What Can a Trading Course Teach You in a Day?

How to switch a computer on? Other than that I struggle to see why you would want to go on a trading course. If you are at a loss as to how to trade and deem it necessary to go on a course then you would be wise to save your money because you won't learn anything useful on a trading day course. If you do learn something then I suggest you are so underprepared that I doubt you have a future as a trader.

Some of these courses are set up by software vendors to show you how to make the most of their software. The software is pretty easy to understand so again I don't see the need for such courses. In addition to learning how to push a mouse around a table these and other courses teach manual trading. And what kind of manual trading can you learn in a day? Well, it's our old money losing friend, scalping. 

I have written quite a few articles on what I think of scalping so you can read them later. For this article I will define scalping as "the superhuman art of looking at a fast moving market and predicting where prices will move to, how far and how fast, placing a trade, a limit to take a profit and a stop to limit your losses, in the blink of an eye, doing it often enough to make more than you would in a low-paid job and winning more than you lose." And you will lose.

Yes, I've seen the videos showing how easy scalping is too. But, have you seen all the failed videos where trades didn't work to plan? It's a simple scam using survivorship bias. Only show the successful videos so that the gullible get taken in. With so many winning scalpers on YouTube it can only mean that scalping is easy, right? Wrong!

"So what happens on a course? There's no hiding there," you say. Indeed there isn't. I have heard from people on many courses where the teacher has made a loss on the day. I don't know what last year's excuse was but I am sure this year's will be, "Since Brexit..." After you have paid so much money to do a course you will want to believe anything you are told to justify your outlay. 

On some courses the teacher will get lucky and the students will go away with the confirmation they needed. In the courses where a loss was made by the teacher, the obvious excuse is, "Of course, you are not going to win everyday but look at the amount of money in my Betfair account! Want to see my YouTube videos?" More often than not if the student is gullible enough to fork out that amount of money then they will believe any excuse.

If you are in need of education when it comes to trading then you need to think about the kind of trading you want to do. "I'll do anything that makes money," is not an answer. Do you intend being a fundamental trader, a trader who looks at past performances to derive odds for future performances because you enjoy looking at reams of sports data? Maybe you want to be a technical trader, trading market structure and psychology but still needing to calculate probabilities (from reams of data) with which to find an edge. You can also mix the two types of trading together to find the optimal time (technical) to bet on an entrant with an edge (fundamental). Either way, you need to be learning maths not a simple IT course called "Fifty Ways to Lose Money with Software".

The problem with these day courses is that I don't see anything on the mathematical side of trading being taught, which is by far the most important weapon in any trader's arsenal. Knowing how to calculate the probability of something, be it the likelihood of price corrections or the future performance of an entrant is a necessary skill. Without a probability you have no odds (1/probability, for the beginner) and so you are betting blind. And what can you calculate in the blink of an eye, off the top of your head, when you are sitting in front of a screen looking at a market that is changing so fast, either during the event or just before it begins? Nothing. It's as simple as that.

But some people do make money from sports trading. It's only about 10% of traders who do profit from sports trading but I bet none of them went on a day long trading course. Most likely, the only courses winning traders went on was a degree with a large mathematical content or they were sufficiently talented to have been self-taught. They will have realised that in a fast moving market they need automation and a mathematical model that waits for a trade with plenty of edge before trading. Unless they are fundamental traders placing one or two bets on an event long before the start then they will be algo-traders.

An algo-trader uses an automated trading system. Algo-traders leave nothing to chance, neither trusting human instincts nor the fallibility of human emotions, unlike manual traders. Why bother looking at a fast moving market, not fully understanding what is going on and manually firing in speculative bets, averaging when the bet goes against you, throwing in a Martingale to chase losses and hoping the market goes your way? 

If you are a fundamental or technical trader you will have historic data with which to build models of how you believe prices will move thus giving you an edge that you can trade on. You cannot just switch on a computer, look at a trading ladder, fire in a bet and hope everything goes the way you hope it will. Not even a quick scan of the Racing Post over breakfast and having a television (with a delayed feed) next to you whilst you trade will help.

If you haven't guessed what I think of trading courses then let me be succinct. You will learn nothing on one of these courses other than how to use the vendor's software, which is probably the only thing the vendor wants you to learn because you have to pay a subscription fee (on top of your course fees) to use the software. Whatever else you are taught is just to give you a reason to try and use the software. Win or lose the vendor will be getting your subscription fee. Non-vendor trading teachers are just trying to shift ebooks full of scalping nonsense, other loss making ideas or they might throw you the bonus arbitrage bone. Do you really think that merchant banks send traders on a day course to learn how to use their trading desk or do they ask the trader for a list of qualifications and relevant experience?

Manual trading of sports events has had its day. Nearly all open outcry trading pits have disappeared from financial trading. Overwhelmingly, financial trading is automated and sports trading is catching up fast. You need speed and that requires automation, both for gathering data and executing trades. You need solid mathematical knowledge with which to build models for your automated trading bots to trade with. Full automation gives you the power to trade multiple markets simultaneously thus scaling up your income. Automation removes emotion from your trades. Automation takes a winning strategy and maximises your return on investment. Trading courses are not fit for purpose.

See Also

"The PeeWee Experiance"

12 comments:

  1. I hope you feel a lot better after getting that off your chest James!

    To a very large extent I share your cynicism, but not entirely.

    Your warning about paying a software vendor for a day's training is very valid. I know several people who paid a guy £400 for one day's training in using the market-leading software tool — without exception they reckon it was money down the drain.

    Scalping, for almost everybody, is a one-way ticket to the poor house. I know one bloke who scalps the big markets such as the festivals and the major heritage handicaps with success, but he steers clear of the bread and butter racing, and with good reason. I've never made scalping pay, quite the opposite.

    In June 2014 I chose to attend a one-day induction course run by a trader who was well-known and respected on the busy forum of the said market-leading software tool, and who ran a very interesting and helpful blog for wannabe traders.

    The course focused on swing trading, not scalping, and was an induction to an ongoing mentorship programme. I knew that I was taking a gamble in joining, but it was one that I chose to take.

    Interestingly, the induction day used a different software tool, one much less expensive than the market leader, due in large part to there being no affiliate programme attached to it. The trainer has nothing to do with the API tool, by the way.

    I paid just over £300 for the day, and I'm still a member of the mentorship group, paying £25 every four weeks, which is £325 per year.

    I'm not a dreamer, nor am I an idiot (or at least I like to think I'm not). The reason that I still choose to pay £25 every four weeks is because it's worth my while to do so.

    The training and mentorship in pre-race trading does work, but of course not everyone can make it work. It's a difficult skill to learn, and a very difficult skill to master. This is good, as there's a natural high barrier to new entrants — this suits me just fine.

    There are currently 110 in the group, with probably about a dozen or so pro traders. I'm not one of them, for me this is a paying hobby. Of course most drop out after a few months, or even many months, but what would you expect?

    As an aside, quite a few of us have purchased your published book, and are eagerly awaiting your follow up.

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    1. I appreciate that there might be a pearl or two in a sea of detritus.

      However, I stand by what I say about mathematics. There are many good traders who cannot explain things mathematically. All they do is show you how they manual trade and you are to copy them like an apprentice sitting next to a watchmaker.

      The same happened in the financial markets. Many pit traders had no chance of becoming electronic traders. There is a video on it in my video section called Floored, which explains their woe.

      As I said, manual trading is on its last legs. Algo-trading is the future and that is all maths and no looking over someone's shoulder.

      I apologise if I appear to be brusque but there is a book to be written.

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  2. Hi James

    You write: 'It's only about 10% of traders who do profit from sports trading but I bet none of them went on a day long trading course'.

    Where do you get the 10% figure from, out of interest?

    As an aside, I know two pro traders who went to the trading course of a well known software vendor, but neither of them learned anything worthwhile.

    I think people make the mistake of paying for someone's magic beans - and I've been guilty of that myself in the past - when the only realistic way of finding a winning formula is via the scientific method.

    Jeff

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    1. Joseph Buchdahl quotes a similar figure S&S,S&S.

      http://www.betfairprotrader.co.uk/2016/09/squares-sharps-suckers-sharks.html

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  3. 'There are many good traders who cannot explain things mathematically. All they do is show you how they manual trade and you are to copy them like an apprentice sitting next to a watchmaker.'

    +1

    In my opinion, trading isn't like learning to drive a car, inasmuch as you can't expect to get an intuitive feel for how the market will act just by practice and watching a trader come out with vague statements like, 'the price is beginning to come in a bit on the second favourite, so I'm going to start thinking about closing my trade if this goes on much longer'. It's about as useful as an ashtray on the back of a motorbike!

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    1. I like the phrase, "as useful as an ashtray on the back of a motorbike".

      Earlier in the week I heard, "As camp as a row of tents."

      I think I am more likely to use the former in a trading context, unless Julian Clary opened a Betfair account recently without my knowing. Not that I am familiar with the ins and outs of Mr Clary.

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  4. As someone with only 5 months experience in the markets, I agree with you, James.

    When I started, I thought that a course would be all I needed and the money would soon follow!

    Fortunately, I've saved my pennies and just invested a lot of screen time. Am I making a living at the moment? No, I am not BUT, at this stage of my trading career, it's not about the money, it's about getting as much screen time as possible.

    It sounds a little bit arrogant to say it, given my lack of experience, but any newcomer to trading (sports or otherwise) needs to forget about the holy grail of systems and just spend as much time in the markets as possible.

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    1. So long as the "screen time" means learning the requisite mathematical techniques, using spreadsheets and other tools effectively and building back-tested strategies then you have a chance.

      If "screen time" means looking at volume flying through a trading ladder or the Betfair website then you are wasting your time. You should grab data, analyse and then attack it.

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  5. A great place to start is in running betting. Trade 33% of your oridinal stake to profit leaving the win side on 0.00 or as close to. As long as your methods of picking a horse that will perform at some point in the race you should clear a small profit long term

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    1. That sounds like the kind of gibberish that Caan Berry would spout.

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  6. "picking a horse that will perform at some point in the race"

    Aye, there's the rub, as Hamlet said. I remember hearing the same about laying horses when Betfair first appeared. All you have to do is pick horses that won't win and you should clear a small profit long term ... and yet laying turns out to be just as difficult as backing.

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    1. Yes, it sounds easy. There can only be one winner so picking losers should be easier than finding the winner.

      Near efficient markets suggest that all odds are pretty close to fair and so you will lose money laying at an efficient price plus your transaction costs.

      Not so easy after all.

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