When greed is not good

To make this very clear, I'm trading for profit and not for fun. I take the time to think about my trades and go to great lengths to keep calm when the games are in play. Which is the reason why I'm so angry with myself for letting a great profit slip away last night.

I was trading the Nadal v Tsonga match which I thought would be very close. Now, Tennis has been a bit of a bogey sport for me so far. It is however one that I am going to persevere with, as the sheer volume of matches over the year means that it has the potential to be the cornerstone of my portfolio. I have a couple of strategies which I've found to be profitable though I've learned the hard (expensive) way that letting a trade run in tennis can quickly change you position from green to red. Tennis appears to be a sport where you need to know the relative strengths, recent form and mindset of the players more than others. Perhaps more importantly though you need to be able to read the game and predict the way the market is going to move before the trigger points in the match happen.

I went into last nights match with high hopes that the strategy I'd honed in the close darts matches of last week would pay dividends. It started well and sticking to the Bear tack I was able to make 12 consecutive lay and back bets on Tsonga hedging for profit each time. When the market shifted I made 4 successful lays on Nadal. When I hedged up just before the end of the second set I had £123 green on both players. My head was telling me to leave it there. I'd made a good (great) profit for a couple of hours work and it was time to enjoy the deciding set without any pressure to trade.

Did I do that?

No.

I let greed get the better of me and I thought I could sneak a few more trades in before the break of serve in the deciding set. What then happened was a break of serve for Tsonga and I was exposed on my last 2 lays. Rather than hedging out for a reduced green, I did nothing and watched my green reduce until it eventually turned red. I was fortunate to be able to hedge out for a small green of £8 when Nadal broke back but then failed to hold serve as his challenge fell away.

What have I learnt?

1. Set a profit target before I start
2. Have a defined exit point before I enter the trade
3. Accept that £50 guaranteed is better the £200 but only if I'm right!
4. If I'm wrong admit it quickly and and get out of the trade quickly
5. Realise that "hoping" something will happen has absolutely no bearing on what "will" happen

How to throw away a great position!