There are so many people writing about betting on the internet that it might seem impossible for there to be anything new to say about it. And yet I find I don’t agree with a lot of what is said, and end up wondering if it’s just me who doesn’t get it.
Or maybe these people aren’t actually betting with real money??
After all, every site you go to seems to propose paper trading whilst you learn a system.
Well, I DON’T.
On the contrary, I’m here to tell you that paper trading ain’t worth the paper it’s written on. Because it teaches you absolutely nothing about your feelings. And managing your emotions is a huge part of betting.
Apparently, human beings tend to feel losses more strongly than gains, a phenomenon I have heard explained from different, not entirely convincing, evolutionary and psychological perspectives, but which, whatever the cause, does seem to chime with most people.
Sports punters seem particularly prone to strong, negative emotions, maybe because we are surrounded by people insisting betting is bad for us, so when reality does rub our noses in it, we feel such fools. It can be an utterly humbling experience.
In contrast, stock market investment is clearly socially acceptable. Lose your shirt on global banking shares, and you can still call yourself an investor who is in it for the long haul. Lose it on the 3.30 at Musselburgh, and you’re just another failed mug punter. Whereas really, there is little difference. (Except perhaps that share dividends are taxable, whereas winnings on the race-track are not!).
In both cases, you need to stick to sensible selection criteria over the long-term, and use a balanced portfolio approach, as we will experience both winners and losers. Our goal is of course to obtain more of the former than the latter, but provided we manage our money carefully (about which more in a later Pillar), we can simply ride out the ups and downs. However, if we allow our emotions to get the better of us on bad days, we are almost guaranteed to do something silly that we’ll regret later.
In the stock market, the classic emotional error is to sell in the troughs and buy on the peaks, when clearly you should do the exact opposite. The amazing thing is that people know full well they shouldn’t behave like this, but their emotions are so overpowering they still do so.
In the sports markets, the usual mistakes are systems hopping (to whatever is the latest flavour), and loss-chasing. The first ensures you forever remain a novice, constantly poring over new manuals; and the second is the quickest way to the poor house, and the reason why sports betting got such a lousy reputation in the first place.
Emotion in betting is so fundamental that often we don’t even notice its pervasive influence. Stop At A Winner (SAW) systems still attract adherents (try Googling them if you don’t believe me), even though they are based on a patent absurdity… namely that it is so important to finish every day ‘in the money’ (thereby delivering a soothing emotional high) that we should consistently chase losses in order to do so.
Clearly, from a rational perspective, all that matters is that we reach our financial goals overall, irrespective of our performance on any single day. Nobody ever managed a share portfolio and insisted that every session on the London Stock Exchange should deliver a positive return. But SAW systems blithely ignore such considerations, aiming instead at the unrealistic goal of eliminating all the emotional dips that inevitably follow losing runs. In so doing, they expose us to the daily risk of running out of horse races or football matches (or whatever it is we’re betting on), and thereby deliver a series of mildly successful days followed by one almighty disaster.
It says much about the emotional appeal of loss-chasing that a SAW system as dangerous as Martingale should have become the most famous betting method of them all. Please just don’t! If you only take one thing away from this series of articles, it is this: STOP CHASING LOSSES NOW.
But thankfully, that’s not the only worthwhile moral here. For though we may struggle to tame our emotions (guilty m’lud!), we can work round them. I propose that we do so in four main ways -
a) always try out a new system with small amounts of real money. You might be surprised at how upset you are capable of feeling at a loss of just £2!
b) adhere consistently to proven methods and systems that deliver long-term value (about which, more later)
c) be prepared to forego some of your profits in order to achieve an emotionally acceptable strike rate.
- Yes, I know we shouldn’t really have to include point c)! But frankly, I can only keep my emotions in check for so long during a losing run, and if you’re honest with yourself, so can you. I am therefore prepared to trade some profit in exchange for a comfortable ride (i.e. a decent strike rate), and, judging by the amount of money bet on favourites every day, I’m clearly not alone.
d) work with a ratcheted staking plan (only bet a percentage of your current total bank). Not only will this protect you financially (and – worst case – stop you from ever being wiped out!), it will make you feel better as it operates like a brake during bad runs. You’ll feel safer if you’re tethered to something solid when you’re getting close the edge!!
I have one further suggestion, that I have never seen anywhere else, and which has transformed my betting. Dare I suggest that this one comes more naturally to women?…. though it is in fact drawn from the world of stockmarket investment where it is commonplace:
e) share your betting ideas and experiences in detail with at least one real-world friend.
Investment clubs have been run successfully for years by stock market investors who know they don’t have the time to do all the necessary research themselves, and can benefit from sharing expertise. Precisely the same logic can apply in the sports markets. Plus of course there is also the old adage of a ‘trouble shared’… For when your emotions have got the better of you, there is nothing quite so helpful as a quiet drink with a similarly minded friend, who can often help you gain a fresh perspective.
Why do we sports investors think it is so necessary to plough such a lonely furrow? I believe we carry some ridiculous baggage, one aspect of which is the idea of the genius tipster, who is a lone wolf, studying form until the winner of the 4.20 at Chepstow is delivered to him in a flash of inspiration…..
Honestly, what nonsense! Our approach should be – I’ll show you my best tips if you show me yours! We might both learn something. And if nothing else, as we laugh at our ups and downs, we’ll both feel better – which has been the point of this article.
All of which wraps it for the 2nd Pillar!
Now of course, I know you’re thinking, how do we deliver points (b) and (c) above ?
I will provide some answers in my third Pillar which will be all about Making Simple, Easy Money.
Any questions, as ever, you know where I am.