19/20 Trading Review: Dave

Unfortunately for me, this blog doesn’t detail my countless successes throughout the season. I’ve ended this weird, weird season with net deposits of £274, and an account balance of just £119. It’s not quite as simple as me having just thrown away over £150 as there have been some deposits and withdrawals along the way. They say you learn more from your losses than your wins, and it’s safe to say I feel a more intelligent SportStack trader now than I have at any point during the year. Below I explain briefly how my year has gone, recount three trades that I have learned important lessons from, and run through exactly what those lessons are.

A Brief Recap

My six months or so as a trader can be divided into three distinct segments. During the three months prior to lockdown I was generally trading well. I didn’t experience too many large losses; only one springs to mind and I shan’t be repeating that mistake thanks to the Trade Out button. I gradually deposited up to £400 during these months and by the time lockdown hit my account balance was around £525, making for a reasonable return and some good momentum built along the way.

Post-lockdown ushered in the second, stupid segment of my SportStack experience. I was keen to attack the return of football, and deposited enough to round my account balance up to £1k. Quite quickly I found myself struggling to work some of the matches out. You probably got bored of hearing on the pod – between heavy squad rotation, teams packing it in early and the hectic schedule, I made error after error. After a rough couple of weeks I was down around £250 and it amounted to me pretty much chasing losses. Fortunately, before it was all gone, I decided to make a substantial withdrawal.

Taking my account back to £100 and my exposure on each trade to a maximum of 5% of my account, I was able to return to profitability. I still made a few dodgy trades and will address this in a moment, but I was happy to return 20% pretty much just in the final couple of rounds of the Champions League.

The Trades – Good, Bad and Ugly

That first segment, whilst a steep learning curve and a reasonably successful spell, is so long ago that few trades have stuck with me. It is worth explaining the catastrophic loss that I alluded to above, though. This is most definitely the ‘ugly’ of the three trades here. Towards the end of January, Leicester hosted West Ham. Up to this point in the season Ayoze Perez had been patchy in front of goal, with five to his name (including a hat-trick in the bloodbath down at Southampton). I shorted 100 Perez at around 50p, and during the first half I was looking alright as he’d struggled to make an impact. He came to life in the second half with a couple of shots on target, but things were still looking fine. With 10 minutes to go and Jamie Vardy off the pitch, though, Perez took and scored a penalty for Leicester, taking his payout to around 70p. At that point I made a good decision to cut my losses, only I hit the Sell button by mistake. Having accidentally doubled my short, I was reticent to swallow the spread and tried to wait it out. That made Ayoze’s second goal, which came in stoppage time, even more expensive. Unfortunately the trade history on the app doesn’t seem to go back that far, so all I have to show for it is the screenshot here. That £60 loss was equivalent to about 15% of my account at the time, I reckon.

The second trade I’ll detail here is a bad one. A really bad one. But hopefully by the time I’ve gone through the good one you’ll have forgotten all about it. Remember when Liverpool won the league and took hangover form to the Etihad to face City? Well I do too, and it’s because I was short Phil Foden. The idea in itself was sound – the lad had scored two against Burnley in an otherwise quiet performance, so I’d figured Liverpool might be able to keep him muted. I was short 200 shares at 46p. I hadn’t expected that Liverpool would defend the way they did, but I’ll certainly keep it in mind next time I’m trading a game featuring newly-crowned champions. The trade had started off quite nicely with Foden losing 7p in the opening half an hour. Then he registered an assist. Rather than recognising that it could get worse from here, I threw down my phone and hoped it would get better (this was during a bad run for me, so perhaps I was certain my luck couldn’t continue to be so bad). But alas, ten minutes later Foden had a goal himself, and I was deep underwater on my short trade. It was only at that point did I cash out, locking in an ugly loss that wiped out nearly 10% of my account.

My final trade is one I’m most proud of, and unfortunately for me I took this on when I had gone back to trading small lots. Christopher Nkunku hadn’t paid out well in any of his Champions League games – against Atletico in the quarter-finals I had gone short and it had worked out well, as he was subbed on a 30p payout. I decided to take the short on again in the semi-finals with Leipzig likely to be under pressure from PSG throughout. I doubled my position this time, such was my confidence. As the half unfolded, his payout dropped further and further as he gave away one foul after the next. It seemed he was overdue a yellow card and would likely be subbed early in the second half. I waited longer than I should have, adding to my short at 27p. He was subbed at half-time, locking in a tasty profit.

The Lessons

What’s the point in this post if I don’t explain what I’ve learned? One thing to remember with any learning point is that it won’t necessarily stick first time. Repeating mistakes isn’t ideal, but it is okay – as long as the second or third time it happens, you recognise that it’s not something new.

There is no “f*ck it” moment

As in the case of the Foden trade, I allowed myself a “f*ck it” moment. The trade didn’t go to plan and I was a little at the end of my tether, but I should not have let all logic out the window. Instead I fell apart, pretended it wasn’t happening and just hoped it’d go my way. A similar thing happened with the Perez trade. I hit the wrong button and then hoped that I’d be alright.

There are two parts to this learning point. One is to prepare yourself as much as you can for the trade to go for and against you, and to act on that plan. Recognising that football is wild and often difficult to prepare for, it is critical to keep focus, and try to think rationally regardless of what happens. This learning point is so unbelievably obvious, but I’ve been guilty of having “f*ck it” moments too often; that’s why it’s my number one.

Focus on your decision-making, not your returns

One thing about the Foden trade is that I’d probably take it again. I’d certainly manage it differently, but Liverpool’s capitulation was a freak incident. I believe the decision to take the trade was sound – the fact he’s only scored one goal since then is a testament to that.

If you concentrate on the decisions you make, you’ll do well more often than not, and taking a loss will be easier to stomach since you can’t win them all. We had Christian (@ThePercentageGame) on ep 16 of the pod, and he spoke brilliantly about being selective with your bets.

Scale up slowly, scale down quickly

If things are going well and you’re growing in confidence, you’ve earned the right to risk more money on your trades – but that doesn’t mean going from £10 to £100 stakes in an instant. The more I think about it, the more my post-lockdown deposit seems like a bonehead move. We had a pod episode talking about how uncertain we were, yet I was willing to risk more money on each trade.

If things start to go wrong, nip it in the bud. The easiest way to limit your trade size is to withdraw any extra cash. We know losses hurt more than wins soothe us, so if you hit a bad run, trim your stakes back. This allows you to think with a clearer head, as you’ve only got £2 on the line instead of £20. This is really just a slightly less extreme version of paper trading, where you’re risking nothing at all.

Trust your gut

Adding to the Nkunku short was out of character for me as I don’t often like adding to a trade that has moved so far. But on this occasion, all signs pointed to his game not lasting much longer. If you try to call a game in advance and get it wrong, that is a separate learning point – at least you’ve followed your instincts and can rest easy knowing you haven’t missed out on anything you should have taken.

Log EVERYTHING

Whether you do it daily or weekly, log your trades. If you go back and do it once you’ve had some time to cool off, you can easily recognise what’s a good or bad trade, where you might have got lucky, and where there are dangerous trends developing.

To round it off

Writing this has been cathartic and helped to lay out all of my weaknesses as a trader. Having reflected on each trade I’ve taken since lockdown, I’m starting to work out where and when I’m going wrong. I can only apologise if the lessons sound preachy, or if they don’t apply to you – beware though, they may be very relevant and you just haven’t realised it yet!

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