Following on from my last post, I mentioned how I believe I can put traders on the correct path to success but whether they stay on that path and continue in the right direction is another matter entirely. That's because every person interprets information differently - no two people will act the same way given the same data, especially when it comes to trading. But there are some common themes amongst the mistakes that nearly all my members make:
1. Thinking a price is value but not knowing what the true price should be
It's very common for traders to say a price is value (especially when laying low odds) but the fact is, you can never say a price is value unless you have some idea of what the "true" or "correct" price should be. Whenever I see someone say "I entered because I thought it was value" I ask them "So if that price was value, you must think the market was wrong - so what was the correct price?"
Now for the most part, I don't expect any of my members to know the answer to that as it's too soon and more experience of markets is needed. But my point is that in future, you need to attain the skill of pricing up a match in order to be able to truly spot value. Otherwise, you are just having a stab in the dark.
2. Trading the match and not trading the market.
This ties in with number one, in that when most traders decide on when to enter a market, it is based on what they see happening in the match on their TV screen and not about what is happening in the market. Yes, the two are related but in order to find value, you can't go purely on what the players are doing - you have to know what the other traders are doing. They are the ones controlling the money, not the players. Most traders seem to ignore the market and are only concerned with getting a bet on, regardless of price - otherwise known as gambling without an edge.
3. Tweaking and changing a new strategy
Nothing baffles me more than the natural human instinct to tinker with something that doesn't need tinkering with. I'm astounded at how traders can take a tried and tested, proven method and within days, start messing around with the entry and exit points - even when they themselves have been unsuccessful for years. But it does happen and more often than you would think. I'm not talking about straying mid-trade and starting to chase or over-staking because things are not going in their favour (which is something to be expected). I'm talking about actively, consciously, under no pressure before the match even starts, deciding not to follow the strategy and to do things a bit differently. The vast majority of the time, this ends in disaster. Why do we feel the need to do this? Is it because we don't trust the strategy? Is it impatience because we started with a couple of losses? Probably. There's always a reason but I am constantly amazed at how quickly traders start to lose faith in others, yet seem to trust themselves no problem, even with a poor track-record.
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4. Short-termism
I don't know if that is a real word or I've just made it up but I like it and I'm going with it! Basically it means when traders only think in the present and don't think about the long term consequences of what they are doing. It's common to pretty much every single trader in my academy, so not unexpected but it's something many find hard to shake off. Traders who exhibit short-termism, are so pre-occupied with winning their current trade or making profit instantly, that they forget about the bigger picture, which should be to learn and become more disciplined so we come out on top in the long run. Short-termism particularly shows itself I've noticed, by traders being too eager to take a profit. They become obsessed with just getting any size win because they are scared of getting nothing from the match. This means they never get the big greens which are possible (particularly in tennis) because they won't let the winning position run more than a few points or a game or two. There are a couple of ways to stop short-termism. One is to set some realistic short and long term goals to work towards, which don't involve money. The other is to have me shout at them until it finally sinks in. Either one is good.
5. Thinking it's all about picking winners
Saw a classic example of this on Twitter recently, when a trader claimed he'd called 6 matches out of 8 correct at the ATP World Tour Finals. Not a bad feat (although if those matches include picking Djokovic and Nadal to win their group matches, it isn't anything to shout about) but consider this: the final pick, this trader claimed that it was "Not great odds but a winner is a winner". This is exactly how not to trade (or to bet, for that matter). A winner is not a good winner in this case; it's a gamble at poor odds which came off. What makes it worse is that the trader KNOWS it was a bad price, yet he still took it. If you know it's a bad price, you either wait for something better (and he could have got much better as the price zoomed out in-play), lay it (as presumably it represents value), or don't get involved at all. He is not alone in this thought process though and many of my members join up with the belief that you need to find winners. But there's a big difference between picking winners and picking winning trades. On the other hand, if he knows it was a bad price, it perhaps means he does have the ability to price up a match; in which case, he just needs to make a few adjustments in his approach and he will be on the right path.
Every trader that has joined my academy exhibits at least one if not all of the above issues and so this makes it difficult to put and keep them on the right path because these ingrained habits and beliefs have often been there for years. But that's why my academy programme is for a full year - because these issues need time to be worked on. They won't just disappear over-night. But I had every one of those habits too and I've managed to turn it around.
![http://centrecourttrading.blogspot.co.uk/2013/09/sultan-tennis-trading-academy_7.html]()
1. Thinking a price is value but not knowing what the true price should be
It's very common for traders to say a price is value (especially when laying low odds) but the fact is, you can never say a price is value unless you have some idea of what the "true" or "correct" price should be. Whenever I see someone say "I entered because I thought it was value" I ask them "So if that price was value, you must think the market was wrong - so what was the correct price?"
Now for the most part, I don't expect any of my members to know the answer to that as it's too soon and more experience of markets is needed. But my point is that in future, you need to attain the skill of pricing up a match in order to be able to truly spot value. Otherwise, you are just having a stab in the dark.
2. Trading the match and not trading the market.
This ties in with number one, in that when most traders decide on when to enter a market, it is based on what they see happening in the match on their TV screen and not about what is happening in the market. Yes, the two are related but in order to find value, you can't go purely on what the players are doing - you have to know what the other traders are doing. They are the ones controlling the money, not the players. Most traders seem to ignore the market and are only concerned with getting a bet on, regardless of price - otherwise known as gambling without an edge.
3. Tweaking and changing a new strategy
Nothing baffles me more than the natural human instinct to tinker with something that doesn't need tinkering with. I'm astounded at how traders can take a tried and tested, proven method and within days, start messing around with the entry and exit points - even when they themselves have been unsuccessful for years. But it does happen and more often than you would think. I'm not talking about straying mid-trade and starting to chase or over-staking because things are not going in their favour (which is something to be expected). I'm talking about actively, consciously, under no pressure before the match even starts, deciding not to follow the strategy and to do things a bit differently. The vast majority of the time, this ends in disaster. Why do we feel the need to do this? Is it because we don't trust the strategy? Is it impatience because we started with a couple of losses? Probably. There's always a reason but I am constantly amazed at how quickly traders start to lose faith in others, yet seem to trust themselves no problem, even with a poor track-record.
Vitalia Diatchenko (again)
4. Short-termism
I don't know if that is a real word or I've just made it up but I like it and I'm going with it! Basically it means when traders only think in the present and don't think about the long term consequences of what they are doing. It's common to pretty much every single trader in my academy, so not unexpected but it's something many find hard to shake off. Traders who exhibit short-termism, are so pre-occupied with winning their current trade or making profit instantly, that they forget about the bigger picture, which should be to learn and become more disciplined so we come out on top in the long run. Short-termism particularly shows itself I've noticed, by traders being too eager to take a profit. They become obsessed with just getting any size win because they are scared of getting nothing from the match. This means they never get the big greens which are possible (particularly in tennis) because they won't let the winning position run more than a few points or a game or two. There are a couple of ways to stop short-termism. One is to set some realistic short and long term goals to work towards, which don't involve money. The other is to have me shout at them until it finally sinks in. Either one is good.
5. Thinking it's all about picking winners
Saw a classic example of this on Twitter recently, when a trader claimed he'd called 6 matches out of 8 correct at the ATP World Tour Finals. Not a bad feat (although if those matches include picking Djokovic and Nadal to win their group matches, it isn't anything to shout about) but consider this: the final pick, this trader claimed that it was "Not great odds but a winner is a winner". This is exactly how not to trade (or to bet, for that matter). A winner is not a good winner in this case; it's a gamble at poor odds which came off. What makes it worse is that the trader KNOWS it was a bad price, yet he still took it. If you know it's a bad price, you either wait for something better (and he could have got much better as the price zoomed out in-play), lay it (as presumably it represents value), or don't get involved at all. He is not alone in this thought process though and many of my members join up with the belief that you need to find winners. But there's a big difference between picking winners and picking winning trades. On the other hand, if he knows it was a bad price, it perhaps means he does have the ability to price up a match; in which case, he just needs to make a few adjustments in his approach and he will be on the right path.
Every trader that has joined my academy exhibits at least one if not all of the above issues and so this makes it difficult to put and keep them on the right path because these ingrained habits and beliefs have often been there for years. But that's why my academy programme is for a full year - because these issues need time to be worked on. They won't just disappear over-night. But I had every one of those habits too and I've managed to turn it around.
