandered several trading banks this way. My inability to accept losses is the primary object preventing me from trading full-time. I am determined to overcome this mental barrier.

Has anyone else struggled with this in the past?

Part 3

I began recording trades yesterday.

My starting bank was £75. Profit on the day was £16.24, which I have attached.

I have linked to 7 videos below. The videos are fast-forwarded, roughly one minute long each. If 7 videos is too many, please let me know and I'll be more selective next time.

The videos are hosted on Screencast. I am told they can be unreliable. If there are problems watching the videos, let me know and I will upload them to Youtube.

Lastly there are more videos of losing trades than there are of winning trades. I will be paying close attention to my losing trades because I want to eliminate as many entry errors as possible.

Sedge 1300. Attempted swing trade with a sloppy exit. I then tried to scalp nearer the off, but cancelled my orders when WOM went against me.

http://www.screencast.com/t/26SsiyFbOfz5


Strat 1310. Simple scalp. You can see I briefly debate whether to scratch the position, before deciding to come up.

http://www.screencast.com/t/6Z1mEwzlU


Strat 1340. Scalping gone pear-shaped. First losing trade of the day. Pleased with the successful scalp at the end of the clip, though.

http://www.screencast.com/t/R7DRrKl3B


Ling 1350. It's only now, after watching the video, that I see I was scalping at the top of the range. Perhaps the sensible decision would have been to scalp in the other direction, back first and then lay? Perhaps it would also have been sensible to scratch my second scalp on the favourite, when the price came back up? Finding the balance between caution and aggression is tricky.

http://www.screencast.com/t/twWtjb56


Ling 1420. Attempted swing trade. I opened what, to me, felt like a reasonable swing trade opportunity. The price went against me so I cut out for a loss. As the price is steaming, you can see I'm waiting to open the trade again when the retracement occurs. Sure enough, the retracement kicks in. It's just a shame I missed it! I remember being shocked at how suddenly the price shot up.

http://www.screencast.com/t/eFziHNWkInd


Strat 1540. Biggest loss of the day. Two failed swing trade attempts. First trade is a scratch, second trade results in the loss.

http://www.screencast.com/t/793Vz2DMV3H4


Strat 1610. Resemblance to the setup in the 1540. Not identical by any means, but fairly similar. This was a strong setup, imo. Missed out on the trade because I delayed my entry to show the graph on video. Lesson learned, prioritise the entry. Had the lay been matched, I would have realistically closed the trade out at either 3.30 or 3.65.

http://www.screencast.com/t/8kgindJ0xO

[JollyGreen]

Welcome to the forum!

I looked at the first video, here is my opinion. I am NOT criticising I am giving you pointers to help you.

You took a good opening point on Dispour but you cancelled out of fear. This is not a bad thing, hell I was no different at the same stage in my venture into trading, in fact I was probably worse! The key for you holding on was to watch the price of the 2nd favourite.

Your opening order was at 2.08 on Dispour at that point the 2nd fav was trading around 2.94. I see the book percentage at @101% so feel safe when I say this is classic market behaviour. As one shortens in the other is going to move the opposite way. There is often a delay as the two interact so as one shortens the other main protagonist won't often just shoot out, you have to trust your market reading skills and hold on. I am not saying hold onto a negative I am saying when conditions are correct, as they are in this market then you hold on. You can see that as the fav reaches a peak the 2nd fav reaches a bottom point. They then push against one another as the market tries desperately to balance. There will be a price above which the market will not be keen to let the fav exceed and it seems like 2.20 in this case. These two controlled this market so as one goes down the other will go up, when they reach certain levels the movement will stop. This can then be reflected in the prices of multiple other runners as they get moved around to balance the book.

It is hard to try and cover it all in one post but I think you should have looked at backing the second favourite as the potential profit was greater in terms of price movement using the same stake. The favourite seemed stuck between 2.00 and 2.20 based on what you recorded. Always try to keep an eye on the main market protagonists rather than just focus on the horse you are trading. Because there can be a delay when they move against each other you can be happily thinking it will do a certain thing when the delay expires and the market moves quickly against you.

Try this. If you are trading one, drift or steam then always watch for the others. If you see a move in opposition to your position i.e. you are laying and something else is being back, then your position is good. If however you suddenly see another main horse starting to be opposed you can be pretty sure your move is in jeopardy and the move may stop.

I hope this ramble helps?

JG

[stevequal]

My inability to accept losses is the primary object preventing me from trading full-time. I am determined to overcome this mental barrier. Has anyone else struggled with this in the past?

Yes, a constant struggle for me and easily the hardest skill I've ever had to learn. Trading can really mess with your head. Keep reading up on dealing with the psychology of trading and keep trying new things to help you keep emotions in check.

[mrtrader]

Hi Wolf.

Some excellent points from JollyGreen, so I won't repeat them.

I trade full time as my only income and I can say that getting over the 'in play demon' was probably the trickiest part of learning this.

You are not alone in letting trades go in play - in fact I would guess that this is probably something the majority of traders go through (and most never get past it).

Think of it like this - if you're looking to make a career out of this, as opposed to a few quick wins, then you need a system that stands up to many many plays. As in 'if I play my system 1 million times, will I be up or down'?

It goes without saying that if you keep going in play that you may be up in the short term, but over 1 million plays, you will be down. Probably by a huge amount.

So this has to be the first thing you get fixed. Whatever you do, you must force yourself to always close out your trades before the off, regardless of the green or red figure.

You have to accept that it's ok to lose.

One way I did this was to define my edge in the market. I have a strategy that works for me. I then spent time collecting data about when the best time is for me to enter the market and close out. I have a spreadsheet full of numbers that say 'if I close out 4 minutes before the off I will make 7% on average'.

This process of data collection is what got me over the in play demon. It gave me confidence in my system and made me unemotional to winning or losing. I just know that I am going to win 80% of the time and lose 20%. If I lose, it's part of the 20%.

Your current problem is that you don't yet have your edge defined, therefore you can't tell yourself that losing is ok.

[Wolf]

JollyGreen: You took a good opening point on Dispour but you cancelled out of fear. The key for you holding on was to watch the price of the 2nd favourite.

JG, first of all, thank you for your detailed feedback.

My read was that I should have traded out sooner at 2.20, the peak of the range. I expected/wanted the price to break through the resistance. Often, there are mini reversals during a swing and I thought that might be the case in this instance. Clearly it wasn't.

JollyGreen: I think you should have looked at backing the second favourite as the potential profit was greater in terms of price movement using the same stake.

Fascinating. Besides Dispour looking to drift, is there anything else that helped you to identify Innsbruck as a likely steam?

The idea to back Innsbruck would never have occurred to me.

To my eyes, the money on offer for the horse was thin from both backers and layers, and the price could have moved in either direction imo. The looming crossover point would also be a concern.

Then, 8 seconds into the video, WOM shifts and the Innsbruck steam looks inevitable. It happens in blink of an eye, though.

I hope this ramble helps?

Your comments are helpful and genuinely appreciated.

My main takeaway from your post: pay closer attention to the price movements of other horses. I didn't even notice the steam on the second favourite until you highlighted it. This will change with immediate effect.

"Always try to keep an eye on the main market protagonists rather than just focus on the horse you are trading."

As an aside, your Trading For Newbies series was valuable, too.

Sincere thanks.

Stevequal: Yes, a constant struggle for me and easily the hardest skill I've ever had to learn. Trading can really mess with your head. Keep reading up on dealing with the psychology of trading and keep trying new things to help you keep emotions in check.

Thanks, Steve.

I have been writing and chanting, "close all trades before the off". Repetition, repetition, repetition. I want it to become part of me. Silly as it sounds, it's definitely helping to reinforce my discipline.

Learning to accept losing trades professionally will obviously improve us as traders, but I also think it will develop us as people.

MrTrader: Your current problem is that you don't yet have your edge defined, therefore you can't tell yourself that losing is ok.

Excellent point.

I strongly agree that defining my edge will help me to maintain a professional and long-term approach during drawdowns.

After all, drawdowns are inevitable. They exist in any winning strategy. Even in Peter's recent scalping chart, it's clear there are temporary drawdowns.

My trading approach is not mechanical. I do not say: open at X, green up at Y, stop-loss at z.

However, within a flexible trading approach, I can still track my metrics.

I will starting recording my trades with immediate effect.

I want to define: 'when I swing trade between 2.00 and 2.10, anticipating a drift, my strike rate is WW% and my expected return is XX%' or 'when I scalp 6.20/6.00, my strike rate is YY% and my expected return is Z%'.

If I know these numbers, I can keep perspective during drawdowns.

Thanks for your input, MrTrader.

[Iron]

+1

Boredom is another killer for me - it can lead to indisciplined trading.

Over-staking is another killer.

Jeff

Yes, a constant struggle for me and easily the hardest skill I've ever had to learn. Trading can really mess with your head. Keep reading up on dealing with the psychology of trading and keep trying new things to help you keep emotions in check.

[Wolf]

As promised, I've been keeping record of my trades. The strike rate on my scalping is >91% at the moment. Feels like the markets are producing above average conditions this week, so this figure may dip over time.

I've also been paying closer attention to the horses I'm not trading this week. It's definitely helping.

With regard to profit, Monday Tuesday Wednesday have all been pleasing.

I only had one losing race yesterday, which happened while I was petting the dog.

You can watch the video via the link below.

Kemp 1630. When the video starts, I'm predicting a drift. My £100 was very near the front of the queue at 2.02, which is why I held the order. Sadly, it didn't get matched. Thought about pushing the money up to get matched at 2.06, but I was taught that it's generally a losing strategy to join swing trades once a drift/steam has already begun.

The dog petting starts around 03:22 before the off. I'm half petting the dog, half watching the screen. I'm aware of the steam, but still happy to have my £100 matched at what looks to be the bottom of the trading range.

I'm not concerned until the the bomb hits, eating through 2.04 and 2.02 and taking my money with it. Favourable queue positioning counts for nothing when that happens!

In the blink of an eye, the position is against me. Often the price breaks into odds-even terriroty, only to drift back into odds-against, and I expected that to happen in this case. I purposefully waited.

While this is happening I'm asking myself the trader's dilemma, 'at what point do I get out?'

I settled on 1.91 to prevent the trade from losing any more than 5% of my risk. There must be a better, more scientific approach to cutting losses on swing trades?!

As expected, the price drifts back out to odds-against. It's just a shame my stop-loss was triggered first.

You can watch the trade here at http://www.screencast.com/t/llHibk6R8v

As always, constructive feedback on the trade is welcome. What can I do to improve my exit strategy?

It was my only losing race of the day, but there's always room for improvement.

I've ordered a USB microphone from Amazon. When it arrives, I'll capture videos with voice commentary.

[Iron]

Thought about pushing the money up to get matched at 2.06, but I was taught that it's generally a losing strategy to join swing trades once a drift/steam has already begun.

Who taught you that?

How do you decide whether a drift/steam has begun?

From what you've written, it sounds like you like to pick tops and bottoms, which IMHO is a dangerous approach. Financial traders call it trying to catch a falling knife for a reason.

Jeff

[Wolf]

Thought about pushing the money up to get matched at 2.06, but I was taught that it's generally a losing strategy to join swing trades once a drift/steam has already begun.
[/color]

Who taught you that?

It's an idea I learned from Peter's blog.

"One of the most common mistakes I see in newbies is trend following." (http://www.betangel.com/blog_wp/2013/10 ... n-trading/)

I think I'm taking his advice too rigidly.

Having reflected, I get the impression he's talking about latching onto swings that are well under way, which is different to adjusting an entry position by 1 to 3 ticks if an order fails to get matched.

[Iron]

It's an idea I learned from Peter's blog.

"One of the most common mistakes I see in newbies is trend following." (http://www.betangel.com/blog_wp/2013/10 ... n-trading/)

I think I'm taking his advice too rigidly.

Possibly.

What I suspect Peter is talking about is waiting for the main trend to break down, and then joining the new trend at an early stage, just as people who were following the main trend are rushing to get out of their positions.

I could be wrong though.

A better decision might have been for me to wait for the predicted reversal

You can't predict when or if a reversal will happen.

Incidentally, it may be that Peter doesn't predict anything - he just responds to whatever the market gives him, and gets out quickly if the market goes against him.

Jeff

[steven1976]

The market is actually very predictable. Its taking advantage of that predictability that is difficult.

[Iron]

It is predictable in that it displays particular patterns of behaviour repeatedly.

It is unpredictable in that you have no way of knowing what it will do next.

The market can do anything at any time...

Jeff

The market is actually very predictable.

[Wolf]

The viewcount to my trading videos has triggered the bandwidth limit with Screencast. This means the videos will not play atm.

I'll post new videos next week, most likely on Youtube.

In the meantime, if anyone can share some wisdom on their approach to cutting losses with swing trades, that would be much appreciated.

[milano]

Hi guys,
I can't find the category betangel tennis:
challenger, Bogota
challenger, bratislava
challenger, ...
ITF tennis also
exist on betangel this category tennis?
thanks

[Wolf]

You can't predict when or if a reversal will happen.

With respect, this is nonsense.

You cannot predict the market correctly all the time, but good traders can predict the market correctly most of the time.

In my experience, trading ranges hold up well in stable markets. There is a reason why people give close attention to support and resistance levels.

It [the market] is unpredictable in that you have no way of knowing what it will do next.

I cannot guarantee the weather in Dublin tomorrow, but I am confident in predicting that it will be cloudy.

Similarly, while there is an absence of absolute certainty, you can use technical and fundamental analysis to make very informed trades. Over time, with correct money management, this leads to profit.

Trading Progress

Letting Trades Go In-Play

There has been a breakthrough in my psychology towards trading. For some reason, I suddenly have zero desire to take trades in-play.

It all clicked into place last week. The thought of letting a trade go in-play now feels very unappealing and unprofessional.

I suspect this change in attitude has something to do with accountability. When you journal your progress and keep trading records, you feel more accountable for your actions.

Letting trades go in-play has been my biggest sticking point up until now. It genuinely feels like I've conquered the bad habit, so I'm thrilled. In terms of becoming a full-time trader, this is a big step forwards.

If ever there is a relapse, I'll hold my hands up and reveal all in this thread. But hopefully not. It really feels like I'm over letting trades go in-play.

Record Keeping

My record keeping is coming along. I track everything manually atm, which is time-consuming. It's enlightening to see where I'm strongest and where there is room for improvement.

The next step is to automate as much of the record keeping as possible.

General Trading

It's been a good, steady week trading wise.

A very kind soul sent me some words of wisdom via PM and his advice has really helped.

Videos

No videos this week. I need to find new screen capture software because my current one creates SWF files, which Youtube does not support. I'll search for alternatives this weekend.