Managing The Emotional Ups and Downs of BettingRenowned betting author Steve Ward offers readers of gamblingonlinemagazine.com some interesting insights into how to keep your emotions in check when you’re betting
Sex, Drugs and Mortal Danger
Nick Leeson the financial ‘rogue trader’ once said that ‘When markets are going your way, the feeling is brilliant - more intoxicating than champagne, more exhilarating than sex. A successful trade makes you feel invincible.’
Neuroscience and brain imaging has now shown that he was right. Research in neuro-economics shows that when you are making money the neural activity in the brain is indistinguishable from that of someone who is high on cocaine or morphine, and on the flipside that financial losses are processed in the same areas of the brain that respond to mortal danger. Is it any wonder then that dealing with such highs and lows in betting is difficult, and is compounded by the fact that these ups and downs are the norm rather than the exception.
Long-term success in betting is dependent on how you manage these highs and lows, how you deal with the euphoria and overconfidence that can arise from big wins and winning streaks. And the fear, frustration and anger that can come out of your losses and losing streaks. The emotions that you experience impact on your betting decisions and behaviours, your discipline and consequently your results.
Dealing With The Lows
“The difference between a professional and an amateur is not necessarily the ability to analyse a match, it’s how they handle the emotions of a sustained losing period. Losing punters find it hard to stomach losing runs and quickly lose confidence in the strategy or tactics they are using. This is where emotions take over and we feel vulnerable. How you channel these emotions will determine how successful you are going to be long-term” – Matt Finnigan, mattfinnigan.com
It is not whether you have losses, setbacks or mistakes that is most relevant in whether you are successful in betting but how you deal with them when they arise. For example imagine taking a loss on a horse race, one person might after that event become annoyed and angry, want to get their money back and so look to place a bet on a horse in the next race possible. Another person might be annoyed or frustrated with the loss and decides to not bet again at all. A third person might look at the loss, analyse what had happened, and then wait for their next planned bet. For any given event there are a range of possible reactions all of which will give different outcomes, so the most important factor is not the event itself but your reaction to it.
How people react to situations particularly adverse or stressful ones is largely a function of their levels of resilience. I consider resilience in betting to be a function of three key components:
1. Financial resilience
2. Psychological resilience
3. Physical resilience
If resilience is about being able to weather tough patches, to be able to bounce back to be able to keep going and stay in the game then having a sufficiently sized betting bank and appropriate staking strategy is absolutely critical. In fact in my experience financial resilience may in fact be the most important factor of all due to the knock on psychological effects of being undercapitalised or taking big or sustained losses.
Financial resilience has three levels to it:
• Personal Capital/Wealth – your personal level of financial wealth
• Betting Bank –the allocation of capital you have to bet with
• Bet Size – your stake per bet
Think of your betting bank as being a wall, and the bet size as being the size of rocks being thrown at that wall. A small wall for protection and big rocks being thrown is going to be a hard place to survive for long. A big wall for cover and small rocks being thrown provides much greater protection and likelihood of survival.
“I can think of no psychological characteristic more important to long-term success than psychological resilience. Resilience has been defined in a number of ways, sometimes as a process, other times as a trait. In all cases, resilience presumes exposure to stressful conditions and an ability to maintain high levels of social, emotional, and vocational functioning throughout this exposure” – Brett Steenbarger, Psychiatrist, Trading Coach
Psychological resilience is a feature of your mindset – it is about how you mentally deal with perceived tough situations. Cognitive psychologists suggest that an individual’s "explanatory style", how they explain events to themselves, the meaning that they give events, can be a significant factor in influencing their level of resilience and performance.
• What is a loss? What does it mean to you?
• What is a setback? What does it mean to you?
• What is an error? What does it mean to you?
The research done by prominent American psychologist Martin Seligman suggests that individuals with a more optimistic explanatory style not only consistently outperform those with a pessimistic explanatory style but are also, as an aside, happier and live longer.
Seligman’s work is essentially based on 'attribution theory’, which is the study of how people explain 'good' and 'bad' events that happen in their lives. What Seligman has discovered is that people who are resilient and who don’t give up have developed a the habit of seeing setbacks as ‘temporary, local and changeable’ which he explains as ‘It’s going away quickly; it’s just this one situation; and I can do something about it’. In betting an optimistic explanatory style, particularly about bad events, encourages perseverance: pessimistic people are more likely to lose confidence and motivation after a poor result than more optimistic people. With pessimistic people when a negative event occurs - for example, a big loss; a sustained period of losses or making an error their explanatory style would promote see these events and the effects of them as more permanent and longer lasting, wider reaching into other aspects of life, and less under their control to change.
Adopting more optimistic explanations is a useful strategy for building betting resilience.
The final component of resilience is physical resilience, essentially having the energy to cope with everything. When betting is tough it can take a lot out of you physically as well as mentally and emotionally. When you are physically run down your body lacks the energy to mobilise the high energy emotional states it needs to operate at its best such as challenge, confidence, focus and concentration. Because you are low in energy your mood is affected and most people find that they often make more mistakes, get irritated, angry or frustrated more easily and lose motivation and the wanting to bounce back and perform in this state. During such phases take extra care to ensure you are getting good sleep, eating well, staying hydrated, getting some exercise and importantly some relaxation and downtime.
Dealing With The Highs – The Trappings of Success
“There is a temptation to drift away from your specialist area and dabble on sports where you don’t hold an edge” – Bill Esdaile, squareintheair.com
When betting is going well it feels great. A key reason for this is because of the positive emotions you are feeling and the chemical release of feel good hormones within your body. The biggest hurdle when people are being successful with their betting is making money. It can breed overconfidence, complacency, laziness, and in some cases arrogance, and anyone of those emotions can drive betting behaviours that are ill-disciplined and will ultimately lead to increased frequency or size of losses. Many people work hard and achieve good results only to fall off the wagon and give large amounts of their betting bank away – sometimes all of it. When you begin to make profits from your sports-betting one of the key strategic decisions you need to make is what you are going to do with those profits.
If you are operating a percentage based risk system then as your bank grows the physical amount of your bets will also be increasing in monetary terms although it will be constant in percentage terms, whereas in a level stakes system whilst the betting bank grows the stake is fixed. The danger for both sets of people though is if the growing betting bank creates feelings of excitement and overconfidence and they decide to start betting bigger than their staking systems suggest they should. This can be a recipe for disaster. Having a strategy for managing your betting bank and your profits is key to avoid getting sucked into taking excessive risk or over-betting because you ‘have the money there to do it’. Seeing the money you made from your betting as ‘money to play with’ for example is a very dangerous way of thinking. Likewise money made from big wins or unexpected results can often lead you to behaving differently in your betting.
Managing your betting bank as it grows and monitoring your behaviour as it grows are key
The most important factor in this situation is developing self-awareness that you are moving into a time of potentially higher risk. You are the greatest risk in your betting and if your behaviours change then discipline, performance and monetary returns may all also be affected. Being aware that you are having a good run and then being aware of any signs that your attitudes or behaviours are changing is important. We are looking for changes in attitude and behaviour as these will precede or trigger changes in performance and ultimately outcomes. This is something that I would strongly encourage anyone to do and it is why logs and journals are such an important asset. During these periods key areas that flag warnings are often when you stop doing your research and preparation or you are not doing it as well as you could be, when you stop doing your evaluations or again do them but with little real thought or effort, and when you start considering taking extra risk either in terms of your bet sizing or the types of bet you are taking or the markets you are taking them in.
It’s not only the lows of betting, the losses and losing runs that present challenges for us and our betting discipline but also the highs of the big wins and winning streaks. To be successful at betting in the long run requires an ability to cope with and mange the effects of these highs and lows, to create accountability to your own set of ‘disciplines’, to develop an awareness of the higher risk times, and to continually evaluate and assess yourself and your betting performance to ensure that you are keeping on the straight and narrow, being consistent in the execution of your betting strategy.
One final note and word of caution is that the effects of big losses, and indeed big wins create a trauma effect within the brain that has an impact on future betting decisions, so one way of helping to weather the ups and downs of betting most effectively and to stay disciplined in your approach is to avoid the temptation of hitting the big home runs and to adopt more consistent and middle of the road staking strategies and approaches.
Steve Ward is owner of High Performance Global Ltd who provide specialist performance and psychology coaching and training for traders and also with people and organisations in the sports betting and poker industries. He is the author of ‘High Performance Trading’ and ‘Sports Betting To Win’ and was consultant performance coach to BBC2’s ‘Million Dollar Traders’. His website is highperformanceglobal.com