[March 2012]
So, another significant meeting has concluded! This year, however, it has truly left an indelible mark on me. It has provoked me to ask myself hundreds of questions, which I don’t mind since, as I’ve mentioned before, trading has greatly contributed to my self-enlightenment and soul-searching.
Today, the impact was unexpectedly direct, which was quite strange. After a reaction, a brief conversation, and an extended discussion with a family member deeply interested in psychology, my mind was thoroughly bewildered. I’ll try to elucidate.
So today, Saturday, March 17th, the day following the Cheltenham Gold Cup, was a day when trading was not expected to be particularly fruitful due to the scarcity of “mug money.” Punters’ cash had been flowing into the markets all week, which means that the day after, it’s likely to be a battle amongst traders, with bots also in the mix.
However, I believe the Cheltenham event has positively affected my mental state and attitude toward what I’m doing. Yesterday was another clean sheet—no great surprise, as I traded only the highly liquid races with a degree of discipline. Yet today, around 1600 hrs, I found myself quite bored with my activities. Feeling quite hungry and fed up with the monotonous nature of trading, I decided to review my profit and loss sheet, only to discover another clean sheet. I hadn’t even realized it until I looked, and astonishingly, I had made almost the same as on Thursday, the day before the Gold Cup. To say I was shocked would be an understatement; this is not typical for me.
The most unsettling realization was almost as if, psychologically, I was dismissing my results, likening them to those of a professional, yet they were genuinely my own for the day.
After speaking briefly with another trader, I sensed they understood my sentiments from past experiences. I have taken their wise words to heart. For those reading this blog, thank you.
Essentially, they advised that I shouldn’t scrutinize my results race by race, day by day, but rather month by month, if at all. I understand the logic behind this: focusing too closely on daily outcomes is likely counterproductive, a realization that now resonates with me.
Reflecting on this, I find myself still agitated by losses of £10 – £20, or even larger amounts, which I mentally catastrophize.
This mindset significantly hampers my daily results and sometimes affects me longer. The advice was to perceive it as a numbers game rather than a monetary one, an intriguing perspective.
So, what’s the problem?
Despite having the capability to trade at my current level for some time, and while it’s not unsatisfactory, the ambition for more persists. If I don’t truly believe in my ability to achieve the results I desire, how can I expect to reach them? Continuously using the same methods without expecting different outcomes is illogical.
Certainly, the prominent traders circulating in cyberspace aren’t using the stakes I am to achieve their results. To elevate my game, increasing my stakes is one thing, but more importantly, I must accept that losses happen, regardless of their size. The idea is not to flinch at a £20 loss, as it’s insignificant in the grand scheme, and I can’t expect to win £20 without risking equivalent amounts. Fundamentally, I need to start truly believing in myself. While labeling myself as a ‘pro’ may be premature, are my results not indicative of progress? Your views on this matter would be appreciated, though the poll is now closed.
Setting that aside, I consulted with someone close to a therapist to discuss my feelings and perceived limitations. In summary, they highlighted my risky behavior across various aspects of my life and linked it to psychological self-harm and low self-esteem, as suggested by one of the most renowned psychologists. This resonates with me to some extent.
The core insight was that my reactions to losses and wins reveal deep-seated issues. Losses reinforce feelings of inadequacy, while wins are often dismissed as luck. This mentality hinders more substantial achievements.
Experiencing a series of positive outcomes has slightly shifted my perspective, but there’s more for me to explore and understand about myself. Specifically, I need to embrace the notion that I’m deserving of more than £20 in a race and not fear utilizing stakes that could potentially increase my profits.
After all, those who post significant wins aren’t relying on minimal investments. Moreover, learning to accept losses without it affecting my self-esteem and causing frustration is crucial. The ability to remain unfazed by losses of £20, £40, or even £50 is an invaluable quality, as I’ve noticed how one setback can derail an entire day’s trade.
Your opinions on this are welcome—whether you agree or not, I’m interested (though, please be gentle!).
Related Article: Horse Racing Strategies For Betfair
6 thoughts on “Trading Psychology”
Hi Caan, I voted on your poll ‘none of the above’ – let me explain! A ‘pro’ is someone who gets paid as an expert in a specialised field. So if you are living off your trading profit, then you are a professional in the field of trading because you have an expertise in this field. You would of course be in profit over the long term (not short term). What the long term is, is open to debate but I would say a minimum 2 consistent years – 1 year can be a fluke but 2 and you’ve surely got something.
However, often when people are labelled as a pro, they are just being called good at trading. You can be good at anything but unless you have some proof to back it up, it doesn’t make you a pro. If it’s not your job then you technically aren’t a pro, though with trading it’s slightly different from other jobs because many people do it as a hobby or second income and still make a lot of money. If they can prove they have consistent profit stretching back years, they can probably still be considered a pro, even if they don’t live off those profits (though of course, it would need to be more than a couple of quid profit!)
Basically, if you can’t live off your profit, you are not a pro and if you haven’t be able to do this for at least a couple of years, you are not a pro.
Qualities that a ‘pro’ trader definitely would have, are confidence in what they are doing, a proven track-record and very few unanswered questions about themselves, their strategy or their mindset. If you have no record of consistency, an unstable mental history when trading and constantly are looking for answers, you are a long way from being a pro. You might trade ‘like’ a pro from time to time but unless it’s consistent over years, it means nothing. There’s nothing wrong with that, it just means you have a lot more work to get where you want to be.
My advice for you is you need to resolve these self esteem and anger/ frustration issues before you even think about upping stakes. You have to keep asking questions about why you do things and work on those issues beacuse they won’t just go away. It’s good that you recognise your issues though because most people don’t and they never improve.
Hi Caan, good post and one I can relate to as I’m sure many others do. In terms of losses they are much easier to accept if they are in line with your bankroll. By that I mean if you lose £100 on a trade with only a £1k bank then that would have a greater impact on your psyche and your confidence than if you were trading with a £10k bank. That was my problem when I first started out. Trying to make £15-£20 per race with just a £1k bank. You can do it if you get on the right side of a move but it’s not a realistic amount to expect on every market and that’s where my problems began with overstaking and in turn the out of proportion losses to my bank. This led to self doubt and and all sorts of negative feelings and this carried on for a good while. It wasn’t until I realised that to make £15-£20 a race and to lose the same amount without it damaging my psychological state I needed a bank of £2500-£3k and even then those amounts weren’t guaranteed, they never are. But the knowledge that I could safely get in a position to win those amounts without the losses affecting me allowed me to trade without the shackles of knowing that I could always make it back in the next race without having to put my bank at risk of further excessive losses.
I’ve probably gone on a bit there but basically providing you have a proven edge those amounts you are talking about will come as your bank grows. Then next problem is becoming complacent and not being satisfied with ‘only’ £15-£20 per race and wanting more. But that’s for another day.
Take it easy and it’ll come.
All the best.
Thanks guys, some very insightful comments.. exactly what i needed.
Sultan – yes you are right and as i thought maybe its the wrong label but i think you got the just of it.. these esteem issues etc you are completely right, its just a case of what comes first the chicken or the egg i think maybe?
CC – Thanks for the posative comment, hadn’t really thought of it like that before but it makes sense, could be part of the frustration, oddly i think i’ve expereinced the satisfied and wanting more feeling alot already and can deal with that easier than the losses, will soon see 🙂 cheers for the input guys
Excellent post Caan and good discussion, I’m really thankful you haven’t abandoned your blog and can come back here from time to time to write a really insightful exploration of where you’re at yourself. Thanks to the Sultan and Chris for “going on a bit” cos to a newbie trader like me this conversation hits exactly on the thoughts and feelings I have during a session, and yet haven’t chatted about enough to know how to express it,…. i remember a while back you did a post about knowing when you have an edge — along the lines of You just stop caring about it and keep doing what works, when it doesn’t hassle you and provides good results and you don’t have to stop and think about each trade , you are comfortable with what you’re doing,….
BOth replies hit on the right point, its about doing what you do consistently, over and again and crucially “having as few unanswered questions about yourself” as possible…. in my newbie idealistic vision (having not reached there myself yet), i imagine that you only reach that point when you’ve had weeks and weeks and months of regularly consistent results when you eek out the most profit from the bank you’re using, without toying with big risks — as it seems (reading between the lines), that you still capable of leaving yourself in very risky positions that could break you,. I think balance is key , between expected reward and what you can risk,.. and the journey you’re on is finding how to develop that balance as you grow in confidence and self-assuredness in your moves.
i know the “train-wreck” mentality (the pride sting from a red £25) all too well and until that’s dispelled, you’re always at risk of self-sabotage. keep going with it, your patient enough to get good at this me thinx, wish u the best ! 🙂
thanks too, to The Sultan & Chris for sharing your valuable perspectives – Ron
I know a few people who trade for a living but can’t imagine any of them would ever call themselves a ‘pro’.
Only people who refer to pro traders are wannabe ‘pro’ traders or scammers 🙂
Superb post, honest and incisive.