Lets face it – we all hate losing money. We hate losing full stop. We want to beat the market and we want to make a living doing it.
There are two sides of Tennis Trading that you must deal with effectively in order to win consistently – deal with winning and deal with losing. You might say that dealing with winning is easy but it isn’t that simple. I might have mentioned it before but I like to play poker when I’m not trading. Poker and Tennis Trading share many elements, most of all psychological elements. If I sit down with £20 at a cash game and all goes well I could easily grow my £20 to £50. Nothing wrong with that! But what follows is! Instead of taking £30 profit and sitting down again with £20 at another table, I start playing at a table with higher stakes, with the whole £50 on a table with higher stakes and better players. And I’ll do this until my money is gone! In my mind, I’m really only risking my initial investment of £20, and that £20 is really all that matters! But of course I’m very wrong.
The lesson here is to take your winnings and treat it as real money – money you earned, money in your pocket. Never risk more that a set % in any game or trade. You might feel good about winning but it will be short lived if you don’t manage your winnings. I set a target winning % every day when trading tennis – normally 10%, and these days when I sit down to play poker I also set myself a target for a table. The longer I sit at a table, the more probable it is that my KK will come up against AA and I could potentially lose my bank.
Treat you winnings as you would treat you wages at the end of every week – money you worked for and don’t give it away easily. Keep using the same % stakes – as your bank grows so will your stake size and your returns too. Be patient. Don’t be tempted to win too much too quickly.
The other side of Tennis Trading psychology is, of course, dealing with losses. And everyone suffers losses sometimes! How you deal with it depends on many factors – your personality, the percentage loss and your current ‘form’.
I’d like to address the last point first! There is no ‘form’ – just correct strategies and correct money management. Believing in betting form will most likely make you an unsuccessful trader. Losses will happen – but those losses don’t make you a bad trader. Don’t berate yourself for losses. You should have had good reason to make the trade in the first place. Players form is be on your side so you go for it. And sometimes players just don’t play to form! So players form reflects your own form! And that doesn’t make sense. Just deal with it from the beginning – sometimes you will lose. It’s inevitable when trading tennis. However, you shouldn’t be losing constantly! If you are, you are most likely using incorrect strategies or stake sizes and you should ask a pro for some advice. For most traders, making small changes can make big differences to their bank balance. I had a guy recently that told me he was constantly breaking even every day and just couldn’t make even a small few quid. The guy was losing a full 40% of stake on every losing trade. I simply told him that the 40% I mention in many articles is MAX loss, not a target loss, and now he’s in the money! Don’t be afraid to ask questions! If you are having a certain problem, you can be guaranteed that another trader is having the same problems.
Another mail recently was a very interesting one and said a lot about trader’s mindset. The guy spent a m0nth in practice mode on Fairbot and was feeling confident, but the results were not reflected once he started trading for real money. After long discussions we figured out two things. Firstly, he wasn’t trading out soon enough when he was winning – he was letting trades run so he could make more money, but it wasn’t working. He traded mostly on WTA and WTA is more likely to have wild swings and that’s what was happening – greed. The irony here is that greed is the reason many people are traders – we want more and we want it yesterday. You should have a target win, as you should set target loss – anything from 5-20% win is normal. Trade out with profit and trade out early with losses. In the long run, this is what will set you apart from average traders.
Secondly, traders also act differently in Trading Practice Mode than they do in real life, with real money. Naturally, when you deal with real money you will become cautious. You trade with smaller amounts and worry about all the different aspects – you become tense. Suddenly, trading isn’t really fun and a loss can be very disheartening. The moral is to be a little less cautious – don’t be afraid to get involved. Those who only see numbers and not money are the most successful traders. Let’s get back to the poker – pro poker players don’t care if they have to call $100 or $100,000 as long as they feel the odds are correct. The end result is money, but it’s not the reason for the call. They call because they feel the odds are in their favour. The same goes for tennis trading – if a players odds are too high or you have good information then go for it! Use the full 10% stake or up to 30% if you are very sure. What you must always remember is that you have good reason to do it and the risk is worth it and the odds are in your favour.
Also, trading with money you simply cannot afford to lose will inevitably lead to bad decisions. One loss will hurt so much that suddenly, and without being fully aware, you have your full bank on the next favourite. Obviously, this is very wrong. You must always be disciplined when trading tennis or your downfall will be swift and painful. Avoid the situation by trading only with money you can afford to lose, as it will take the stress out and you will have the right mindset from the out.
So what do you do if you feel like smashing the laptop off the wall? You just lost more than you should and you don’t know how you can recover it. You are completely stressed. What should you do? You calm down and carry on! Use the correct size stake on the next match (or less) and move forward. It’s incredible how that next small win can get you back on track. So that’s what you need to do – get back to winning ways straight away! I cant stress this enough – get back in the saddle!!
Sorry this article is so long!! There’s a lot to talk about. Think of something else I haven’t mentioned? Wanna contribute? Leave a comment below…