How to Improve your Sports Trading Results

Right now as we write this article we'll be shortly taking a well-deserved break from the sports markets, as activity on many of the sports wind down in preparation for the new year.

 

Of course, as an admission that we're addicted to sports trading, this won't be a total break as there will still be lots to trade on. Also we have some trading books to read and we will be taking time out to conduct a review of our 2013 performance and to plan for 2014.

 

We highly recommend that you do the same.

 

Don't get us wrong, reviewing your trading performance is not just a 'once a year' event.

 

We actually conduct different types of review after each trade, after each session, after each week and then again monthly. And we also complete a six monthly review, one of those being now, at the end of the calendar year.

 

While we will be reviewing our P&L figures and drilling right down into the stats such as winning percentage and win/loss size ratio for each of the setups, our biannual review is not so much about that stuff. That gets taken care of on a monthly basis.

 

The biannual review is really a chance to reflect on your results, your plan and your goals from a much higher level. And the best way to do that is...

 

ASK YOURSELF QUESTIONS!!!

 

We know, you'd rather us just give you the answers, but that's not how life or sports trading works. The real insights in life come from questioning what is happening and allowing your inner-mentor to provide the answer.

 

Ideally, the questions will also be customised to your needs. If you relax into the process you'll know the questions to ask. But to get you started, maybe some of the following questions will help provide you with an insight which will make 2012 your best year yet.

 

• Am I enjoying myself?
   
• Have I achieved my sports trading goals? Why? Why not?
   
• Are my sports trading goals still relevant?
   
• Is my sports trading plan current? Does it accurately reflect how I trade?
   
• What is the strongest part of my sports trading plan? What can I do to improve it?
   
• What is the weakest part of my sports trading plan? What can I do to improve it? What can I do to minimise the risk or impact?
   
• What is the area of my sports trading plan that I haven’t really developed to its fullest potential?
   
• Do I really know whether my plan provides a positive expectancy? How do I know?
   
• What is one thing I could do right now to improve my pre-trading preparation?
   
• What is one thing I could do right now to improve my identification of setups?
   
• What is one thing I could do right now to improve my entries?
   
• What is one thing I could do right now to improve my sports trade management?
   
• What is one thing I could do right now to improve my exits?
   
• What is one thing I could do right now to improve my post-trade review process?
   
• What is one thing I could do right now to improve my record keeping?
   
• What is one thing I could do right now to improve my longer term reviews (weekly, monthly, biannually)?
   
• What is one thing I could do right now to improve my discipline?
   
• What is one thing I could do right now to improve my consistency?
   
• What is one thing I could do right now to improve my sports trading psychology?
   
• What is one thing I could do right now to improve my money management?
   
• What is one thing I could do right now to improve my risk management?
   
• What do I fear most in my sports trading?
   
• What am I embarrassed to talk to others about when discussing my sports trading?
   
• What was the low point of the last six months? What will I do to prevent that reoccurring?
   
• What was the high point of the last six months? What will I do to ensure that repeats again in future?
   
• How do I plan to improve in coming months?
   
• What are my current life goals? What are my current sports trading goals.

 

It's that simple. Hopefully there's one or two in the list that you really related to. If not, you'll need to find your own question. Relax, and ask yourself, 'What is the most important question I need to ask myself to improve my sports trading?' Then let the question go. The answer will come when it's ready.

 

Here's hoping 2014 is the best year of your life so far!

For more information visit www.interactivesportsinvestor.com 

The 'Traffic Light' Risk Management Strategy

Would you like to discover a quick and simple risk management strategy that is easy to apply to any trading plan, and has the potential to vastly improve results? Excellent!

We are not talking about the placement of stop losses, which is what most people consider as ‘risk management’. Rather, this is a simple tool for managing the risk in your sports trading activities.

Effective sports trading requires focus and discipline. There are many external factors that can interrupt your focus, and destroy your discipline, such as:

• An unreliable internet connection
• Your sports trading software losing its signal or the betting exchange going down.
  
• A knock at the door
• The telephone ringing
• A baby crying
• Hunger
• Noticeably too hot or cold
• Fatigue (hopefully from late night sports trading study, rather than alcohol and party induced fatigue)

And as if that’s not enough, there are many internal factors that can also interrupt your focus, and destroy your discipline, leading you to make decisions and actions based on emotion, rather than following your documented trading plan. You’ve no doubt experienced some of these already. The internal factors would include things such as:

• Hesitation in entering once price triggers an entry
• Hesitation in exiting when price hits your stop loss
• Doubt about your entry after entering the trade
• Fear of exiting at your stop loss
• Worry about how you will explain another loss to your partner
• Any thought about an early exit of this trade, just to make up for earlier losses

There’s a whole lot more, but hopefully you get the point.

One flaw in many sports trading plans is the absence of a valid strategy for managing these risks. So, let’s fix that situation.

The problem is,sports traders have no guidelines as to:

• When the risk justifies us stopping our trading,
• When to just pause trading and manage the issue, or
• When to ignore it and continue trading.

The way we do this is using a very simple risk management strategy developed by Shell, a global group of energy and petrochemical companies. Obviously they didn’t create it for use in sports trading – we just find that it works really well in this environment.

What we need to do is firstly classify your current trading as being in a GREEN, AMBER or RED condition. Think of a set of traffic lights. GREEN indicates that everything is fine. This is the desired sports trading environment. RED is a compulsory STOP condition. And AMBER is a warning that you need to be prepared to stop.

What we’d like you to consider is documenting any RED conditions within your sports trading plan. This might include things like:

• An unreliable internet connection
• Your sports trading platform losing it’s signal (when you have no alternative)
• Fatigue due to less than six hours sleep the night before, or more than four consecutive nights with less than eight hours sleep (customise this for your own requirements)

These are mandatory STOP sports trading criteria. Alongside each of these risks you need to define the actions you will take. For example, how will you manage your software going down? If you’re a long term trader this might not cause too much stress and may actually be an AMBER rather than RED – your stops may be in the market and you probably have alternative software options. However if you’re a horse racing trader operating on small timeframes, this is clearly a RED criteria. You may choose to manage this by having direct contact by phone to the betting exchange operator you use and closing out all positions.

So, for each risk we define as a RED, we simply document a procedure to manage that situation. And when one of these conditions emerges while trading, we carry out our procedure, and then stop trading until the condition has gone.

Now, everything else that is not as serious as a RED, but can still influence our sports trading, is an AMBER. The problem here is, as mentioned before, when does it justify stopping, or when should we just continue with our sports trading?

The traffice light risk management strategy simply states that if you get three or more AMBER conditions then that is also an automatic stop. At that point you can either quit for the day and head for the golf course, or manage your AMBERs back to GREEN and resume trading.

So, if your baby is teething, and just won’t stop crying despite your partners attempts to comfort him/her, and you just suffered your second loss in a row, and you now find yourself hesitating at an entry trigger – that’s three AMBERs.

STOP TRADING!

Before you continue, make sure you manage your risk back into GREEN, or at least less than three AMBERs. Perhaps take a short break to review your two losses and confirm that the setups were valid, review your sports trading statistics to confirm that two losses in a row is a normal occurrence, and conduct a short relaxation and visualization session. If you’re braver than we are you might also ask your partner to take the baby out for a drive (ask nicely though!)

If you’re satisfied that you’ve now managed the situation back to less than three AMBERs, or ideally completely back to GREEN, then you’re right to start trading again. Otherwise, take the day off. Sometimes a ‘three AMBER’ complete break from sports trading is a wise move.

While we all hope that our sports trading will occur within a completely GREEN environment, life’s just not like that. The Traffice Light risk management strategy gives you a simple guideline for when enough is enough – and you need to either stop completely, or reduce some of the external or internal risks. Try it, and see if it helps in your sports trading as much as it does in ours.

It’s simple:

• GREEN is GO,
• AMBER is CAUTION and
• RED is STOP, but
• 3 AMBERs are equivalent to a RED. Stop trading, or manage those AMBERs back to GREEN.

Happy (hopefully GREEN) trading

Find out more at www.interactivesportsinvestor.com