Last week I re-capped on everything we had covered over the several months I’ve been doing these articles. I did promise an article about scalping (taking small tick profits before the off) but having started it I’ve realised it’s an epic piece so I’ll be posting that in a few weeks time. Bear with me 😉
So today I thought I’d talk about the difference between fiction and reality. I was inspired by watching a trading documentary that the BBC did last week. It made for interesting reading and I was surprised that they didn’t cover sports trading which is becoming such a massive income potential for people. They covered successful traders and not so successful traders. You should really try to watch it on catch up TV as it’s an interesting programme.
The one person that stood out in the programme to me was a middle aged lady that had started to trade using a practice account. She had a pretend balance of 100k and throughout a few months had built it up to over 1.9 million. Very nice indeed! She saved up a bank and started to trade with a real balance of 6k. You know what happens next – she lost most of it!
Now that highlights something that is inherent in all of our betting/trading.
We spend a couple of days devising a system or strategy in our heads and start to see some winners. We think that we’ve found the holy grail and jump in. Inevitably it goes tits up and we lose our shirts. We keep coming back for more though don’t we!!
S0 what went wrong for the lady in the programme and why does it happen to most of us?
When we trade or have imaginary bets there’s no risk attached to them. We can trade and gamble all day long because there is no emotional attachment to the risk that we’re involved in. As soon as we start to use real money, our relationship with that money becomes an over bearing factor in our decision making. People have a remarkable knack of thinking the worst when using real money and this clouds our judgement.
The fact that the lady in the programme had built up such a massive bank when using fictional money is because she had no risk attachment to her decision making and I will guarantee that the trades she was placing were a little gung ho! Another point was that she was trading whilst sat in her living room and her kids watching television. That’s a recipe for disaster in itself!
So my point around all of this is that in order to trade or bet professionally or at least more successfully is to separate ourselves from fiction and set ourselves up properly with a reality check. The first important thing is to have a separate bank that we can afford to lose. When I started I actually built up a bank from my savings and left it there untouched for a month. Once all my bills and monthly expenses were paid and I didn’t need to touch my betting bank, the following month I’d lost any attachment to it and knew that I’d be able to carry on living without any risk.
Secondly you need a quiet place to work and trade. I have a converted bedroom that is my office/trading room. This is where, with the door closed I can carry out my days work and trading without any distractions. I appreciate not everyone can have that luxury but you certainly need to find somewhere quiet and distraction free in order to concentrate.
So to round things up we need to keep a separate betting bank and make sure that we have a quiet place. If you can set those two things up then you’re closer to being a more successful punter/sports trader.
I’m on holiday next week but will try to get something together for when I’m away 😉
Have a great week,