Learn How To Trade Slowly

How can aspiring traders can turn professional and how they should go about doing this?

What people need to understand is that in the trading game, things are different. We have all heard and paid lip service to such phrases as controlling your emotions and how fear and greed drive all markets, but how many of us have truly taken on board the meaning of these terms.

We can jump the gun and take a real life example, to explain what I mean

Let’s say Pete is a would be professional betting exchange trader, who loves sports and has a very good overall knowledge of football, cricket and rugby and has purchased my Pro Exchange Trading manual. We shall also say that he has taken on-board many of the strategies contained in the book and that initial results look good, he has some losing trades but is mostly
green.

Pete isn’t stupid, he does his stats and realizes that if he could trade every week afternoon as well as Saturday afternoon’s, he could get in front quicker and make more money. He calculates that if he quits his boring day job, takes a few grand out of his savings account and transfers the money to his Betfair account then he’ll soon be on the road to riches and the 9-5 routine will be just a distant memory.

Pete goes even further; he discusses with his wife the project in hand, quits his day job and sets himself up with a brand new PC and the title of Independent Betting Exchange trader. Pete and his wife agree that a daily salary target of £150 is what is required and on reaching the target Pete will stop trading. The stage is set..

On the first day of trading things go very very well. In fact he surpasses his £150 target but instead of stopping trading as was agreed, he believes he is on a roller so carries on and to prove how good a trader he is nets on average £50 per race, and clears £400 for the day, not bad and much better than the day job. Pete is ecstatic, his wife is overjoyed. Life is looking good.

The next day Pete feels things have gone so well that he will increase his stakes and make some more money, it all seems quite easy really, and that way he can buy his wife that nice Spanish holiday they have spoken about for some time. Why not get down to the sun before the rush in August if he can make enough money.

Once Pete starts trading he actually feels pretty tired and realizes that he hasn’t ever done back to back horse racing trading days before. After the first 4 races Pete is actually down £400. He makes a couple of mistakes and puts it all down to carelessness. He decides to get the £400 back “and some” on the remaining races. To do this he increases his stakes – and plays catch up. Things do not go according to plan, and by the end of the day Pete ends down £1100 so down £700 over the two days. He doesn’t feel like telling his wife when she asks him how things went so keeps everything to himself, fresh in the knowledge that the next day will be different and that he’ll get back the £700 and the two days salary of £150 which he hasn’t earned so he required a total of £1000

On the third day, there is heavy snow throughout the country and all racing is cancelled. Pete is pretty annoyed because he has not earned anything all that week, and is actually down by £700. Pete becomes agitated and starts to look on betfair for alternative events, he sees the Greyhound racing, remembers that in fact he isn’t even really interested in the dogs, but really wants to earn some money so thinks he’ll see if he can trade a few races. Pete then also remembers that my Pro Exchange Trader Manual expressly states that you should leave the dog racing alone – for one reason, lack of liquidity, which causes two problems, a wide spread and not being able to get your trades on or off.

The rest I think will be obvious to you. Pete takes a loser because the odds of coming out in front on such a market are stacked against you, then begins to fight the market, places bigger and bigger stakes, ends up down, £2000, changes track from Walthamstow to Brighton, is now down £4000 and carries on until the point where Betfair send an automated message telling him there is not enough money in the account with which to place the trade he requires. In the space of three days, Pete breaks just about every rule there is to break and in doing so puts his trading career in jeopardy.

What went wrong??  There were many things which Pete did wrong. Let’s take a look at some of the major ones. Pete did not attempt to walk before he could run, he gave up his job very quickly after having started out on the road to becoming a trader, he did not think about adequately capitalizing himself, about ensuring he had enough money to live on whilst he was perfecting his trade, he did not think about making a business plan  however small – just a few lines would have been better than nothing – nor did he consider that there would be days went he didn’t earn anything and that he would have to factor this into his earnings estimates. In short, he put himself and his family under too much pressure, he desperately wanted to better his position, but in essence that very desperation was part of his down fall. Scared money never wins, neither do desperate men. However much you want to better your own situation, to break the 9-5 routine, a structured and controlled approach is the only on which will work. In the trading game if you want to get somewhere fast go their slowly.

If you would like to talk trading then drop me a line.

This article has been published with permission. You can contact the author by emailing [email protected] if you need any help or have any questions regarding the articles.