I am now closing off all purchases of "Sultan Tennis: The Ultimate Guide to Tennis Trading" so I'm afraid if you didn't get a copy, you've the missed the boat. However, this post is a little something specially for my loyal readers who missed out on the greatest trading guide of all time.
I get emails sometimes asking me about my trading. Taking into account those emails, my own personal experiences and the things I've read on forums, blogs and Twitter down the years, I have come up with a list of things which I believe is sound advice for novice traders. I didn't want to include the blatantly obvious things such as "only trade with money you can afford to lose", "don't chase losses" and "find an edge". They are things which everyone knows pretty early on, even if they do still remain stumbling blocks years down the line. I have chosen things which I believe cause most traders to fail because they are not necessarily things which are obvious at first. So here are the top 5 things which all traders should (though almost certainly won't!) do:
1. Expect to lose money
No one gets into trading thinking "I am going to lose my money". Well in my opinion, they should. Every new trader should set aside money for their bank, look in the mirror and say to themselves "I am going to lose all this money". Because in all likelihood, that is exactly what will happen. And that is perfectly fine. It should be labelled 'training costs', the same costs you'd expect to pay when educating yourself about any new profession: teacher, doctor, lawyer, engineer, IT consultant, whatever. We have courses to pay for, books to buy, travel expenses. We don't bat an eyelid for any of those professions, yet somehow, we start learning how to trade and expect to make money without shelling out for anything at all (perhaps an ebook and some trading software but even that isn't necessary). I guess it makes sense to think this way because there are no officially recognised qualifications or training programmes and no accreditation required to be a trader. Anyone can just start for free and instantly be making money. Also, it's not a "proper" job; to most of us, it's a bit of fun, watching sport, having a laugh on forums and having a bet. So we go into it with a lax attitude. We don't take it that seriously.
We set ourselves improbable targets; 50 grand in one year, £500 per week, £100 each day. But I would say that even setting yourself a target of £1 per day, week or even YEAR, is unrealistic. A trader's first objective should not be to make money at all, it should simply be to learn. That's it. Learn and improve. Part of that learning process is accepting, taking and experiencing losses - you NEED to lose! Having a monetary goal can only lead to one thing - disappointment. Once you start becoming disappointed, you start chasing and once you start chasing, you stop learning. If you are doing the wrong things, you aren't really getting anywhere, even if you chase all those losses back.
The second objective, should be to not lose money. Work on protecting your bank, managing your money, making sure you don't have to keep refilling it and eventually, just breaking even. Only once you get to a stage where you are roughly breaking even over a period of a few months, can you say that you are ready to make money. Even then, you shouldn't start setting profit targets. Just let the bank build naturally, don't force it and always remember that anything you earn is a bonus. That way, if your bank recedes to zero again, you don't view it so badly because you can't miss what you never had, right?
2. Don't increase stakes too soon
I believe that this is the single biggest reason why most traders fail. When I began trading, I imagine I was no different to the vast majority; using the £2 minimum bet. Why? Because we don't know what the hell we are doing! We are naturally and sensibly, very cautious. This is as cautious as we can be without using a simulator. Even with £2 at stake, I remember being anxious! Greening up for 20p was a buzz! It felt like I was at the beginning of a big adventure and it was exciting, scary, intoxicating and I wanted to learn. Then I started winning.............
As soon as this happened, I became over-confident. All of a sudden, 20p wasn't a buzz. I started looking at how much I could've won, if only I had larger stakes, as opposed to what I did win. Trading seemed easy as the greens rolled in and I felt I was missing out on some decent money. Within 3 months, I'd gone from £2 stakes to £100 stakes - and I'm damn sure I'm not much different to most traders in doing so. Very few new traders will learn so quickly that they warrant an increase so big, so soon. I certainly didn't! But of course, once the losses begin, the chasing follows and the stakes increase again. Another 3 months later and my stakes had more than doubled again to £250. It was an entire YEAR, till I realised that this was a huge mistake. I eventually started over again, dropping first down to £100 and then, reluctantly, down to just £25. I stayed at this level for an entire year. During that time, my learning and development improved rapidly, far quicker than when I traded with hundreds, mostly because the pressure and anxiety were gone. I only increased them again once I was starting to become profitable consistently but even then, I did it slowly: £50, £75, £100. I still haven't gone back to £250 but I'm a damn sight better than I was back then!
Someone recently told me they were going to leap from £100 to £1000 stakes. This is completely crazy in my view. In theory, it shouldn't be. If you were consistently profitable with £100, then it's just a case of doing the exact same things just with larger stakes. The problem is, when we see the red figures increase over-night, it's very hard to take in. Our mind doesn't just see an extra zero, it sees a red figure that was £20, is now £200. You've gotta be pretty cool to go from accepting a £50 loss to accepting a £500 loss. I doubt many people could handle that.
3. Expect going pro to be completely different to part-time
I've written about this before, so here is the link to explain this fully, including my favourite trading analogy - the penalty shoot-out. In short, going pro is NOT the same as simply upping your stakes and trading every single day, as opposed to in your spare time. There is simply no way that you can replicate the added stress and pressure that trading becoming your only source of income, will bring. But I don't think the vast majority of us really think it will be that different to doing it part time.
4. Expect to be learning for years
That's right - YEARS! I have received emails from people who have started tennis trading for just a matter of weeks, who seem to think they must be doing something wrong because they are not making money. Either they have bought the wrong guide or are applying the wrong strategies or there is something they must be missing. They want an answer, something that will give them a quick fix to easy profitability. I usually tell them that there is nothing they are doing wrong other than being impatient. I tell them that in all likelihood, they will still be learning in a few years time and if they are making money in 6 months time, they are either very lucky or one of the gifted few.
I would hazard a guess that if every trader was told "learning to trade the sports markets takes on average 3 years to become proficient" (I actually think it is longer than this but we'll go with 3), at least half of those traders would not bother even trying to give it a go. I'm not sure I would have, to be honest! Most certainly expect profit within a few weeks. Even the most realistic and level-headed of us would probably be thinking within 6 months. Well I did this FULL TIME for 2 years before I got anywhere and I'm neither a gambling addict, nor short of academic qualifications. I'm just an average guy who didn't give up when the going got tough - though I probably should have! The simple fact is, it takes time to learn anything, especially something that has the potential to be so financially rewarding. If it was that easy, exchanges wouldn't exist - we can't all be winners.
5. Work on psychology MORE than strategy
Well this has always been the basis of Centre Court Trading - to get inside the mind of a trader. Most of us understand that psychology plays a big part in our trading, but I'm 100% convinced that the vast majority of traders do not pay it enough attention. Not in the same way they would their strategy or money management or learning about sport or making models and databases and graphs and charts and bots and all those other geeky, noodley, time-consuming things which frankly, I don't even bother with at all. Because when it comes down to it, all of that means absolutely NOTHING, if you start acting like an irrational maniac when you actually trade! Yet how many people bother to learn about and work on their mind? Not many, I'll warrant.
I think it's something people believe will sort itself out, around about the same time they find a profitable system. But whatever strategy you have, you should in theory, be able to at least break even on it. Even someone randomly sticking a pin in The Racing Post with little or no thought process, should come out roughly breaking even on the nags in the long term. So how come most traders LOSE money? It's their head! They could be applying the best system in the world but cannot control their emotions enough to stick to it properly. When things get tough, they chase losses and when things are going well, they get over-confident and try new things - bigger stakes, 'tweaks' to the system etc. What do these 'losers' do to improve their mindset? Most look at the system first. They look at their notes and databases and stats. They watch more games and study the markets more. But I bet they don't look at what is going on in their head and think of how to re-wire their thought processes - that usually comes well down the list, if it's on there at all. I personally think it should be top of the list.
Conquer the psychology of trading first and the rest only becomes a matter of time because it's all facts that can be easily learnt and stored away. Changing the way you THINK fundamentally, as a human being, after 20, 30, 40 years of living your life, is infinitely more difficult than discovering which points in a tennis match produce the biggest swings.
All of the above will of course, be completely ignored by 99% of traders, at least until they hit rock-bottom. That's humans for you! We all want everything immediately and with as little effort as possible and we all think we are the one who will break the mould and don't need the help. But I now realise that if this wasn't the case, I wouldn't be able to profit on the markets. In fact, why am I even telling you all this? Ignore everything I've just written!! Oh no hang on - you will anyway..........
Sorana Cirstea:
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I get emails sometimes asking me about my trading. Taking into account those emails, my own personal experiences and the things I've read on forums, blogs and Twitter down the years, I have come up with a list of things which I believe is sound advice for novice traders. I didn't want to include the blatantly obvious things such as "only trade with money you can afford to lose", "don't chase losses" and "find an edge". They are things which everyone knows pretty early on, even if they do still remain stumbling blocks years down the line. I have chosen things which I believe cause most traders to fail because they are not necessarily things which are obvious at first. So here are the top 5 things which all traders should (though almost certainly won't!) do:
1. Expect to lose money
No one gets into trading thinking "I am going to lose my money". Well in my opinion, they should. Every new trader should set aside money for their bank, look in the mirror and say to themselves "I am going to lose all this money". Because in all likelihood, that is exactly what will happen. And that is perfectly fine. It should be labelled 'training costs', the same costs you'd expect to pay when educating yourself about any new profession: teacher, doctor, lawyer, engineer, IT consultant, whatever. We have courses to pay for, books to buy, travel expenses. We don't bat an eyelid for any of those professions, yet somehow, we start learning how to trade and expect to make money without shelling out for anything at all (perhaps an ebook and some trading software but even that isn't necessary). I guess it makes sense to think this way because there are no officially recognised qualifications or training programmes and no accreditation required to be a trader. Anyone can just start for free and instantly be making money. Also, it's not a "proper" job; to most of us, it's a bit of fun, watching sport, having a laugh on forums and having a bet. So we go into it with a lax attitude. We don't take it that seriously.
We set ourselves improbable targets; 50 grand in one year, £500 per week, £100 each day. But I would say that even setting yourself a target of £1 per day, week or even YEAR, is unrealistic. A trader's first objective should not be to make money at all, it should simply be to learn. That's it. Learn and improve. Part of that learning process is accepting, taking and experiencing losses - you NEED to lose! Having a monetary goal can only lead to one thing - disappointment. Once you start becoming disappointed, you start chasing and once you start chasing, you stop learning. If you are doing the wrong things, you aren't really getting anywhere, even if you chase all those losses back.
The second objective, should be to not lose money. Work on protecting your bank, managing your money, making sure you don't have to keep refilling it and eventually, just breaking even. Only once you get to a stage where you are roughly breaking even over a period of a few months, can you say that you are ready to make money. Even then, you shouldn't start setting profit targets. Just let the bank build naturally, don't force it and always remember that anything you earn is a bonus. That way, if your bank recedes to zero again, you don't view it so badly because you can't miss what you never had, right?
2. Don't increase stakes too soon
I believe that this is the single biggest reason why most traders fail. When I began trading, I imagine I was no different to the vast majority; using the £2 minimum bet. Why? Because we don't know what the hell we are doing! We are naturally and sensibly, very cautious. This is as cautious as we can be without using a simulator. Even with £2 at stake, I remember being anxious! Greening up for 20p was a buzz! It felt like I was at the beginning of a big adventure and it was exciting, scary, intoxicating and I wanted to learn. Then I started winning.............
As soon as this happened, I became over-confident. All of a sudden, 20p wasn't a buzz. I started looking at how much I could've won, if only I had larger stakes, as opposed to what I did win. Trading seemed easy as the greens rolled in and I felt I was missing out on some decent money. Within 3 months, I'd gone from £2 stakes to £100 stakes - and I'm damn sure I'm not much different to most traders in doing so. Very few new traders will learn so quickly that they warrant an increase so big, so soon. I certainly didn't! But of course, once the losses begin, the chasing follows and the stakes increase again. Another 3 months later and my stakes had more than doubled again to £250. It was an entire YEAR, till I realised that this was a huge mistake. I eventually started over again, dropping first down to £100 and then, reluctantly, down to just £25. I stayed at this level for an entire year. During that time, my learning and development improved rapidly, far quicker than when I traded with hundreds, mostly because the pressure and anxiety were gone. I only increased them again once I was starting to become profitable consistently but even then, I did it slowly: £50, £75, £100. I still haven't gone back to £250 but I'm a damn sight better than I was back then!
Someone recently told me they were going to leap from £100 to £1000 stakes. This is completely crazy in my view. In theory, it shouldn't be. If you were consistently profitable with £100, then it's just a case of doing the exact same things just with larger stakes. The problem is, when we see the red figures increase over-night, it's very hard to take in. Our mind doesn't just see an extra zero, it sees a red figure that was £20, is now £200. You've gotta be pretty cool to go from accepting a £50 loss to accepting a £500 loss. I doubt many people could handle that.
3. Expect going pro to be completely different to part-time
I've written about this before, so here is the link to explain this fully, including my favourite trading analogy - the penalty shoot-out. In short, going pro is NOT the same as simply upping your stakes and trading every single day, as opposed to in your spare time. There is simply no way that you can replicate the added stress and pressure that trading becoming your only source of income, will bring. But I don't think the vast majority of us really think it will be that different to doing it part time.
4. Expect to be learning for years
That's right - YEARS! I have received emails from people who have started tennis trading for just a matter of weeks, who seem to think they must be doing something wrong because they are not making money. Either they have bought the wrong guide or are applying the wrong strategies or there is something they must be missing. They want an answer, something that will give them a quick fix to easy profitability. I usually tell them that there is nothing they are doing wrong other than being impatient. I tell them that in all likelihood, they will still be learning in a few years time and if they are making money in 6 months time, they are either very lucky or one of the gifted few.
I would hazard a guess that if every trader was told "learning to trade the sports markets takes on average 3 years to become proficient" (I actually think it is longer than this but we'll go with 3), at least half of those traders would not bother even trying to give it a go. I'm not sure I would have, to be honest! Most certainly expect profit within a few weeks. Even the most realistic and level-headed of us would probably be thinking within 6 months. Well I did this FULL TIME for 2 years before I got anywhere and I'm neither a gambling addict, nor short of academic qualifications. I'm just an average guy who didn't give up when the going got tough - though I probably should have! The simple fact is, it takes time to learn anything, especially something that has the potential to be so financially rewarding. If it was that easy, exchanges wouldn't exist - we can't all be winners.
5. Work on psychology MORE than strategy
Well this has always been the basis of Centre Court Trading - to get inside the mind of a trader. Most of us understand that psychology plays a big part in our trading, but I'm 100% convinced that the vast majority of traders do not pay it enough attention. Not in the same way they would their strategy or money management or learning about sport or making models and databases and graphs and charts and bots and all those other geeky, noodley, time-consuming things which frankly, I don't even bother with at all. Because when it comes down to it, all of that means absolutely NOTHING, if you start acting like an irrational maniac when you actually trade! Yet how many people bother to learn about and work on their mind? Not many, I'll warrant.
I think it's something people believe will sort itself out, around about the same time they find a profitable system. But whatever strategy you have, you should in theory, be able to at least break even on it. Even someone randomly sticking a pin in The Racing Post with little or no thought process, should come out roughly breaking even on the nags in the long term. So how come most traders LOSE money? It's their head! They could be applying the best system in the world but cannot control their emotions enough to stick to it properly. When things get tough, they chase losses and when things are going well, they get over-confident and try new things - bigger stakes, 'tweaks' to the system etc. What do these 'losers' do to improve their mindset? Most look at the system first. They look at their notes and databases and stats. They watch more games and study the markets more. But I bet they don't look at what is going on in their head and think of how to re-wire their thought processes - that usually comes well down the list, if it's on there at all. I personally think it should be top of the list.
Conquer the psychology of trading first and the rest only becomes a matter of time because it's all facts that can be easily learnt and stored away. Changing the way you THINK fundamentally, as a human being, after 20, 30, 40 years of living your life, is infinitely more difficult than discovering which points in a tennis match produce the biggest swings.
All of the above will of course, be completely ignored by 99% of traders, at least until they hit rock-bottom. That's humans for you! We all want everything immediately and with as little effort as possible and we all think we are the one who will break the mould and don't need the help. But I now realise that if this wasn't the case, I wouldn't be able to profit on the markets. In fact, why am I even telling you all this? Ignore everything I've just written!! Oh no hang on - you will anyway..........
Sorana Cirstea:
