The Big Question: Are you trading better than yesterday?

Hi, I've been away to sunny Spain for 10 days so it's the first break from trading I've had this year. I'm feeling really refreshed!

I did have internet access but it wasn't that fast and also as I didn't have t.v. pictures of the racing I resisted the temptation to have a go at trading. I thought the additional risk wasn't worth ruining my holiday!

I did wonder if I'd have forgotten how to trade by the time I got back, but it seems it's a bit like riding a bicycle and I was soon back in the swing of things yesterday. In fact, I was on for a real cracker of a day (increased my bank by 60% by 6:20 p.m.) so I was even trading a few early evening races which I don't normally bother with. At that time I decided to finish on the 6:55 p.m. as there was an o.k. favourite there, but I got badly caught out beforehand in the 6:35 p.m. by the very weak market and kept calling it all wrong. I did close my trades but temptation got the better of me and I decided to red-up in running - bad idea! I lost a big chunk of my day's profit.

Over at the excellent Tim Ferriss blog, his latest post is entitled,"The Big Question: Are you better than yesterday?" (www.fourhourworkweek.com). Today I am still reeling from the stupidity of not redding-up yesterday and was wondering if it will effect my trading today. After reading his blog post, I feel that is applicable and all I need to do is make sure I trade better than yesterday. That seems pretty easy - just red-up!

In his post, he mentions that it is easy to become demotivated by large complex problems (I would say successful trading is one of those!). For me, successful trading is comprised of many small solutions. In his post, Tim states that because these can be difficult to measure it is hard to see results. He uses the example of trying to get in better physical shape - he can go to the gym every day for a week and at the end he might not appear to be in better shape.

However he realised that by focussing on making today better than yesterday that it was possible to "be enthusiastic about taking real, tangible steps toward a distant goal".

For a long time I simply judged my improvement on how much I'd made (or lost) in a day / week which I don't actually think is very useful (what if you lost a bundle on trading and then made a lot backing or laying a horse in-running, or you didn't red-up and got lucky). Nowadays I simply compare my average loss per race, average win per race and strike rate. It is then easy to see if I'm on the right track, regardless of the daily P&L. I mentioned this in more detail in my previous post "Part 2 of Ending your pre-race trading career by going in-play" (it's a very long post - scroll down to the bit with the graph).

Trading better than yesterday - that's my aim for today!

Video your trading with screen recording software

Videoing my trading has helped me hugely. It means I can track what I am doing well and not well, I can analyse how different markets behave. I often watch some of the previous day's trades before starting my afternoon's trading to get my mind focused and ready for the first race.

The software I use is free because it's Open Source software, it's called CamStudio (http://camstudio.org/). Apparently the best software available is Camtasia Studio (http://www.techsmith.com/camtasia.asp) which has a free trial but is then $299 to buy. It has loads of features but the only one it has that would be useful to me for recording my trading is the animation on the cursor when you click the mouse button. For $299 I'll do without!

One thing that wasn't good was the filesizes it generated - about 250mb for 6 mins of video. However, thanks to Google, I found out that you can use these things called codecs which are alternative methods of compressing video files and are legally free to download. I use one called Xvid MPEG-4 codec and now a 10 minute file is about 22mb and the quality is much better. I can record 2 hours using less than 300mb. I could probably tweak the settings further but I'd rather spend the time trading!

Disclaimer: Proceed at your own risk! I didn't know one end of a codec from my elbow before doing this and it was all fine, but obviously I'm not a computer nerd so you may have a different experience - don't blame me if it goes wrong! I'd recommend creating a System Restore point first as a good way of undoing anything that doesn't work, and of course, you have a backup of your computer files, right?!

For anyone wanting to download, I think the codecs are available at quite a few different sites. I used http://www.free-codecs.com/download/Vista_Codec_Package.htm
and did a custom install to just install the Xvid codecs (there are so many in the package that some of the other codecs may well cause conflicts with other software installed on your computer. Apparently codec conflicts are a common cause of software crashes, so just install the one you want). Obviously this is only for Vista users, but the identical codec is also available on the same website in an installer for Windows XP.

I didn't used to be able to run screen recording software because I used an old laptop which wasn't up to the job. I recently bought a Dell Intel Core 2 Duo laptop for £400 and it has been well worth the investment. With my trading software running as well as some websites, it still runs at under 50% processor load when I'm trading and recording the screen.

I find it very motivational to watch back some of my good trades as well as learning from the poor ones. Part of the reason my average profit per trade has increased is because when I reviewed my winning trades I realised I was leaving huge amounts of profit on the table - i.e. getting out of trades way way too early.

Yesterday my best trade increased my trading bank by 13% fully greened-up. If I could do more trades approaching that level and some better, then over a good afternoon I should be able to easily hit my target of increasing my bank 100% even with a strike-rate of 75%. This wouldn't always be scalable to the stakes that the big traders are using other than on Saturdays and other high-volume markets - I only use a few hundred, but this strategy suits me far more than risking thousands to make smaller percentages.

Betfair Market Suspension Problems

How many traders today lost money due to the technical problems experienced by Betfair? They failed to suspend the markets for 4 of this afternoons races at the off (Curragh 3pm, 4pm, 5:30pm and the Nottingham 5:40). Their policy is to then void any bets matched after the official off-time IF the race is never placed in-play at any time. The official blurb is:

"If a market is scheduled to be turned in-play but Betfair does not suspend the market at the time of the ‘off’ and the market is not turned in-play at any time during the event, all bets matched after the scheduled time of the ‘off’ will be void (in the case of horseracing and greyhound racing, bets will be void from the official rather than the scheduled ‘off’ time)."

This is very scary for me as a trader who likes to trade right up until the off (I just love the volatility in the last few seconds!) as potentially they could void one half of my trade and leave my whole balance exposed to the result of the race. If you have a trade matched very close to the off it wouldn't be possible to determine if it had happened before or after the official off-time as even if you are watching on Sky TV, you need to factor in the delay of the pictures (which also varies across the channels).

Out of the four races concerned, I traded the 3pm and the 5:40pm. My green-up trade was cancelled on both races. Fortunately the favourite obliged in the 3pm and I made far more than the greened-up profit I then lost on the 5:40pm. But I was really sweating it on the 5:40pm as I had closed my trade with a lay bet very close to the off and I didn't know whether it would count, fortunately it did.

I guess this is further incentive for anyone having trouble letting their trades go in-play to close well before the off!

I wonder if this is a new policy with Betfair because I've seen the market suspended late on many many occasions in the past without them taking any action. I've also previously been able to back at 1.01 several seconds after the winner had passed the post when they didn't suspend on time.

Looking at the "Market" section of the forum, I see that they also had this problem on the 4:10 at Ascot yesterday. Before that the only other instance was on the 29th June and they have posts dating back to September 2007 (unless they delete some after a while? I'm not sure). So this feels like a change in policy to me. Watch out!

Let me know if you gained or lost from this today.