How Not To Trade Sports
It's a typical Saturday afternoon shopping with my family, and I’m conscious that the Premier League matches will start soon. I look at my watch to find it's near 3.00pm and I’m a little anxious.
I’m still out shopping, and I need to get home for some sports trading online before the games kick-off. I look towards my Wife "Are we nearly done here? Shall we start heading home?"
With no preparation, I was constantly juggling between watching sport, sports trading online and my family commitments.
Arriving home at the last minute in a panic I'd run indoors, turn on the laptop and immediately start placing an absurd amount of football trades on the Betfair exchange, in leagues ranging anywhere from the English Premier League to the Swedish Allsvenskan. I was making last-minute decisions and "hoping" these trades would turn out to be profitable.
A typical scenario would be as follows. My mobile phone would alert me of a goal in one of the games I was trading. I'd scamper around looking for the Post-It note I saved explaining how to manage this particular scenario. The next thing I hear is another notification that there’s a goal in a second trade I’ve entered. I then have to shift over to this particular game in Betfair. I’ll likely hear another alert come in — a goal in a third game. Once again, I'm navigating to another market in the Betfair exchange.
You get the idea. It was unprofessional; it was chaotic, tiring and usually caused mistakes. This scenario I found myself in is a perfect example of how not to trade sports online.
Hitting the Reset Button - Trading Sports Markets.
One evening while reflecting on the day I knew if I aspired to make a real success in trading sports markets, I had to take a step back, have a think, and approach sports trading online in a well planned and organised way.
I've spent the summer reading content from sports trading guru’s but also from experts in the world of trading the financial markets. Some books were technical or strategic. Other books were about mindset. One particular book I enjoyed reading this summer was by Mark Douglas: “Trading in the Zone.” Another book I read again was Darren Hardy: “The Compound Effect”. It’s one of my go-to books and helps me focus and remind me to take things one step at a time. Let the compound effect work for me.
Since reading the books and watching the course material, I’ve created a trading plan. This rule-based plan is similar in structure to the ones I created in the past when I was Forex trading. It contains a set of rules that I can refer to while managing my trades. It also helps to remove the emotion from my trading decisions. If I stick to what's in my plan, I believe I’m in good shape to succeed. It doesn’t mean it cannot ever change. I will have to evaluate and adjust it when needed, but only when using evidence from my records to justify the need to change it. I’ve printed it and attached it to the wall, clearly visible above my monitor — no more Post-It notes! I recommend anyone who takes trading seriously should create a trading plan.
I then thought about where else could I improve my sports trading online to achieve my goals? I've always wanted a blog to document my journey, but I've never got round to it. I was reading some old posts on Caan Berry's blog from 2011. Go check it out if you haven't done so already. It's worth the read.
I've read several articles that explain the advantages of keeping a blog. One reason is it'll be a record of my journey, which could be interesting to look back on. The other purpose is it'll be a way of clearing my mind when writing my posts.
So here it is. I've purchased the domain name so let's see how it goes. Welcome to SportsTraydor.com.
Maybe I’ll crash and burn. Perhaps I'll make a success of it. I don't have access to a crystal ball predicting the future, so I have no idea where I’ll end up. Either way, you'll find out here. The unknown of where this will take me is part of the excitement.
Sports Trading Bankroll Management.
My next decision is to work out how much I should set aside for my bankroll. Some readers might think my starting amount is too small and not worth the time and effort. I see it differently. I intend to be here for the long term and will trade within my means. I remember what I read from “The Compound Effect”. Take a step by step approach, and over time, I aim to increase my bankroll.
How many sport trades will I place?
My first decision is to calculate how many trades I’m going to be placing each day. Considering I’ll be concentrating on football, I should be in a situation to put on at least one football trade a day. Over a month, I’m going to say that’s 26 trades. "Why 26 you might ask?" I’m likely to have a few days when I don’t trade, or there are no matches that meet my selection criteria. This calculation is an average, and I’ll adjust this over time.
How much do I want to earn a month?
I won’t be relying on Sports trading online to provide a full-time income, so if I start with a modest target of £200 a month; I’d be happy with this. It’s an amount I believe I can achieve and satisfies an amount to meet some of my short term goals.
How much do I expect to make?
The next calculation is somewhat of a challenge. I need to work out how much of a return on investment (ROI) I expect to profit from each winning trade. I don’t have an extensive record of my previous trades (remembering that I wasn’t taking this seriously before) so whatever figure I put here today will need to be adjusted in the future. Looking back at my limited record-keeping, the last 30 football trades I placed, I was making 25-60% returns of my initial stake, depending on the strategy. Some returned more. To start with, I’m going to target a 30% return on my stake.
Let’s review my calculations so far. My target amount per month will be £200 over 26 trades (one trade a day). Therefore on average, I’m expecting a return of a modest and somewhat unflattering £7.69 per win.
Calculation: (Monthly £ target / amount of trades per month = £ target amount per win.) £200 / 26 = £7.69.
How much should I stake?
If I am estimating a return of £7.69, that on average returns 30% then I'll need to use a stake of £25.64.
Calculation: (target per win / ROI% = Stake amount.) £7.69 / 0.3 = £25.64
Finally, how much should I set aside for my trading bank?
It’s evident and unrealistic to think I will win every trade. If I look at my limited history of 30 trades, I see that I had a losing streak of three losses in a row. I need to remind myself that none of these losses resulted in losing the full 100% stake as I have an exit strategy that I execute if the trade goes against me. If I look at the worst-case scenario and for argument's sake, I did happen to lose the full 100% stake over a three trade losing streak, I’m looking at a loss of -£76.92. Let’s round it up to -£77 — my stake of £25.64 x 3.
Calculation: (stake x losing streak = losing amount.) -£25.64 x 3 = -£76.92
Let me take this one step further. What if the worst-case scenario is that I lost 100% of my stake over a ten trade losing streak? Well, the math is simple. The calculation is £25.64 x 10, so that would be a -£256.41 loss. I’ve therefore decided based on this rather lengthy (but required) process that I will start with a trading bankroll of £256.61. I’ll be rounding it up to £260.
Calculation: (stake x losing streak = losing amount.) -£25.64 x 10 = -£256.61
So there we have it. Later on today, I will put £260 into my Betfair account, and I’ll start using £25 stakes, towards an average target of 30% return per trade. I fully understand the calculations to achieve my objective of £200 a month is based on winning all of the 26 trades, each time with a profit of 30%, which won’t always happen. I’m aiming for that, but fully understand it could be and will likely be less than this. The primary purpose today was to identify my starting bankroll, to cover a losing streak and to understand my staking amount. The monthly target will be adjusted as I capture more data and record my trades.
There are many ways to work out how much I should start with. I’ve read many articles online about this. This method is one that I took an interest in. I’m also aware of the Risk-to-Reward ratio of trading for long term success, and so over the coming weeks and months, I’ll review and evaluate how I’m trading and adjust accordingly. One thing I learned from my Forex trading is to make changes, based on evidence, when I need to.
Before I finish with this first post, I wanted to say my goal is to become successful and generate a second income to complement my full-time income. I love sport, and as you can see, I have an interest in trading. Trading sports markets with Betfair checks all the boxes. That's why I'm excited about dedicating my time to succeed.
What’s coming up next on SportsTraydor?
I’ll be sharing my specific goals along the way as I believe setting goals or creating mini-challenges will help keep me motivated and be successful. Professional athletes and successful people all say they set themselves goals; therefore, I should do the same.
As it approaches August and the 2019/20 football season is just around the corner, I'll be focusing my attention on the football for now. In regards to creating content, I intend to post here at least twice a week, maybe more.
Right, it's time to get a cold drink oh, and continue to look for that Post-It note!
"Trading sports online is to back (in favour) a team or individual and then lay (oppose) at a lower price (odds) for a profit before the sporting event finishes. Alternatively lay (oppose) a sports team or individual and then back at a higher price (odds) for a profit." - SportsTraydor.