This blog is not dead (yet) and neither am I! Apologies for the lack of updates but I was away on a holiday, returned last week and then got stuck straight into trading the Pakistan v West Indies test match. My September was broken down as follows:

• Writing a cricket bot (more on this below)

• Trading the first test between India and NZ

• Away on a holiday for a friend’s wedding

Firstly, the Profit/Loss screenshot for September out of the way:

My Cricket Bot

September was a very quiet month in terms of cricket trading so I happily spent time developing a cricket bot and testing it in the TNPL, Karnataka Premier League etc. My bot runs in-play and is based on a pattern I have noticed repeatedly in the cricket markets. Here is a graph showing my results so far (including October):

I am using iterative development, which means the emphasis is on coding and testing in short cycles. Overall I am relatively pleased with the results but I have a few concerns/thoughts:

• Long term: As you can see above, my bot has traded 75 markets. I will wait until my bot operates in 200 markets before declaring it a success (or failure).

• Bot stakes: I am trying to work out the stake size which would maximise my profit. Unfortunately this will take a little bit of time. I am currently using 10 GBP stakes. I have read about the Kelly Criterion in this excellent post but this is not applicable in my case. My bot operates in-play and my worry is that the probability of my edge is dependant on the stake; a large amount could spook the market and kill my edge. So I have to start small and increase the amount slowly.

• Shitty internet: I didnt realise how bad my internet connection is until I started running my bot full-time. The connection drops often and it wrecks havoc with my VPN and subsequently my bot. If my bot makes consistent profit, I might consider moving it to a VPS with uninterrupted internet access.

• Betfair API outages: These have robbed me of ~8 GBP so far. I am trying to make my bot as robust as possible but I guess I’ll just have to put up with outages when they happen.

Going forward

I would really like to make decent consistent profit by the end of this winter. There is a lot of cricket worldwide and I would like to trade as many markets as I can. To facilitate this, Im going to change my sleeping pattern: sleep in the afternoon and trade through the night. This could ruin my social life (and my marriage) but I never thought trading was going to be easy…

For over a year I traded 2020s on and off without much success. I often felt like a deer in headlights, waiting to get squashed by the market. In the last month I have traded test matches and absolutely loved it. The markets move a lot slower and I find that I have a lot of time to take stock and make my moves.

So after trading five test matches this month, here is my profit for August.

I am very happy with my results but my smugness quickly vanishes when I realise that I have earnt the equivalent of ~1200GBP/160 hours = 7.5 GBP/hour, slightly above the UK minimum wage. I have only traded six test matches in total so its too soon to draw any conclusions about my ability to trade them. Nevertheless this month’s results have encouraged me to trade more test matches in the future with higher stakes.

Mental Accounts (Narrow Framing)

I have made a profit in each of the last five test matches. While I am quite happy about this, I am not sure whether I am trading efficiently. Recently I read the book ‘Thinking, Fast and Slow’ by Daniel Kahneman (I highly recommend this book) who talks about mental accounting - an irrational form of decision making used by people to keep score. “We hold our money in different accounts, which are sometimes physical, sometimes only mental. We have spending money, general savings, earmarked savings for our children’s education or for medical emergencies”. The problem with holding mental accounts is that it leads us to make irrational decisions, “for instance simultaneously putting money in a savings account and maintaining debt on credit cards”.

Surprisingly the problem of mental accounting can affect even professional stock investors who manage portfolios of stocks, leading them to make irrational decisions. Sometimes investors set up a mental account for each share that they buy and they want to close every account as a gain. The rational approach would be “to have a comprehensive view of the portfolio and sell the stock that is least likely to do well in the future, without considering whether it is a winner or a loser”.

I have noticed that I fall for the same psychological effect. In the last month, I tried to close every test match as a winner.

• On two occassions I got into fantastic positions only to sell my position too soon and cash out my winners for smaller amounts.

• In all the test matches, I have built up a nice green book until Day 3 and then I find myself trading with reduced stakes so as to not convert my nice profit into a loss.

Ultimately the only thing that matters is my account balance. Moving forward I hope to trade efficiently (or rationally) than worry about whether I close a test match as a winner.

Next month

In between the test matches, I have spent time developing a bot based on patterns I have observed in the markets. There is a lull in my cricket calendar until the next test match (late September). I will test my bot in the next 2 weeks and update you with my results.

Thanks for reading and have a good weekend!

Wow. What an exciting test that was! And well done to the West Indies for making the series interesting. I needed a break after that. Here is my analysis of how I traded the test.

Positives

Preparation. Recently I read an interview with Bruce Kovner who said something that has stuck with me: “One of the jobs of a good trader is to imagine alternative scenarios. I try to form many different mental pictures of what the world should be like and wait for one of them to be confirmed. You keep trying them on one at a time. Inevitably, most of these pictures will turn out to be wrong - that is, only a few elements of the picture may prove correct. But then, all of a sudden, you will find that in one picture, nine out of ten elements click. That scenario then becomes your image of the world reality”. I now spend about an hour before the start of every day thinking of various scenarios and reasons for them to occur. As the play unfolds, I see a scenario crystallize and trade accordingly. For example on Day 5 of the test, in one of my scenarios, I conjured up reasons for West Indies to save the test match (pitch slowing up, bowlers not looking in rhythm etc) and after an hour of play, it looked like West Indies had a good chance of saving the match. So I layed India when possible.

Risk Management. Most of my trades were 100-200 GBP stakes. On a few occasions I wanted to increase my stakes but I resisted temptation and consequently I was able to think with a clear head.

Improvements

Trading the rain. I want to learn how to trade the rain better. A significant portion of my winnings was due to trading the rain but I think I can improve. I will also lean more on my lovely wife to help me with this; she has a Masters in Maths and Meteorolgy.

No data-driven approach. I am currently trading on instinct. With 2020s I have defined very clear edges based on my database and I execute my trades using these edges. For test matches however, I have not defined any such edges. And I dont think this is the most efficient way of trading. In the upcoming days, I will think of how to incorporate this.

Overall I am very happy with my trading during the match. I prepared well and executed my trades without any stress. And to be honest, I think I got a little bit lucky too. Almost every trade I made went in my favour.

Third test

I will try to build on my trading from the second test. Given the amount of rain present over the next 5 days and the relatively flat pitch I will look to back the draw whenever possible. I also think West Indies would have gained a bit of confidence from the previous test and will look to build on that. However, I will wait and watch before making my moves.

Other things

I have been coding a couple of things on the side - a bot, and a more data-driven approach to trading 2020s. I will write about them later.

Thanks for reading and have a good week!

Last week I traded my first full test match: India v West Indies. I usually enjoy watching test matches but at times I struggled to sit through this one. India dominated from start to finish and the market was relatively stagnant. After 4 days, I lost a bit of money but overall I learnt quite a bit.

How I traded this test?

At the start of every day, I did my research and thought about the various ways the match could unfold. For the first 2 days I traded relatively well but things went downhill from there. Mid-way through the first session on Day 3, I backed the draw. The draw price was crashing and I was hoping to cash out with a nice profit during the lunch break, except… Bravo decided to get out at the stroke of lunch. Just after lunch, Shami picked up two wickets in one over and I was a dead duck.

I am disappointed in myself for the way I traded the remainder of the test match. I backed the draw at high prices and kept waiting for a fightback in anticipation of green-ing out. This was quite dangerous given that all five of the Indian bowlers were bowling very well.

With the benefit of hindsight, I probably lost money due to the following reasons:

• A bit of bad luck with the wicket of Bravo on Day 3. However, if presented the same situation I will trade the same way.

• A lot of bad trading on Days 3 and 4. Given that the Indian bowlers bowled well, I should have been more wary of backing the draw. If I had back the draw, I should have dipped in and out of the markets looking for small profits rather than large ones.

• Over-estimating the West Indies. I know this is a poor West Indies team but I expected a bit of fightback at some stage, and this didnt eventuate.

Second test

I am really looking forward to the 2nd test starting today and I hope to implement some of the lessons learnt.

The pitch is green and the last 15 matches at Jamaica have not seen a draw. So I am going to back the bowling team tomorrow and lay the draw when possible. I think a green pitch might favour the West Indies slightly in that it will bring their bowlers more into play (Brathwaite and Holder looked especially toothless in the first test). And I hope we see a bit of Alzarri Joseph!

Whilst I dont intend to turn this into a profit/loss blog, I might attach screenshots from time to time:

My first step towards becoming a consistent trader involved defining my edges. Most readers of this blog already know what an ‘edge’ is but for the non-traders: an edge is just a condition which indicates a higher probability of something occuring. When I see the condition I place my bet. Here are the results of my 4 defined edges so far which I have been testing during the T20 blast and CPL:

So to be clear: £10 trades on Edge 2 would have resulted in a loss of £9.3 after 10 matches.

I will test each edge for 20 matches before deciding whether it is profitable. The good news is that Edge 1 seems promising. It is quite rudimentary at this stage and I have a few ideas on how to improve it. I am currently trading with only £2 bets but I will soon start increasing my bet amounts. The advantage of defining my edges and trading rigidly with them is that I am no longer stressed. I am able to take a loss just as easily as a win. You might argue that I have no right to be stressed when Im only staking £2! But you get the idea. Edges 2, 3 and 4 are not doing well yet but there is still a long way to go before I judge them

On another note, the CPL has taken a slight toll on me. I stay up trading late into the night, find it hard to sleep and then I dream about cricket in my sleep. While I enjoy cricket I certainly dont want to dream about it. So from next week, I will switch my focus to the West Indies v India test matches which are during far more reasonable hours.

Thanks for reading my first post. Just to introduce myself: In 2006 I graduated from University with a degree in Computer Science and found a job at a large corporation. Pretty soon I realised that this was not my scene. Whilst I enjoyed some parts of the job, I really despised the corporate culture - climbing the ladder, dealing with office politics etc. I could go on and on. So I started thinking about my future and came to the realisation that I wanted to work for myself or start a technology company. The problem - I had no decent or even semi-decent ideas.

In the meanwhile, I would really enjoy watching sports and having an odd bet from time to time. In January 2015, I stumbled upon Betfair cricket markets and was stunned by the amount of money exchanged over a game of cricket. After doing some research I found that there were quite a few ‘Cricket Traders’ who made a comfortable living doing this. I really love cricket and betting - I wanted a piece of the action.

I convinced myself that this would be quite easy. After all, I had grown up playing cricket and I watched a lot of it on TV. But how wrong was I? In the following 12 months, I found that if I backed the batting team a wicket would fall, if I sensed a wicket I was too scared to back the bowling team; I would chase losing positions so as to avoid ending the day with a loss. The market was contrived to take my money!

Eventually I read ‘Trading in the Zone’ by Mark Douglas. The book resonated with me so much that I read it twice, then a third time and I took notes. I have tried to internalize Mark’s concepts and focus on his principles of having a probabilistic mind-set.

In April 2016, I quit my job to trade sports full time. I have given myself three years to crack this. This blog will document my journey from a novice trader to hopefully a consistent one.