The Game of Life

Before I explain what the game of life is and what it has to do with trading I should fill in a few gaps on my own life since my last post back in April. It’s been a busy year for me and In-between trading, it kind of went something like this:

May  - Stag do in Algarve

                                                          Apparently I got off Lightly 

June -  Married in Newbury

 July - Honeymoon  in Bali

                                                        

  

       Seminyak Beach

                                                              Ubud - The heart of Bali

August 30^thBirthday celebrations.

Then back to Trading/Automation/Data-Analysis/Bot-Building/Data-base building/ More Trading

So....  it was always going to be manic summer but I’ve had an absolute blast. 2012 will definitely take some beating in terms of laughter, joy and emotion.  

Trading was always going to suffer in terms of the quantity of races I would trade this year with all the wedding planning (yes... I was involved) and holidays. The problem you have when you miss out on markets is that you miss out on new patterns, therefore not only do your profits naturally suffer as your race average drops but the races you do trade become trickier as your not adapting to newer conditions. I really noticed this in August when I started to trade again after a Month in Bali. It was almost like I had forgotten how to trade or that what I had remembered just simply wasn’t working. Maybe I was just rusty? Or maybe there was a fundamental shift in how the market worked? What’s important is that I quickly managed to adapt and since the end of August things are back to steady profits for me.  

The game of life.

I was recently watching a documentary on the subject of evolution which had a section on “Conways Game of Life”.  Its concept reminds me of the direction I have taken with my trading in recent times and continues to inspire and influence the way I go about my business on the exchange.

“The Game of Life, also known simply as Life, is a cellular automaton devised by the British mathematician John Horton Conway in 1970.

The "game" is a zero-player game, meaning that its evolution is determined by its initial state, requiring no further input. One interacts with the Game of Life by creating an initial configuration and observing how it evolves.” 

Source Wiki

http://www.youtube.com/watch?v=FdMzngWchDk

I see those initial building blocks as variables to a strategy or the early stages of an idea I’d like to explore.  You don’t need to over complicate them or worry if they don’t work out.. What’s most important is that you learn from how they perform, why they perform and what the key ingredients are.

My outlook on trading has changed considerably over the last 18 months and the concept of “The Game of life” has enabled me to further understand my risk in the market and more importantly given me a whole new viewpoint on how to deploy, monitor and evolve fresh and exciting strategies.  This combined with the stuff I’ve learned in Excel makes me much more flexible as a trader and I hope this can help me to achieve my goals in 2013.

Relationships

I have always wanted to explore the relationship between trading and outright betting. In the past my trading activity was so short term it was difficult to find a connection but since I have learned how to analyse data, I am now venturing into the world of longer term trading and even outright betting.  This was unthinkable for me just a year ago; I just didn’t want to take those kinds of risks, probably because I didn’t understand them nor did I have an idea of how to tackle them.  I would also say that I have some-what been forced down this route firstly because of Betfair’s taxes and secondly because of the increasing unpredictability of the short term market.

I’m aware that this blog in 2012 is about as thin as a Roscommon bumper and one of my goals is to be more active here and the trading forums next year.  Social interaction with other traders is important to me and I want to contribute more on that front. 

Anyway, I would like to wish any readers that still follow me a very happy Christmas and a prosperous new year. Best of luck.

Sam

Keep Your Head, Watch the Clock & Attach this to your TOY !

You always want to get off to a good start when a big meeting comes around but I managed to forget that  yesterday. I got caught with an open position In-Play and had to take one on the chin.  I had  forgot to turn the t.v channel over from RUK to ATR and I also wasn't watching the clock.

This is the kind of thing that can happen if you are not 100% on the ball, I had tunnel vision and all I could see was the ladders and my positions. It's Been a while since Ive done that and was a big reminder of how focused you need to be.

I'm not the first and wont be the last to have a blunder like this. If it happens you just have to try and erase it from your memory and stick to the plan. Don't carry on with the mentality that the market owes you something as you will most likely make things worse!

I knuckled down straight away and got on with the job. I was probably  too defensive in certain situations but with good reason. I Fucking hate losing!

Spot the Blip

O.k so what can you and I do to prevent such and incident happening in the future! Here is your answer!

Ive recently uploaded this to my Toy's Audio Alerts Manager.
You have absolutely no excuses if this is blasting away at off time and you don't close your trade.

If for some reason you haven't used the Geeks Toy yet then you can get it here.
Its rocket fast, full of cool gizmos and Its ultra customizable, even the biggest sufferers of OCD will be happy.

Good luck on the National ! Your gonna need it!

Following on about Betfairs Security

Just want to follow on from my post at the weekend and clear up a few other points that have been raised on some of forums and some other facts.

Firstly If Betfair are refunding victims using the trapped funds which were proven to be fraudulent  then of course I'm happy about that and I would like to hear some stories where this is the case. Others may have the opinion that trapped funds generated by their accounts are rightly theirs so I think this needs clearing up for a start. I do also understand why Betfair policy on fraud is in place and I can see why they can and probably will stand by it in the future. But one thing they can surely look at now is how to improve the security of the site and how to implement advanced safety measures for those who use the exchange regularly.

The Core of the problem is clearly security and how easy it appears to be for hackers to access other people accounts. I still have no idea how I got hacked. I keep my internet security as tight as possible and have only ever logged in from what I consider a very secure network. I do this for a living so security is one of the highest priorities for me but with Betfair there is only so much you can currently do to prevent this.

Going back to my particular situation and the foreseeable events that could have arisen.

Firstly you should know that my balance was left in its exact state it was in before it  was breached which to me suggests they wanted to slip back and have another free ride hoping that I wouldn’t notice in my settled bets page.
 I was lucky in that when they attempted to move the funds a trigger kicked in because the account used to match me must of been flagged by Betfairs fraud department.So Betfair aren’t blind to this kind of activity and do have measures in place which is a start. However, If this “flagging” didn’t happen I don’t think it would of been long before they were back in having another pop, being someone who understands probability pretty well too it would NOT have been long before my trading bank was cleaned out.

The harder part for these criminals I would imagine is getting funds out of the system once they have generated the profit on the victim’s behalf. I got lucky twice.

1. The hacker won

2. The other account was already flagged therefore triggering a block.

It all gets much worse when 1. Says “The hacker lost”,

This lost money goes to genuine punters and this is where Betfairs policy kicks in. Unless they decide to change this policy there can only be one solution which is to 

FIGHT THE PROBLEM AT THE SOURCE!

I also want to state that I don’t  like making this story public and don’t enjoy making Betfair look bad. My experience on the exchange has been life changing and I’m grateful of Betfairs exchange concept and platform but I feel it’s important people know what can happen and how they can prevent it happening to them. For a trader to lose his/her bank is absolutely devastating and even if it wasn’t their fault I can almost guarantee it would a have serious physiological impact on their future trading and confidence. I know personally that it would of been a big knock to lose my bank  especially when I know how safe I try to be with my personal details and Internet security.

How FAIR is Betfairs policy on Fraud and Online Security and do they really refund customers that have lost out from Trapped Funds?

This is not something I really want to be talking about a few days before Cheltenham but this is extremely relevant as many traders will be increasing their bank size to match the increased volumes and opportunity that a big race festival brings. My story happened in the last 3 months and I can’t go into exact details but I'm sure you’ll get the idea. Once you've read it please take time to Please poll your vote on the top right of this page regarding the issue. Thanks.

Dear Sam,

Following an investigation into the activities on your account we have concluded that unauthorised access has been gained to your Betfair account. As such your account has been suspended and will remain so until further instructions on this matter are received from yourself.

If you wish to continue to use Betfair please choose one of the following options:

1. Change your password and ensure that you run appropriate anti-spyware, firewall and virus protection on your computer

2. Create a new account to which we can transfer any remaining funds and Betfair Points to your new account.

Betfair cannot accept liability for funds lost from your account under these circumstances. Under section 1 of our Account terms and conditions of use:

"You are solely responsible for the security and confidentiality of your account. In particular, you agree to keep your username, password and/or TAN strictly confidential and you are responsible for any misuse of your password and/or TAN. Provided that we have been correctly supplied with the account information requested, we are entitled to assume that offers and payments are made by you. You should change your password on a regular basis and never disclose it to any third party. You undertake to protect your username and password in the same way that you would in respect of your bank cards and any failure to do so shall be at your sole risk and expense. If another person accesses your account, you are solely responsible for all their actions whether or not their access was authorised by you and you hereby indemnify us and hold us harmless against all costs, claims, expenses and damages howsoever arising in connection with the use of or access to your account by any third party..

Regards,
Investigations Team

So after changing my pants I call Betfair and prepare for the worst. 

The first thing I wanted to know was my current balance and I was so relieved to hear it was where it should have been. Next I wanted to know what kind of activity has caused the suspension of my account.

 It turns out someone was able to log into my account and make bets  exposing 50 % of my bank on American sports markets. To cut a long story short they generated profit of almost 50% (which should tell you the amount of risk involved) and dumped the winnings on a very short priced market that clearly had Fuck All liquidity. They were almost certainly the account on the other side trying to take the “Free money” they had just generated whilst risking my hard earned cash. 

The account suspension kicked in because the other account that they tried to match “my bets” with was.....  And I quote: “Already under investigation” 

Ok great thanks Betfair so where has this “dumped” money gone because its not back in my account? If I would have lost from this activity would I be refunded?

They got back to me  with a phone number and summed up our discussion with a follow up email along the lines of  "As per our  conversation tonight, we have answered all your questions.  We can confirm the funds trapped in the fraudulent account who compromise your account, were used to compensate two other victims involved in the same situation who lost funds."

I had asked during the phone call for evidence that others had been refunded but of course this kind of information is strictly confidential. I guess I’ll just  have to take you word for it Betfair. You’ve never lied to me in the past..... you did forget to tell me about that data hack in March'10' but hey we all make mistakes. 

Go and Open two tabs in Google & copy and paste the two quotes

·        Betfair account Hacked

·        Betfair account Refunded after hack

 I'm not the best at looking for things just ask the missus that but I definitely can't find much on refunded funds from fraud. All I can see are stories similar to my own but where I got lucky in that the fraudster made profit... many others have lost out. 

This thread on the Bet-Angel forum also shares some stories.

My advice for now would be to change your password regularly and check your security tab daily to make sure no-one else is logging in to your account.

Again I'm Sorry to put a downer on Cheltenham but this is a serious issue that Betfair really need to address and I hope that by me sharing this here this weekend it can get the message spread further. 

Please poll your vote on the top right of this page regarding this issue.

Record Keeping

For a long time Profit & Loss figures were the only records I was keeping from my trading. One year I got so slack I didn’t even keep up with P&L for around 6 months and I had to email Betfair to ask for the spreadsheet. I was clearly only interested about the bottom line and wasn’t prepared to look deeper statistically at where I could improve. I guess it’s easy to become complacent when things are going well but when things slowly stop working and you can’t pin point why I can tell you it is extremely frustrating. 

I recall a post made by Peter Webb a few years ago; he had noticed that his return on investment (ROI) on certain strategy was in slow decline so he knew he had to start making changes. Although I was doing well at the time I should have taken more notice as I and probably many others have struggled to adapt to market shifts in the past. I have had to work very hard to reinvent my trading methods to continue to profit from the exchange and keeping good and detailed records has played a big part in this transition.

Record keeping has also helped with goal setting and making monthly/yearly comparisons.

Below is my P&L comparison of January 2011 and January 2012.

 Initially I was a little disappointed that I hadn't greatly exceeded last years Pre-race total but looking in more depth I had actually traded 30% less races compared to this time last year. This fact reassured me of my progress where previously I may have had doubts. I started trading In-play around 15 months ago so it was no surprise to see an improvement here and it will be interesting to see how far I can go with that this year.

Finally, Go here for a great Spreadsheet for monitoring your P&L by Multiple criteria.

http://betfairtradingmindgames.blogspot.com/2011/04/results-summary-v2-spreadsheet-is-here.html

Excelling in Excel

Learning to integrate automation into my trading has been on the ‘to-do’ list for a while now and during the winter I’ve really started to get the ball rolling with excel.  I feel it’s something that I must learn now if I want to progress further and I’m hoping my efforts will open up new avenues to explore and profit from in 2012.

I’ve gone off in two directions with this. The first is learning how manipulate and study the Betfair historical data so I can look for trends and back-test trading theories and ideas. The second path is targeted towards assisting my manual trading and maybe one day being confident enough to leave a ‘hands free’ Bot making trades without human intervention. 

I am only in the early stages of both projects but can already see the huge potential of using Excel alongside my trading. Playing around with the historical data has shown me that in general, as I expected, the market at Betfair SP is very efficient. But, looking deeper at more refined criteria and taking the in-play market into consideration I have already found some very interesting angles to follow.

Excel VBA was like Chinese to me 2 months ago. It is still like Chinese but now I know 5 sentences and 50 words. That’s how I would describe my progress so far and although it may sound slow you’d be surprised how far you can go with those language skills. (I have not tried that by the way although Dim and Sum might come in handy)

As a trader who has spent many hours watching racing markets I have developed a kind of ‘sixth sense’ that doesn’t translate easily into a set of programmable rules. Getting excel to think and perform exactly as I do isn’t realistic but I can get it to assist me in areas where my hands and eyes are at full stretch. It can also execute repetitive tasks that when performed manually could be hampered by boredom/tiredness or might lead to missed opportunities.

I wish now I had pushed myself into learning excel a long time ago as it really does add a new dimension to my trading but I guess that’s just one of those things. The Instinct I have developed from watching the markets over the years is still the key to my success and it will be essential for the development of any automated strategy’s in the future.

Xmas

The Festive period was quite for me as always. I rarely trade over Xmas and New Year and although there are some high class race days I prefer to take an extended break and spend quality time with friends and family. I’m learning how important it is to maintain a good balance is between work/play and knowing when to take a break from the screen. This was a difficult decision to make in winter 2010 as I was feeling pressured by bad results. A big difference in 2011 has been a more regimented approach and I want to work even more on that in 2012. This includes planning the weeks ahead instead of looking at race cards daily and saying ... 

“Oh this looks rubbish” or  “I might trade today”. 

It has also become second nature to go to the gym or go swimming before a trading session. If I sit at the screens without this preparation it just doesn’t feel right and I’m more likely to lose concentration or miss a big opportunity. My main goals for this year are to maintain and improve these new changes to my lifestyle and to be even more aware of my performance levels throughout the year. I can’t set a financial goal as this just doesn’t work well for me; I want to take each day as it comes and although I naturally have expectations I’d prefer to be absorbed in the markets rather than thinking about how much should be making. I also hope the work I have done in excel can flourish this year and open up a few more profitable roads to explore. 

I wish you all the best of luck in 2012 and I do plan to be a little more sociable on this blog ;)

Sam.

I Remember September...

Last year, I had a tricky month and couldn’t gather any momentum after taking some bigger than normal losses. It was a similar story during October and although I was making a profit overall, the path was bumpy and stressful, it forced me to really work on my overall game and iron out some bad habits that had crept into my trading. 

From a psychological perspective one of the things I looked at was how a losing trade could affect my performance moving forward. It was incredible to see how often I would have a losing race after a losing race and this same trend was becoming evident in my daily P&L. I used to be good at taking losses and I would naturally set out to take each race as it came but for some reason my mentality had changed. It’s difficult to pin point exactly where and why this happened but the underlying reason would probably be that I was getting frustrated with the markets and couldn’t meet my own high expectations, I knew something had to change.

I came across a blog called Traderfeed and could relate to many of the topics I was reading. One of these topics was performance anxiety. I purchased The Daily Trading Coach by Brett Steenbarger who is also the author of the blog and In parts it was almost as if the book was written for me. I felt I was stuck and this rough patch was kick I needed to wake up and change my ways.

From “The Daily Trading Coach:” Lesson 1: Draw on Emotion to Become a Change Agent

“We desire changes in our lives. We adapt—we grow—by making the right kinds of changes. All too often, however, we feel stuck. We’re doing the same things, making the same mistakes again and again. Do we wait for life to change us, or do we become agents of our own life changes?

The easy part is initiating a change process. The real challenge is sustaining change. How many times does an alcoholic take the initial steps toward sobriety, only to relapse? How often do we start diets and exercise programs, only to return to our slothful ways? If we focus on starting a change process, we leave ourselves unprepared for the next crucial steps: keeping the flame of change burning bright.”

I made big changes to my daily routine and how I approached each day with regards to goal setting and targets. I started writing in a diary after each day’s trading and quickly began to spot patterns in why I was making mistakes or getting frustrated. Here is a sample from my own diary last October where I talk about how watching videos of my own trading is helping to identify my triggers.

My Diary Oct16th 2010

"Watched a video of a losing race before trading today. It is crazy to see the hesitation and lack of control when these types of trades go against me. It has really helped to watch this one back and it reminded me how it feels when I get caught like this and how this can lead to a stressful day. l should do this more often before racing as Steenbarger suggests for a visualisation technique."

Today went well and I felt in the zone from an early stage. I started to fade as did the markets (hopefully linked) as the last hour came in and there were a few niggly losses at the end of the day which I should of limited or turned green if I was more focused and not being greedy."

I am much more aware now of my risk in the market and what I can handle without becoming emotionally blinded. I never thought that the toughest challenge of my trading career would be 4 years in. I had always assumed that the hardest hurdles were at the beginning but I can tell you for a fact that’s not always the case.

This graph below shows my P&L comparison of Sept 2010 & Sept 2011. I only had one losing day this September compared to seven in Sept2010. The momentum gained from setting out not to lose really is worth it not only from a financial sense but also mentally I feel much stronger. I’m much more confident compared to this time last year and believe I can keep this momentum going through the winter months.