I had a conversation with someone on Twitter a while back, a follower wanted some advice. He told me that over the years on the Betfair Exchange he had turned an initial £10 to £100 or thereabouts a number of times. But when it came to turning the £100 into £1000 he just couldn’t do it, it was like he hit an invisible wall. In fact he found that once he went over the £100 mark he struggled to stay there, he asked me if I knew what the reason for that was.
This is almost entirely a psychological problem, I have identified three main reasons why you may find it hard to make £100 to £1000 on Betfair so let’s look at what’s happening here;
Inner Gambler Madness
It is hard to quantify percentage-wise how much Inner Gambler Madness (IGM) is responsible for stopping someone from replicating turning a smaller amount of money into a moderate amount of money. To then turning that moderate amount of money into a larger amount, but at a guess I would say over 50%.
IGM is a lot like strategy slipping which is one of the 5 most common ways to lose money on Betfair and Betdaq. However the difference is that with strategy slipping you’re tinkering with your strategy over time and unconciously turn it from a winning strategy to a losing one.
With Inner Gambler Madness you depart entirely from your strategy and start to do things that you wouldn't have dreamed of when you were turning £10 into £100 pounds. So what’s the reason for this?
Like most sports traders you have probably been introduced to trading via straight forward gambling. If you are a trader on Betfair then the chances are you are less risk averse than the average person.
If sports trading has attracted you and you’ve never gambled or traded in stocks, currency or commodoties then you will either give it up as too stressful or you are most probably somewhere on the scale of risk-seeking, just how high up that scale, is something only you will know or find out at a later date.
We can find the reasons for Inner Gambler Madness if we look at a typical journey for a sports trader new to the game.
- Open Betfair or Betdaq account
- Deposit £XX
- Blow £XX fairly quickly
- Deposit £XX
- Do a little better this time, discover lay/back trading and start to get it.
- Blow £XX
- Deposit £XX with determination not to blow it
- Get disciplined and start to understand the difference between pure gambling and trading.
OK so the above scenario and many variations thereof, is one that I’m sure has played out countless times, regardless of the details there comes a time in every sports trader’s life when he or she realises a way to eke out slow and steady profits, with maybe the odd big jump but stability is usually what win’s over the fledging trader.
So then what happens?
- Disciplined well planned trading takes latest deposit of £XX to £XXX
- Thinking starts to creep into the mind about trades that he had always wanted to do but felt he didn't have enough money, like correct scores on the football or point-to-point tennis betting.
- Start backing high risk 0-0s in order to try and lay off for big profits.
- Start backing underdogs in various sports in hope they do well enough to lay off later
- Realise that £XXX has shrunk back down to £XX
- Start making higher risk bets in order to get back to £XXX as quickly as possible.
- Blow remaining stake and wonder about deposting again.
Clearly I have simplified what is a fairly subtle and incremental process that goes on in the brain over the course of what could be weeks of the bankroll yo-yoing up and down before ending up with at best, next to nothing.
Okay, all well good to recognise what’s going on, but how the hell do you stop it?
The way we stop it is twofold, first we nip in the bud any errant thoughts about rash trading and we do this by constantly vocalising our thoughts. So if you are sitting at home and a sporting event that you haven’t been trading on comes on TV and you start thinking about loging into Betdaq and checking prices, instead vocalise what you are thinking.
You might find out that as you sit there and say out loud,
"I wonder what the odds are on this game of rugby finishing over a certain score." You may just stop yourself and say;
"..hang on a sec, I know nothing about this sport, it is totally off strategy and I should protect my bankroll."
You may have valid reasons for wanting to trade rugby, you might want to do what city traders call, diversifying their portfolio, which is completely valid. However the proper way to do it, would be to test the viability of the market by paper trading.
That way you can test out a market without risking money and after doing that a few times over, making sure you keep an eye on market volume as this will tell you if your paper trading is realistic, you will discover whether it is indeed a market that you want to start trading in.
The second way to stop Inner Gambler Madness is that once you have a tried and tested method write down your overall trading strategy (mine is trading under 2.5 goals in English football) and then your specific strategy (mine is lay off half liability after 20 minutes and zero after 40 minutes and green up after 55).
If you do this and you read it every day, refining it and making sure you’re sticking to your guns, then it will be a lot easier to ignore the risk-seeking part of your brain that wants you to put your entire bankroll on the 12-1 4 dog at Kempton.
Mother Hen Syndrome
Mother Hen Syndrome is pretty much the exact opposite of Inner Gambler Madness, Mother Hen Syndrome or MHS, is an affliction whereby the larger the bankroll gets the cluckier and more protective we get over it.
We may start to get clucky as that initial £10 grows to over £50 and then that cluckiness develops into full blown MHS as the bankroll hits 3 figures. So let’s look below at the effects of MHS on our trading.
- Settle upon a 45% staking plan
- Settle upon a strategy that see’s you green for about 20% of initial stake at green point (60% of trading event gone)
- Get up to £65, next trade is only 40% of bankroll as a result green is only 17% of initial stake and have traded out at just over half the event gone.
- Get up to £85, next trade is only 30% of bankroll as a result green is only 14% of initial stake, green point taken before half the match has gone.
- Get up to £100, next trade is only 20% of bankroll green is only 15% of initial stake green point still at about half the match.
- Get up to £105, next trade is still 20% of bankroll, but this time because of low stake and desire for higher green, stay in trade too long and end up red £20 back down to £85
- Continue low staking pattern, winning small greens but big reds every few trades, bankroll dwindles back down to around £20.
Again I have oversimplified the process here, but that is a good overview as to what can happen when MHS strikes. The problem is borne from the fact that we didn't really care about the £10 that's about 2 pints if you live in London, there is pride at stake but financially you can dismiss a tenner fairly easily.
However when you start getting up to three figures then thoughts like;
“That’s a decent amount of money now.” and “I’d be gutted if that trade goes wrong straight away.”
and a litany of similar thoughts connected to how much you now value your bankroll. The ultimate and tragic end to MHS is that you develop Trading Blindness and stop trading all together and lose interest for an indeterminable amount of time until your brain ‘resets’.
So can you avoid catching Mother Hen Syndrome?
The best way to avoid MHS is to be aware of it right from the start, that is to say we want to stop thinking of our bankroll as we think of normal everyday cash. Because if we think of our bankroll as normal everyday cash we risk a situation whereby we set the mental conditions for cognitive dissonance and when that sucker raises its head we can be in for some big trouble.
You see if you think of your bankroll in the same way as everyday cash, then the moment it is apparent to your brain that;
“Hang on a sec, how many times do you just spend £70, £90, £100 in a day on nothing? This is getting to savings territory! Be careful, don’t blow it! YOU WILL REGRET IT!”
These kind of thoughts are happening in our subconscious what is known in Zen as The Intuitive Mind, just out of reach of our concious minds.
So we set up a dissonant situation whereby we want to trade freely with our bankroll, but these kind of intuitive thoughts stop us doing just that!
The result is our brains act like a boss who needs to fire one of his employees;
Last in first out
So rather than reject the savings instinct, your brain rejects the one that it hasn't had drilled into it for half its life and rejects the idea that it is OK to risk larger and larger sums of money on the outcome of particular aspects of sporting events.
The only way to avoid MHS is not to treat your bankroll like you treat your cash, that is to say you have to have a completely different mindset the second you deposit that money onto a sporting exchange it ceases to become money, it is your bankroll and a way of keeping score.
Some easy steps to follow to help you disassociate your bankroll from your wallet.
Draw up an exit strategy
This simple bit of advice is ignored by (in my personal experience) 99% of sports traders and who knows; maybe all types of traders. But trust me an exit strategy and one that you study until it’s drilled into your mind will stop you getting all clucky over your bankroll.
For example, you might set a simple strategy like: deposit £10, trade to £150 withdraw £50 then trade to £250 withdraw £100... and so on. That way when you do start to reach the three figure mark your subconscious is telling you to keep going till you hit your target. I personally have got an exit strategy that is no where near as conservative as the one above, but each to his or her own.
Draw up a trading strategy
You will start to notice this particular bit of advice in many different articles and sometimes, like this one in different places within the same article and that is simply because it is bloody good advice.
Just like with Inner Gambler Madness when you start to feel yourself slip, so to with Mother Hen Syndrome, you look to your strategy and if it’s a working strategy which it should be if you have cut out all the most common ways of losing your money on Betfair. Then you will draw strength in reading it back to yourself aloud and sticking to it.
Hide your balance
Simple and effective, you can see from the graphic below I've hidden my balance in Betfair, you can do the same on Betdaq and probably every other exchange or betting site out there.
It’s a tool, use it.
I’m not a religious or spritual person, quite the opposite I’m stocked full of pragmatism and reason. However I’m not closed minded and when I see something that can improve my life and my ability to do important tasks, then I see that as a good tool and I will use it.
The thing that used to frustrate me about meditation is that I thought that it was meant to relax you, but whilst that is a by-product of meditation, the actual process is a test of will. If you spend just 10 minutes a day sitting there staring at an object in front of you and concentrating on your breathing, you will find concentrating on more interesting things like trading a doodle.
The reason it is good for Mother Hen Syndrome is that it makes you more aware of your mental state at any one time, therefore you are more likely to feel yourself slipping into MHS and you can pull yourself out of it.
There are many different types of meditation techniques and many different places that you can go to to find out how to meditate, but I personally would recommend heading over to Amazon and buying Zen Golf.
As with Zen In The Art Of Motorcycle Maintenance, Zen Golf doesn’t actually dwell on the mechanics of golf, in fact it doesn’t have a single practical golf tip in the whole book, but rather it takes situations that you come up against in golf, which is a mentally demanding game and tells you how to mentally cope with them.
If you happen to be a golfer, then Zen Golf is the best book you will ever read and it will make you a better golfer, I reckon it has taken 5 shots off my game and has made me a calmer more focussed person.
Remember The Sums Are Increasing But The Percentages Are Staying The Same
One of the best mental tools you can give yourself as a sports trader or any type of trader for that matter, is to think in percentages and not fiscal amounts.
The reason for thinking like this is it give's you a realistic, non-abstract measure of how you are doing overall or in any particular trade.
For example, it is much better to say;
"I staked 45% of my bankroll and I ended up green for 22% of my stake and I am up 11% overall."
"I put £60 on and won £15 and now I have £117"
The reason is the first way gives a definite value which the brain can immediately relate to, because we know that making 10% on your investment on a single trade is good and we can relate that to other types of investments.
In the second way we have random arbitrary numbers and what's more because we are talking in the currency we spend on a daily basis, all cognitive triggers are telling us that we are risking money, money that we could be spending on something else.
Conversely talking in figures could lead to a small amount of self delusion, because saying;
"I won £50 today"
Is not as useful as saying;
"That £50 increased my bankroll by 8% today"
LOW MARKET VOLUME
This last one is clearly not psychological and in a way should have been at the top of the list, because if this is the reason you're struggling to replicate a winning strategy at a higher financial level then the other mental problems probably haven’t come into play yet.
The fact is you can trade in a multitude of sports around the globe, no matter how obscure the sport is, someone will be trading in it, which means you can trade in it.
However though, there are clearly events and markets that are more popular than others. So if you have turned your £10 into £100 trading in Asian Cross Border Tiddlywinks then the chances are that the events are all low volume events, in other words hardly anyone is trading on them and the people who are, are not spending much money.
So you will find that the market and or event that you are trading in can support a €25 bet when you are on a 50% staking plan but as your bankroll creeps up to the €100 mark and your stake starts to get closer to €50 and above, there just simply isn’t enough action and your bets end up unmatched.
If this happens then you are in a situation whereby a €25 bet is the biggest the market will ever be able to support which will means that you are in a sort of forced Mother Hen Syndrome whereby that €25 bet is becoming a smaller and smaller percentage of your bankroll, meaning your winnings are also on a diminishing percentage.
Research other markets
This is the simplest one to remedy as it takes less mental effort, it still takes some as we tend to get comfortable when we encounter something that gives us reward for little effort. So the trick is to realise as early as possible that you are in low volume markets and/or events.
Luckily you are a member of Betfair Trading Tips and you now know what a low volume market is so you can avoid getting stuck in one.
I am not saying you should never play low volume markets, especially if you find one which you can be successful in, all I am saying is be aware of the fact that it will not support you should your bankroll grow to a certain size.
So we have looked at three things that will stop you replicating turning £10 into £100 when trying to turn that £100 into £1000 they are:
Inner Gambler Madness - A syndrome whereby you start doing rash bets as your bankroll grows.
Solution - draw up a trading strategy, vocalise your strategy, get into paper trading to test out higher risk markets.
Mother Hen Syndrome - You get to attached to your bankroll, trading in smaller and smaller percentages of your bankroll, causing your rate of ascent to slow down and eventually reverse.
Solution - Hide your balance on screen, draw up and exit strategy and a trading strategy, take up meditation and start thinking in percentages, rather than fiscal sums.
Low Volume Trading - You get attached to a market that cannot support trading over a certain size.
Solution - Research other markets, also paper trading in them to gain confidence.
So what ever affliction takes you when you start to build your bank into a decent size, if you follow the instructions above you will carry on making bold, astute and informed decisions and before long you will grow three figures into four and so on.
What about you? If you think you've identified another reason for not being able to replicate 10 > 100 on a larger scale, put it in a comment below and lets examine it together.
Good luck and happy trading.
The Zen Trader