Mind over money

 

Mind over money

 

One january evening I traded Gent v Wolfsburg and things weren`t exactly going according to plan. My pre match analysis was that Gent would prevail over a Wolfsburg  side with a poor away form. 54 mins and the Germans were winning 2-0. A more detailed summary of this trade can be found here.

But I have a confession to make. I had advised members in the chat room to BACK Over 3.5 which increased our liability of course but would return a small profit IF it proved to be a successful bet. What I didn`t post was a move I made at HT to BACK Over 2.5 for £25 @ 2.38. After Wolfs` 2nd goal on 54 mins I hedged that market for £16 green..........

So, I hear you grumble, why didn`t you tell us Bingo? The answer lies in what psychologists call "cognitive bias theory" and more specifically, its sub category - anxiety avoidance bias. Basically, this is the state of mind that controls your desire/need to avoid things like embarrassment, because that leads to anxiety, and your nervous system places a higher priority on avoiding embarrassment than getting a positive result. Most of you that I have come to know a little actually won`t be grumbling as you will understand and even sympathise with this type of mindset. Many of you appreciate the difficulty I have in simultaneously managing my own trade position and being aware of other people`s risk v reward approach. I have written about this before but from a more technical perspective.

When I posted my parting comment in the chat room last night in which I asked you to come up with trading ideas for future games I immediately realised the magnitude of that request. Like me, you too would suffer from from "anxiety avoidance bias". Some more pragmatic souls may rightly feel that it is my job not theirs to provide trade suggestions.

However, this potential embarrassment issue has wider implications for us all. It leads to a situation whereby you would rather not try than try and fail, because that is mentally easier. Not taking the risk and using the knowledge you have built up, apart from leading to indecisiveness and poor judgment, also means you are more likely to exit a trade too early or even worse pull out of a potentially lucrative trade. The fear of something going wrong is connected naturally to a a fear of losing money but it also has much to do with how you see yourself. Making mistakes reflects on you as a person and avoiding the lowering of your self-worth becomes more important than your desire to win.

In sports trading the potential for ridicule and self blame is huge. I have been in the spotlight in this business for 7 years now and still struggle with the demons of making bad choices that will be criticised. The zen trick, I guess, is believing that I am not what I do - I can win or lose - but I am still me. Posting ALL my moves is what I should be doing and not to feel guilty if I make a bad choice.

The same can apply to you. Take the knowledge (which I hope has increased in your time with this site`s service) and post your trade ideas on the Forum and/or in the chat room. You may not win every time - and NO-ONE will criticise you for that - but I feel sure it will help improve your trading skills.

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