Value

I've been thinking a lot about the way I'm trading.

I've started trading roughly a year and 4 months ago.Since then,Ive had a few big wins,a LOT of big losses,a few busted banks.Typical from someone who is inexperienced and that does not know what he is doing.

Ive started trading soccer,since it is my favorite sport to watch,closely followed by tennis.As many,I have experienced a pretty good start followed by a spiral of losses,red screens,anguish,fear,nervousness,sleepless nights.

Recently,and as my greens started to fade again,Ive found myself thinking about what I did in those first few weeks that made my profit so big and that made trading look so easy.Because it really felt easy back then.I just watched the game,defined who was playing better and just backed that team.More often than not,my position would come out as a winning one.Simple as that.Expectations started to rise real high as the promise of a life free from the trivialities of a day job and financial independence seemed closer than ever.It felt like I was just a step away.The harsh truth is,after almost a year and a half later,a few busted banks later,a lot of time,dedication,experience and countless hours of watching the markets,hundreds of trading sessions later,I still feel just a step away.Ive always felt just a step away.I never felt that I needed a radical change to the way I was doing things.So what started to go wrong?

Trading requires a certain set of skills,technical and mental skills.Some of them are of extreme importance and some of them are less important,but to be successful in this game,you really have to have the whole package.Back then,I had a certain set of skills that is extremely hard to learn if it is not natural to you.Its widely known as "reading the game".I would just pop up a stream of any sport I was relatively familiar with and within a few minutes I could tell you who was going to win,and more often than not I would be right.It didn't matter if it was soccer,tennis,NBA,snooker,you name it."I can do that too",you say to me.Well,let me tell you then if you already don't know,you are a lucky son of a gun.Just as I am.I just didn't have the clarity of mind back than to understand it.

I can't tell you how many times people approached me,being it in forums,cafes or in those Sunday afternoons in a friends house where we gather to watch the evenings soccer games and said to me "How on earth can you read the game that way?!"Well,I don't know.Its something I cant teach anyone.You either know how to do it or you don't.Its not something like bank management,risk control,market movement,emotional control that you can read about in books,forums or blogs, take an attitude and start learning it.

The downside to it is that it can make you so overconfident that things just start to crumble away beneath your fingernails,beneath your very own eyes.But that overconfidence blinds you so badly that you think you cant ever be wrong.Never.Ever.But you can.And you are wrong once.And a red screen appears."No problem,I just bet enough next game to recover my losses.". And you do.But you are eager to recoup that money you lost,so you take a position that had no value (and you KNEW it had no value) just because it paid enough for you to recoup your losses.Another red.You already lost more than half your bank in just 2 games.Panic installs.All that profit has slept away from your grasp.That profit that took you 10 games to win.That many hours of hard work  you invested just faded away.In just 2 games.So quickly that it felt like being hit by thunder.You're not only not in profit,you already have lost a considerable amount of what you have invested.That impatience of recouping everything you worked so hard for starts to turn to anxiety.That anxiety makes you not only take valueless positions,it also makes you start chasing your losses within the same game.And your bank goes bust in the split of a second,in the blink of an eye.This time it doesn't feel like thunder.It feels unreal.To the point that you go to bed that night believing that its just a bad dream,that you will wake up and it was all a nightmare.But it wasn't just a bad dream.It was the cold,harsh truth.It wasn't a bad dream but it sure is a living nightmare.And it hurts.So bad.And it left big scars.

You start to research,to read books and forums,hundreds of hours spent reading about trading.You read about bank management."LOLZ,whoever wrote this must be stupid" you think.And you try again.Boom,you go bust.You are back to research mode.This time you read about some technique.Being it scalping the U/O or the correct score.You try it.You have some small success but you go bust again.More research.This time is Lay the Draw.Didn't work,bust again.You change sports because you are so sick and tired that it seems impossible to make a profit in those "stupid rigged soccer markets". Still no results.And you find yourself in this downward spiral,trying everything you can find,following every tipster and his mothers picks,trying to find that holy grail of trading.

I bet many of you,if not all are familiar with this scenarios.Answering the question I left a few paragraphs ago, what went wrong?What went wrong is that,although you knew the way you had to trade you just didn't have the whole package of skills required to make a consistent profit.I came to a conclusion recently.No way of trading can feel more natural to you than the way you did things when you didn't know how to do things.Seems like a paradox?Let me explain further.To the people who experienced success before utterly and complete destruction of their banks,you must have done something right.You won.I don't believe in luck that way.I believe that you had an edge over the market,being it choose underdogs to win or assess with relatively security the chances of a goal being scored in a certain time frame or the chances of a break of service occurring.What happens is,most of us don't have the mental and emotional skills to take the game a step foward.We don't have bank management,no defined risk,no control over our risk of ruin.When we start to lose,we don't have the clarity of though to recognize that we cant always be in a winning position.We can only see the lost.That affects us to the point that we start to do things we know we aren't supposed to do,but we lack the mental strength to stop doing it.So we look for examples of what people are doing and we try to copy them.We can never be successful because its not our way of doing things.And Im not talking solely about strategies here.Because there are people who cant find their own way of trading until they try out what others are doing.This is for all the "naturals" out there.Let me try and put this into an example.

Imagine someone (this can even be your specific case) who is really good at picking underdogs to win a game of soccer.You go through all of this phases I described above.You read about bank management (which I think is one  of the first core concepts that doesn't come natural to many but is also one of the first to make sense and sink in). You see someone who is really good at picking favorites to win and they use stakes of 10% of their bankroll.You start to use 10% of your bankroll as your stake but you still go bankrupt.You think you have bank and risk management,but you really don't.You know you are going to be right much less often than this other guy,but still you use the same bank management.Can you see where I'm going with this?Bank management started to make sense to you,but it obviously didn't sink in.

And then comes the emotional control,which is solely the HARDEST thing I have EVER had to learn in my life.Learning to trade isn't difficult.Winning battles against yourself is difficult.And it is so difficult that you might win some battles,but if you don't keep fighting,you'll never win the war.If you don't fight to always have that set of mental skills,that control over yourself,you'll never succeed.The mental strength that is required to just sit and watch a game for 2 hours and DO NOTHING is so big that it is almost overwhelming to do it at first.Patience.To accept a loss knowing that you made the right call and still lost hurts more than a punch straight to the teeth.Acceptance.To not take a position you know has value because you are afraid.Courage.To let a trade run even after you realize the value it had no longer exists.Well,thats just plain stupid lolz.

That being said,I'm taking a new (old) approach to the way I trade.Ill do exactly what I've done in the beginning,but Ill do it using all the skills Ive learned through the way.All of them.The whole package.Ill start trading VALUE again.