5 Easy Steps To Trade Like A Vulcan
I loved Dr. Spock on Star Trek, maybe it was something to do with the way he embraced logic, I loved his catchphrase “That is not logical Captain”. I’ve always thought that Spock would make a great sports trader and make a killing on the Betfair exchange, because when you use reason and logic to make your sports trades, instead of impulse and emotion you lose less and you make more money, simple.
Captain Kirk on the other hand, who was completely led by his human emotion would have made a terrible trader as he loved going for the against-all-odds situations and he revelled in them; which of course made Star Trek so great to watch.
So; how do I trade like a Vulcan? I hear you ask, well for a start whether you write it on a post-it and stick it to your computer or tattoo it to your forehead (if you do the latter, don’t forget to do it backwards so you can read it in the mirror), remember this one simple sentence.
Remove all emotions, from trading, be they positive or negative.
You probably knew that and maybe hadn't vocalised it before, but like 98% of people who use Betfair and Betdaq you know it but still end up making silly decisions based on your emotions.
So how do you remove emotion from trading and begin trading like a Vulcan?
Easily done when trading on a sport you care or know little about, as I’m cold trading horses, if a trade starts to go against me, then I’m outta there, pronto, I don’t stop and think;
"...yeah but this horse does run well on this type of ground and it is a race made for it."
No, I just get out of there because I have no emotional investment in horse racing, it’s a sport that gives me no pleasure outside of occasionally trading on it.
Sports Trading Example
Peggy is sitting at home about to watch Chelsea against Atletico Madrid away in the Champions’ League. Peggy is now 26 and has supported Chelsea since she was a six year old girl when her dad took her to the Bridge (clearly an abusive father!) to watch them play back in the days of when the likes of Vialli and Gullit played for them, she loves Chelsea and she loves football.
Before the game she has laid the draw in the first 15 minutes of the game it is obvious to her boyfriend Gary who doesn’t care who win’s, that Chelsea are going for the draw, they have six recognised defenders on the pitch and Fernando Torres up front, a clear indicator that they are not trying to or going to score a goal.
Peggy's Father condemned her to a lifelong suffering of Chelsea!
Peggy being a Chelsea fan thinks that whilst the game is tight, Chelsea can catch Atletico on the break and nick a goal. At halftime it is obvious to all watching that a draw is the most likely outcome, however Peggy hangs on thinking that the breakaway goal is still on. By the time she comes to her senses 80 minutes have gone by and the draw is 1.16 meaning that the losses she’s cutting are around 5% of her original stake, she can’t bear the thought of cutting her losses for a meagre 5% save, only to see her beloved Chelsea nick a winner and her joy be tempered by losing money, so she leaves the trade, Chelsea draw and she loses all her money.
If you’re a football fan and you've ever traded on your own team before, then a version of the above scenario has almost definitely happened to you, I know it’s happened to me and lots of traders I know. Delete football fan and insert cricket, rugby or whatever and I'm sure versions of that scenario has been repeated time and time again and plays a big part in why most people are not profitable trading on the Betfair exchange.
Being able to trade like a Vulcan requires you to become a tad schizophrenic; you must play Spock to your own Kirk. At the start of a trade ask yourself this question;
“Am I emotionally invested in either this team or the sport in general?”
If the answer to that question is no, then great; your inner Kirk isn't going to influence on this one, go ahead and trade safe in the knowledge that your inner Spock is in control at the start, though Kirk may try and wrestle control back later.
Great, all well and good for sports you’re not emotionally invested in, but what about ones that you are heavily invested in, like football for Peggy? For me the most dangerous time for a trader is when trading on a sport you love involving teams you don’t care about.
The reason for this is that all your prior experiences in that sport can cloud your judgement and because you don’t care about the teams you won’t even realise that your judgement is being clouded!
A real world scenario for you, I recently sat in on a T20 county cricket game with my trading partner, because I wanted to learn more about the great scalping and back/lay opportunities that reside within 20/20. He love’s cricket and he loves trading it on the Betfair exchange. Whereas my emotional investment in the sport is very low, I now and again, enjoy watching highlights of international games involving England but that’s about it.
The game was an excellent one to sit in on, because it was an exciting game and I saw my friend turn a losing situation into a winning one with a really great example of good exchange sports trading. By the time the game was around 65% done my friend was in profit, job done. But no, wait, my trading buddy told me of how there are often opportunities to make even more money and now that he had an all green book, there was less pressure on the trades.
I pointed out to him that surely at some point, the fall of wickets and the hitting of boundaries wouldn't affect the odds as much as they had been as the game drew to a close; he agreed but insisted that it was still a fertile time to make more money.
One of the reasons he felt that, was because he loves 20/20 cricket and he wanted to see an exciting game, so he let emotion get in the way of cold logical trading and I told him so, he didn't listen to me the first time and that affected his green book by minus 10%
Luckily he listened to me the second time when he was just about to put money on the chasing side with a few overs to go and around 60 runs to make, I asked him how many times he felt that a comeback was achieved in the same exact scenario, I asked him to give me a rough percentage value to it.
He thought about it for about ten seconds and replied
“About 15% of the time, actually no, it’s probably less than 5%”
and so I pointed out that he should probably leave it then and consider his money made on this particular trade, I was the external Spock to his inner Kirk, as I said earlier, he agreed and sure enough there was no comeback and he would have ended up in a zero point blank scenario.
If you’re about to back a high risk trade at the tail end of an event, ask yourself;
“What are the percentage chances of this actually happening?"
If you’re emotionally invested in a sport then you’ll probably be able to give a fairly accurate answer and if you’re not you’ll be able to use the odds and the indicators you've compiled in order to work that one out.
There are other scenarios where emotion can creep into your trading regardless of emotional investment in the sport you’re trading in, even though they seem obvious I will list them, that way you can study them and when you find yourself in such a situation you can say to yourself;
“I’m being emotional, I need to cut my losses/green up right now, I need to be like Spock and trade like a Vulcan.”
1. Green to red
A green to red scenario is when a trade has been going your way and then an event action has happened, like a goal, wicket, boundary, try, knock down or whatever and your green book has fallen to zero or worse a red book.
In that situation you will be angry and you need to ask yourself what would Spock do? Answer truthfully or there’s no point, but listen to the answer whatever it is, no matter how unpalatable, it will make you money on Betfair and that ultimately is what you’re after.
2.Swimming in a sea of green
This is where everything is going your way, the Betfair exchange is your friend, odds are moving in the right direction your green book is getting bigger by the minute and the world is a better place. This is where your positive emotion is going to cloud your judgement – You need to ask yourself, am I safe? What would Spock do? Be honest with the answer and follow what our Vulcan friend would do.
There are other scenarios where you’re in danger of letting emotion override logical thought, but I felt these two are the two main sources of emotional flux within the brain of the Betfair trader and talking to lots of traders I have ascertained that these are the two main times when traders lose their money on Betfair.
So let’s summarise how to be more like Spock and trade like a Vulcan;
Remind yourself on a daily/hourly basis, to take all emotion out of all trades, ‘knowing’ something and reaffirming that thing every day are two different things. By repeating to yourself every time you turn on the computer and/or login to Betfair, you are training yourself to behave accordingly.
Be Spock to your own Kirk, ask yourself about the percentage probability of winning and losing in trades you’re involved in, if the answer is between unlikely and extremely unlikely don’t make the trade. Doing this train’s the mind to think in a calm way (you can’t do maths if you’re frantic) whilst using logic to make your decision, a key element to trading like a Vulcan.
Be Spock to your own Kirk, before, during and after trades ask yourself why you are making or about to make a trade, if your answer isn't; “because it is or was the logical thing to do at the time.” Then you’re letting Kirk make the decision, silence him and let Spock take over.
This is a neurological trick that recovering addicts often use, putting a voice to their psychosis so that they can eventually silence that voice with logic and reason. Whilst that might sound a bit extreme, trust me making those kinds of decisions over and over again in trading is a form psychosis.
John Richardson, the author of Dream On; a book about a guy who take’s 33 shots off his golf game in one year (for those non-golfers out there, that’s an incredible feat) whilst he was going through his gruelling year, he often imagined his golfing heroes standing next to him criticising him when he went for low percentage shots or talking him out of making those shots and going for safer ones, he would even use different players for different situations.
This was the golfing equivalent of having Spock in your head every single time you’re trading sports on Betfair, telling you; “..that would be highly illogical Captain.” just as you’re about to go for that one in a million trade and throw good money after bad.
Once you deposit your money on the Betfair exchange it helps to refer to it as my bank or my pot. Using words like stake, trade, pot and bank take you into a place where you’re psychologically more likely to act less like Kirk and more like Spock.
“The guy who invented poker was clever, but the guy who invented chips was a genius.”
It’s OK and in fact necessary to trade on sports you have an emotional investment in, however, NEVER trade on a team you’re emotionally invested in. i.e. don’t bet on Arsenal if you support them or a game that might dramatically effect their season or tournament.
The fact is if you follow the first four rules then number five is redundant right? No, our brains are incredibly powerful and whilst we might consciously want to do something on a subconscious level we’re still more likely to make bad decisions about an event you really want your team to win.
Betting on your team to lose or anything negative to happen is psychologically very hard, if you don’t believe me logon to Betfair pick an evenly matched game involving your team now bet on them to lose; see?
Equally you may be one of those negative down in the dumps type football fans, maybe your team is giving you good reason to be like that, it will be equally difficult to see anything positive about them, so in short avoid the situation.
So that’s it, follow those five rules and you’ll trade like a Vulcan and make better decisions, which will lead to you losing less and winning more and joining the top 2% of people who make money trading on Betfair, trade long and prosper.
The Zen Trader
Since writing this article, the great Lenoard Nimoy passed away on the 27th of February 2015, he'll be sorely missed, I will leave you with his immortal words
Live long and prosper.
The Zen Trader