Saturday, 9 February 2013

The Trading Syndicate

Recently I mentioned that I had received an offer from an individual to trade with their money, in return for a share of my monthly tennis trading profits. Talks are still ongoing. I wrote in that same post, about offers I'd had last year and these were things I'd never blogged about. One of them was an offer from a betting syndicate, which I actually agreed to. This took place back in October. I traded for this syndicate for one month. Four other traders took part in what was a trial period, which was due to last 3 months. Unfortunately, at least 2 of  those traders blew their entire allocated bank (c£2000) and the other 2 reportedly made a loss. I was told I was the only one who made a decent profit. As it turned out, October was my 2nd highest ever monthly profit for tennis alone. So I was particularly disappointed to learn that the trial was to be ended 2 months early, a lack of funds for the operation being cited, no doubt due to the losses incurred by the other traders. I don't blame them to be honest! But I have since wondered what could have been achieved if I'd been kept on. I won't go into too much detail but the entire plan encompassed much more than just trading with a £2000 bank and splitting the profit. Funds were promised far in excess of this, along with a business structure resembling that of a small company. In short, it could've turned my trading into something many times greater than it is now.

I never wrote about it on the blog for two reasons. Firstly, I didn't want to upset the syndicate in any way and so felt it best I kept quiet out of common courtesy. Secondly, I was worried about the adverse affect it could have on my trading. By that I mean the added pressure of wanting to impress my readers and also the added pressure of  trading with someone else's money and wanting to impress the investors. I think it was a wise choice not to blog about it because it turned out that the initial pressure did indeed get to me! The first few days, I found myself wrought with nerves in a way that I hadn't experienced for many, many months. It caused me to get frustrated at things I normally would not allow to get to me and some of the old anger started to resurface, the sort that blighted me in the early years of my tennis trading. I was fortunate in many ways, that I got off to a good start. If bad variance had kicked in immediately, I may have found things turned out very differently.

As it was, I got a win quite quickly and this calmed me down somewhat, though mistakes were still creeping in, mostly because I was just so damn keen to impress! I was desperate to prove I was as good as my results had proven over the past year (which was the reason I was contacted in the first place) and so I maybe pushed things on the ladders that I would not have pushed if I'd just been trading with my own money. So although it sounds preposterous that 2 or 3 of the other 4 traders involved, blew their entire bank within the first month (one I believe did his dough within the first WEEK!) I can kind of empathise. I know what must have been going through his head because I was probably thinking the same things.

It was such a big opportunity that the pressure felt really intense and as I've said from the very beginning of this blog, it's the psychological aspect of trading that is the hardest to master. I had been trading relatively stress-free for 9 months, yet that was changed instantly as soon as the pressure was turned up a notch. It wasn't that I was worried about losing the money because the deal was that I was not liable for any losses. In theory, that should've made trading easier and more relaxed (and that was indeed the case once I'd got a few wins on the board) but it was the strain of knowing that if I failed to make enough profit to impress the syndicate, I would be dropped and lose out on a fantastic opportunity, that was the real pressure.

Whilst others struggled and ended up chasing losses and exposing their banks with poor money management, I kept my head and gradually built my profits to over 50% of the bank - only for the experiment to be cut short. So it is not the first time I've had an offer to trade on behalf of an investor and now I have a better understanding of the pitfalls, I'm not too worried about doing it again. I'll go on record as saying the party who invested in me last October were very transparent, smart and trustworthy guys who I wouldn't hesitate working with again. So I had overall, a great first experience of this kind of partnership. Plus, trading without the pressure of losing my own money really gave me a new lease of life. It enabled me to perhaps do a few things which previously, I had held back on for fear of losing what I already had. This extra aggressiveness in my approach was no doubt a decisive factor in me achieving one of my highest ever monthly profits and is something I've tried to continue now that I'm back risking my own money. I can't help wondering 'What if?' about that trial but I definitely got a lot out of it, even if it meant giving away some of my hard earned wonga!

Iveta Benesova:

17 comments:

  1. Mate, I've told you before, that all you have to do to take your trading to the next level is COMPOUND.
    And then after that, you COMPOUND SOME MORE!

    I can 100% understand the attraction of trading with someone else's money, but I personally think it adds another level to the continual psychological pressures you face.

    At the end of the day, you need to think about how it may affect your long-term development. Yes, you had some success with your first little venture into trading for others. But how would it affect your psychologically if it goes tits up? Would you be able to just crack on with your own bank after that? Or would you be a nervous wreck with a clickety finger?

    My advice, is if you do decide to go ahead and manage someone else's trading money, stick all of your share of the profits into your own personal trading bank! You get in, SMASH it, get out. Clay season is round the corner, perfectly possible to be sitting on the next level comfortably by the time Wimbledon comes around... ;)

    Once you have reached the level of bank size you desire, you then decide on an amount where you are able to live comfortably each month, and then EVERYTHING over and above that gets split into savings/reserve banks, and you look to diversify business interests.

    Geeeeez didnt mean to carry on so much,maybe I should've rather put this on my blog :P

    Oh and for anyone thats interested, Liability Trading is not gone, just doing some work on the site when I manage to get some time. Will be more content, some strategies, and its to remain FREE...

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  2. I know Fred but I've already mentioned on the blog that the reason I need investment is because I am not able to compound! All my profits go towards something which I need to pay for and that will not change for a while.

    If it goes tits up, I just go back to my own bank and do what I'm doing now. I don't see why I'd be a nervous wreck?

    The other advice is stuff I already have planned but I can't do it now because I don't have a big enough bank. It looks as though that is about to change though.................

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  3. I never said you would be a nervous wreck, and I dont think you would be. You do seem to have moved to the next level mentally, and I have no doubt you are not far away from the level of success you desire. Just be certain that IF it does, its not at the expense of all the development you have done so far, that it doesnt set you back mentally.

    My comment was in no way meant as a dig mate, just making sure you have thought of ALL the potential repercussions from getting involved in something like this, and that you have considered it from all angles.

    I do wish you well in this, and will be holding thumbs for you mate.

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    1. I know you weren't having a dig :) I just wondered what you meant by a 'nervous wreck'? I don't know why dropping back down in stakes would be such an issue, it's going up in stakes that presents the big problem, surely?

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  4. Ahh yes, but it can also be incredibly frustrating and hard to accept using smaller stakes again... Causing you to possibly push the limits just a little, to try get back up there quicker.

    Again, I don't think you would do that, but you need to consider all possible scenarios, regardless of how unlikely they may seem. Coming back down to lower stakes can provide a much bigger psychological barrier than you may expect. But as you know, being aware of and accepting that it is possibly something you may have to deal with, would put you in a much better position to deal with before it can get out of hand. You cant solve a problem you aren't aware exists. Just be as prepared as you normally are.

    I looking forward to you showing me I'm worrying for nothing ;)

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    1. I have already been in that situation Fred. I was trading with hundreds and went down as low as £25 stakes. It actually made me trade better, not worse! I appreciate things might be different in this scenario but I'm not going to pass up an opportunity to trade with larger stakes just because of what MIGHT happen.

      I could consider all scenarios but it's not going to matter because until you are actually in that situation, you can't know how you will react. So I either take on the larger stakes and go for it or sit on my hands for another 6 months, maybe even a year. The choice is simple for me. I've always taken risks in my trading career, in the big scheme of things, this is actually one of the smaller ones.

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  5. I think Fred means if you lost someone else's bank/money, how are you going to feel afterwards if you had to trade with your OWN money again. Extra pressure? Guilt? Confidence shot from losing a considerable amount of money/blowing a bank? I think there the kind of thing's when Fred says would you become a 'nervous wreck'.

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    1. All of that is possible Kojn, but it's like anything in life - you never know unless you try! I will worry about all that if it happens. To be honest, I've been at rock-bottom with shot nerves, sleepless nights, anxiety, before, a couple of years ago. Trust me, there is no way blowing someone else's money will ever make me feel as bad as losing my own!

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  6. Well maybe I've not articulated my point well, but its seems that you've already made up your mind anyway, so good luck.

    One last thing though, the talk about needing a bigger bank is starting to reminded me of O'Dwyer.....

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    1. Now that IS insulting! O'Dwyer claimed he NEEDED a bigger bank because he believed his whole strategy revolved around having funds big enough to do what he wanted (namely, lumping on anything and everything at ridiculous prices).

      I don't NEED a bigger bank to make my strategy work, I WANT a bigger bank so I can make more profit - name me someone who doesn't though? It shouldn't make any difference to what I do, strategy wise. So if I have the opportunity to work with a bigger bank, why would I turn it down?

      Yes, it MIGHT go wrong. Yes it MIGHT, cause me to trade badly if I have to go back to lower stakes. But what I'm doing now MIGHT go wrong. I could be trading with £2 stakes again next month! At least if it goes wrong with someone else's money,I get another bite at the cherry with my own money.

      As far as I'm concerned, I won't be doing anything different, other than using someone else's money, which as I've already said, actually took the pressure away when I did it last year.

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  7. My apologises that you feel insulted. I am done now.

    Good luck buddy

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  8. great read mate keep up the good work, any cricket trading help would be awesome


    free betfair systems

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  9. Wow, you should feel honoured being compared to 'Super' trader O'Dwyer ;-) - any chance of a follow up interview? My comments on his blog get deleted after a couple of days.

    Good luck with the venture, I see very little downside in the long term. ld suggest you try to set fixed reporting times (e.g after major tournaments), keep client expectations in check and slowly ramp up size.

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    1. Haha! I'm not sure he'd do a follow up interview! I haven't looked at his blog for ages as it's car-crash stuff, I actually feel a bit sorry for him. How is he doing these days? I imagine he's had another good spell by now.

      Thanks GG, I agree, the downside is minimal, as long as both parties agree to every process beforehand.

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  10. Some very sound advice from Fred in there

    Good luck with whatever you decide to do though.

    Mark

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  11. When you first talked about this I was on the "cautionary" side. After you said you couldn't compound your own money due to whatever, I certainly see this as a good option to having the opportunity to grow.
    But, how much time are you going to have to be with this? I guess the investor wants a relatively long term on this or it'd be easy for you to get in, grow your own bank, say bye bye.

    I find this fascinating, actually. And if BF behaved more like a true exchange, these kind of investment opportunities for both investors and traders would be far more common (and so I hope all the buzz around Betdaq materializes).

    Good luck!

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    1. Hi Cobo, yes, that's part of the ongoing discussion, the longevity of the deal. Lots to be ironed out!

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