How important is "mentality" in sports trading?

[Trader_Tom]

I'm curious to see what peoples opinion is on how important it is to have the "traders mindset", particularly from those who are successful at it.

Obviously there are more aspects to trading than simply having the right mentality but how important do you class it? You often hear bodybuilders talk about how their physique is mostly down to diet rather than smashing weights down at the gym and I wonder if people put too much stock in collecting edges and reading the market than they do in improving themselves and their execution.

It is impossible to be a good trader without being able to read the market to some degree so the two must go hand in hand. I personally feel my mentality is far superior to my ability to read the markets. I've made all the same mistakes every trader did starting out but I rarely make them twice. I'm sure along the way there will be many more creases in my psychology that need to be ironed out but they will be dealt with as and when they are realized.

Many people have read "trading in the zone" which I think is a good read, if not a bit heavy (a lot of waffling) but one saying has stuck with me and that is...

"Be rigid in your rules and flexible in your expectations".

While I believe this is solid advice, how can you be rigid in your rules if you don't know what they should be?

[newaustralian]

It always interests me about being in the Zone. I trade however before I start trading I do an easy and I stress easy Suduku and if I cannot complete it in under 5 minutes I do not trade as I believe I am not “sharp enough”. Also, when I trade I have fixed money management rules that are never broken except if I feel ( without reason) that a determined bet is high risk I just do not bet. Without being able to say why, I have found these no bets are often correct – I would have lost as I only lay.

[Euler]

I had to undergo a complete change from where I started to adopt the right mentality. It's more about overcoming typical human biases and being able to see through them. Being able to take appropriate risk.

I never read trading in the zone or anything like that. I just sought out successful people and read books on psychology and learnt to understand why people make mistakes and how people made really good decisions. Once you understand how it's a very empowering feeling. You look at everything around you with different eyes and sometimes wonder at the bewilderment of it!

I learnt to be a good risk taker, but one of the side effects is that people often don't understand you and you feel a bit of an outsider. Good decisions tend to go against the crowd.

[Trader_Tom]

It always interests me about being in the Zone. I trade however before I start trading I do an easy and I stress easy Suduku and if I cannot complete it in under 5 minutes I do not trade as I believe I am not “sharp enough”. Also, when I trade I have fixed money management rules that are never broken except if I feel ( without reason) that a determined bet is high risk I just do not bet. Without being able to say why, I have found these no bets are often correct – I would have lost as I only lay.

If you have a set of rules (like you do) that you can say with confidence, if followed, will produce a long term profit then I think it is easier to follow them. Where I fail is not having the time in the markets to know whether my techniques are successful/unsuccessful due to random luck or not. The passage of time is the only thing that can help build this confidence as the more an presumed edge is put in to practice with success the more probability it has that you were right.

[Trader_Tom]

I had to undergo a complete change from where I started to adopt the right mentality. It's more about overcoming typical human biases and been able to see through them. Being able to take appropriate risk.

I never read trading in the zone or anything like that. I just sought out successful people and read books on psychology and learnt to understand why people make mistakes and how people made really good decisions. Once you understand how it's a very empowering feeling. You look at everything around you with different eyes and sometimes wonder at the bewilderment of it!

I learnt to be a good risk taker, but one of the side effects is that people often don't understand you and you feel a bit of an outsider. Good decisions tend to go against the crowd.

Thanks for the input Peter.

My trading seems to be more mechanical if anything. I close my trades where I decided my exit would be when I opened it, unless there is definitely reason not to (like a huge spike that would most likely return etc) and have no problem letting a race finish at a loss if another opportunity doesn't present itself and each trade feels individual and separate from my last. My problem, as described above, is knowing whether or not I do actually have an edge. I have confidence in myself and my execution of trades but no idea if the short term results are just sheer luck or not.

So far, I'm happy with my results, they are on small stakes but they are consistently profitable but there is still such a huge amount to learn.

I suppose there is no real remedy for thinking this way other than getting more screen time to solidify your edge. Once it's carved in stone I'll have no reason to doubt it and can trade with more confidence.

Your last paragraph was an interesting one. I'd love to know how being a risk taker has affected your day to day life and peoples opinion of you?

[SeaHorseRacing]

Whether your expecting any advice from me I think I can share some advice simply because I traded over 9,000 markets in 2016 and I spent 75% of them aware and working on my mentality.

Your question is 100% the difference between a long term successful trader.
Before I started trading I thought I knew alot about myself when in fact I didn't.
As your aware my from trading diary people kept banging on about managing risk and turning to automation.

I am a young and I would say at least average In intelligence guy, with no serious emotional or physically problem.

I struggled with blowing banks now and again but I do know with 100% certainly now that I am incredibly undisciplined, incredibly narrow minded, over thinking and have serious with in deep pain.
This may sound a little deep... but what I am trying to get at is most people who never make it probably don't know their weaknesses. I would say removing them is even harder.

knowing the answer to your question is your edge and its your key to profit.
Everybody's answer is different and the traders that make it discover the questions the need to ask and then answer them by making the changes needed.

If anyone asked me what trading successfully is?
To be able to implement a proven statistical edge being utilised by someone who has mastered themself.

So although you say your disciplined etc... are you missing out something that is not market analysis related?
I'd there something mentally your not aware of yet that's holding you back?
Time will tell...

Great question and the best topic I've seen on the forum for some time. Cheers

[ShaunWhite]

I'm reading 'Behavioral Investing : How Not To Be Your Own Worst Enemy' (by James Montier) atm... and I can recommend it wholeheartedly.

It's basically about supressing your inner McCoy and developing your inner Spock but it's a nice easy read, packed with info and written with a sense of humour.

There's a test to measure your confidence in your abilities ...at the risk of breaching copyright...

Q. Give a high and low estimate for each question, make sure you are 90% sure the high and low estimates surround the actual answer...

• Martin Luther King's age at death
  Length of the Nile (in miles)
  Number of countries in Opec
  Number of books in the Old Testiment
  Diameter of the moon (in miles)
  Weight of an empty 747 (in pounds)
  Year of Wolfgang Amadeus Motzart's birth
  Gestation period of an Asian elephant (in days)
  Distance from London to Tokyo (in miles)
  Deepest point in the ocean (in feet)

Most people only get between 4 and 7 showing that generally we are too confident in our abilities. I wonder how many people here will get 90% unless they already know a few of the answers?

Here's the answers... 39 years, 4,187 miles, 13 countries, 39 books, 2,160 miles, 390,000 lbs, 1756, 645 days, 5,959 miles, 36,198 ft.

[kerberus]

OK Shaun nice challenge for the start of the week,
from google
:
Showing results for testament
Search instead for testiment

Showing results for Mozart
Search instead for Motzart

2 things, these are trick questions, and how the heck do you get the answers to display?

Happy Monday Morning.
PS you didn't post rules, like - no googling!
K

[Bluesky]

Excellent question Tom, I think as someone else said the two things go hand in hand. I have read that people say, learning to read the market is easy, but acting correctly upon that read is the difficult bit.

I personally do not find it easy to read the market, I am hoping as I spend more time in front of the trading screen I will improve. Having made quite a lot of money from on line poker back in the day, I am hoping the psychological lessons learned will help me become a profitable sports trader. So perhaps I have less work to do on that side of things than other newbies to sports trading, but I am not certain about this.

The thing is though, I could have a fantastic "mentality" for sports trading (not chasing losses, not going in play, not frightened to take a loss etc.), but if I cant read a market with some kind of proficiency, then none of that is going to do me much good.

I think if you do learn to read markets well, and importantly have confidence in your ability to do this, then you can work on the other things as necessary.

I am like you at the start of a very long journey, its not going to be easy, and if you look at the rewards that are available to the tiny proportion of people who succeed, then it shouldn't be easy.

This might sound rather strange but I quite like the challenge of it, if I become successful then the extra money would be nice, but equally and probably more importantly it will give me a really good sense of achievement that I have accomplished something that is extremely difficult to achieve (my Mt. Everest if you like).

If I don't succeed then all it has cost me is some time (I only trade minimum stakes) so the financial loss will be negligible, and I will just be part of the 95% plus who try this and fail.

[LeTiss]

It's critical. Psychology is far more important than being able to read graphs

The reason for failure in trading is usually due to people succumbing to their own weaknesses. Don't forget, your cat would have a 50% chance of getting trades right, just by walking across your keyboard

Some traders just can't help themselves from making the same mistakes when things go wrong - they let trades go 'In Play', they overstake on the next trade, or they start gambling to win back their losses

I don't know how many times I have said this on this forum, but just in case you're a newbie , I'll say it again - "The difference between a successful trader and a bankrupt one, is what they do when they are faced with a red screen"

It is so true, because the mental obstacles traders face (especially inexperienced ones) is overcoming rushes of blood, frustration and anger when a trade goes wrong.

You need to rewire the brain for this game, and it's why I think gamblers have the biggest problem. I had a minor gambling problem when I was a young guy, so I'm speaking from experience here.

As a punter, you can accept losses, but you at least expect to get a run for your money. This is why over 2.5 goals bets are so popular, because even if the match remains 0-0 after 60mins, you are still in with an outside chance if a goals is scored within the next 10mins. However, when a punter gravitates towards trading, that philosophy of expecting a run for your money is a majorly difficult mental hurdle to overcome. Locking yourself out for a guaranteed loss before the match has even started takes willpower and invariably some eye watering losses

The reason why I'm still here trading, is not because I can read markets better than newbies, it's because I identified all my mistakes, and all my personal flaws which led to those mistakes, and I found ways to overcome them. Eventually, they start disappearing into the distant past

If you don't have the right 'mentality' for this game, you will be toast

[Bluesky]

The reason why I'm still here trading, is not because I can read markets better than newbies, it's because I identified all my mistakes, and all my personal flaws which led to those mistakes, and I found ways to overcome them. Eventually, they start disappearing into the distant past

This is very interesting, I have read many of your old posts and have noticed you saying similar things in the past. I am wondering though, if what you say applies to particular types of markets. I think you have said in the past that you have tried trading pre off horse racing markets and have found it very difficult. However you do trade football markets very successfully.

The way I look at it, is that if you can trade football markets well, but not be successful at pre off horse racing markets, its not your psychology that's the problem. As you have stated in the past you have worked on this and you sorted it out. The reason why you are not doing well at the horse racing is that you don't read that market well.

Would you say that being successful at football markets is more to do with having the right mind set, rather than being able to read markets, but pre off horse racing needs one to be good at both?

[LeTiss]

A lack of confidence in trading is very rarely a winning formula long-term. I've never been able to read Horse Racing markets, however there are exceptions to this. The markets I succeed in are the major races during the early morning activity - the prices don't jump so quick, the movements are easier to identify and there's decent liquidity to not leave you exposed when things change. I also do well when there is a heavy odds on favourite, where the price rarely jumps 4 or 5 ticks in the blink of an eye

The major reason for this lack of confidence is that I hate Horse Racing, I have no interest in it at all. If this job was all about Horses, I would have left years ago through sheer boredom as much as anything else.

However, I love all other sports. I think this is a key ingredient - I have a good idea of where the prices are going to go, purely through knowledge and experience, whereas with Horses I haven't got a bloody clue, as I know jack shit about it

I've mentioned to struggling traders on here before - identify the sports you like most, the markets you have most confidence and knowledge in and go from there

[dt888]

Mentality in this game is so big. Its massive. Bigger than massive

For example the feeling when a £20 loss would alomst ruin the day and getting to that stage where the same loss doesnt even make you flinch and you just move on to the next race knowing its part of the game and you will get it right more times than getting it wrong is amazing

I never stop working on mentality. There is so much to learn and improve on

For those that may be struggling with this just keep plugging away. There is probably no quick fix. Working hard on mentality bit by bit and putting in the hours sat in front of the markets, putting it into practice and things will improve in this area

[ruthlessimon]

the biggest killer of trading banks: laziness!

but imo, psychology is heavily over emphasised (the majority of times) & is too often used as a 'get out of jail card' for poor trading/edgeless trading/lazy analysis.

example: "i get out of trades too late"

if you know categorically that cutting (over a large sample size) is better than holding, it's not a psychological problem - it's an IQ problem!!

[Black Ice]

That's all very well ruthlessimon..and holding too long is a fault of mine and so i will have more winning trades than losing..but a biggish loss will wipe out the profit. BUT often a reversal will take place and you can get out for a scratch or minor loss. My problem is knowing when it is going to reverse and when it's just going to keep going? Any ideas? Thanks.