Scaling up

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stueytrader
Posts: 863
Joined: Tue Dec 15, 2015 6:47 pm

If I could also add another suggestion into the mix for this area:

Sometimes success is itself a danger - Mark Douglas' version would be the issue of euphoria following success.

We only tend to scale up after success (not including chasing losses etc), so we may be in a relatively comfortable state when we do try to scale up. Winning smaller amounts may have started to seem less meaningful. But, this can be dangerous, as our motivation for scaling up is also important, I'd suggest. If it's trying to reach something that is too far from our reach (e.g. moving from a sideline to a full income) that is problematic full stop, in terms of our mentality. At least, that is my current view on it.
stueytrader
Posts: 863
Joined: Tue Dec 15, 2015 6:47 pm

Just out of interest, how has the planned earlier scaling up gone for you Shaun (if you don't mind sharing anything)?

Been good?
PeterLe
Posts: 3715
Joined: Wed Apr 15, 2009 3:19 pm

Its an interesting question and one that faces many traders who find an edge.
It's that battle in your mind, being too cautious so you don't loose your bank versus the fear of missing out whilst you have an edge.
I too had this dilemma when my automated in play trading started to pay off.

Initially I came up with a plan to increase my stakes based on my bank. As the daily returns could be hundreds of times my stake money, I factored in a tiny increase of stake based on my bank. Ie initial stake plus say 0.05% of the bank. The first thing I noticed was that the stake still grew too quickly, with compounding, even though the bank was still growing, it just seemed too big too soon for my brain to take it in!
I subsequently reduced the percentage down real low, but then left it running.

I then came up with another idea which I call ratcheting. This was in addition to the idea above and was loosely based on the Kelly criteria.
As the vast majority of profit each day could come from a handful of races, I wondered what would happen if I could increase my stakes at the optimum time (ie just on those races) and forget the others. This was easy to do with automation.

So the stake money became = Stake money plus a percentage of the green value of that race. ie suppose during the in play, I had a green figure of £100 across all runners, I may then choose to add 10% of that (£10) to the stake. if the green then became £500 on that race, the stake may then become stake plus £50 etc. It had a cap on that limited the max stake and was all automated.
This brought new challenges, because the market is only so big. The more you increase your stakes, the harder it is to get matched.
What I mean by this is that, when bet is a bad one, (ie it goes against you) you will always lose (100%), but in those instances, you are right, you may not get matched fully (remember this was in play). You may have a stake of £50 in play, but you only get matched £3. When you plot your figures, the larger the stake, diminishing returns kicks in because of the above.

Nothing lasts for ever and as the markets changed around 2012, I still used ratcheting but reduced my stakes back considerably.
When I look back now, I made the vast majority of my lifetime profits in this period. Could I have made more? maybe but Ill never know!
Good luck anyway!
Regards
Peter
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ShaunWhite
Posts: 9731
Joined: Sat Sep 03, 2016 3:42 am

stueytrader wrote:
Sun Sep 23, 2018 9:36 am
Just out of interest, how has the planned earlier scaling up gone for you Shaun (if you don't mind sharing anything)?

Been good?
I've gone in a slightly different direction. I've moved to an automated approach that eliminates the mental game. There's no point trying to fit a square peg in a round hole.

My technical strengths were being underutilised too, and with not really being much of a sports fan, seeing out my days watching it seemed less appealing than a passive income (however modest) and time to do other things. I've always liked coding too.

I'm not sorry I spent so long trading manually, I learnt a lot, but I do wish I'd understood more about the many different approaches sooner so that decision had been better informed.
stueytrader
Posts: 863
Joined: Tue Dec 15, 2015 6:47 pm

ShaunWhite wrote:
Sun Sep 23, 2018 5:57 pm
stueytrader wrote:
Sun Sep 23, 2018 9:36 am
Just out of interest, how has the planned earlier scaling up gone for you Shaun (if you don't mind sharing anything)?

Been good?
I've gone in a slightly different direction. I've moved to an automated approach that eliminates the mental game. There's no point trying to fit a square peg in a round hole.

My technical strengths were being underutilised too, and with not really being much of a sports fan, seeing out my days watching it seemed less appealing than a passive income (however modest) and time to do other things. I've always liked coding too.

I'm not sorry I spent so long trading manually, I learnt a lot, but I do wish I'd understood more about the many different approaches sooner so that decision had been better informed.
I see, thanks Shaun. Guess that's something partly related to my point above, about the 'reason' for wanting to scale up in the first place. Our motivations in this game can easily be underestimated as a factor in progress. I'm currently financially capable of scaling up, but why I want to is something that has to also be considered, if it's to be a positive change.

Cheers,
Stu.
stueytrader
Posts: 863
Joined: Tue Dec 15, 2015 6:47 pm

PeterLe wrote:
Sun Sep 23, 2018 4:16 pm

Initially I came up with a plan to increase my stakes based on my bank. As the daily returns could be hundreds of times my stake money, I factored in a tiny increase of stake based on my bank. Ie initial stake plus say 0.05% of the bank. The first thing I noticed was that the stake still grew too quickly, with compounding, even though the bank was still growing, it just seemed too big too soon for my brain to take it in!
I subsequently reduced the percentage down real low, but then left it running.



This brought new challenges, because the market is only so big. The more you increase your stakes, the harder it is to get matched.
What I mean by this is that, when bet is a bad one, (ie it goes against you) you will always lose (100%), but in those instances, you are right, you may not get matched fully (remember this was in play). You may have a stake of £50 in play, but you only get matched £3. When you plot your figures, the larger the stake, diminishing returns kicks in because of the above.
Like your views PeterLe, very interesting.

In your first point, it seems slightly surprising that adding only say 0.05% from the bank caused that much difficulty, though you mention it definitely did for you. I wouldn't have thought it was that big a difference mentally speaking?

Your second point there is certainly the issue from the mechanics side, though that also affects confidence IMO - if you aren't sure you will get filled, that's a confidence issue when making entry points.
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