How to define 'its working'

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eightbo
Posts: 2154
Joined: Sun May 17, 2015 8:19 pm
Location: Malta / Australia

Be fully transparent with your results to your wife.

You will know its working when you are consistently finishing the month with a net positive result.
At this stage you should be making withdrawals and no deposits. After some time has passed and if you have established yourself as a consistently profitable trader to both yourself & your wife you can begin to entertain the idea of depositing short-term to trade with more size before withdrawing it again at the end of the session.

If your first attempt of is unsuccessful, there is no reason to risk another grand until things are working, half it and see how you get on - think %'s.
The beauty of trading is if what you're doing is profitable your account size will scale up in no time.

A large part of trading is about risk management. Given the above there really is no harm in throwing the lion's share of your savings into a joint acc. which requires both signatures and agreeing with your wife that she should not let you withdraw them for trading purposes. Consider this or similar means as an option if at a later stage you decide you want more time in the markets. More experience will accelerate you on your journey provided you are tweaking your approach along the way.

Lastly, you should not take trading full-time lightly. Develop a business plan, monitor performance, perform risk analysis, etc.
Put in the work to make it work. And if it's not working, well, where you draw the line should be in your plan too.

gl
luckytrader
Posts: 24
Joined: Fri Mar 01, 2019 11:07 pm

Good job i dont have a wife think i be divorced now if she found out how much i have lost in my first year trading.
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jimibt
Posts: 3641
Joined: Mon Nov 30, 2015 6:42 pm
Location: Narnia

luckytrader wrote:
Thu Jun 13, 2019 3:43 pm
Good job i dont have a wife think i be divorced now if she found out how much i have lost in my first year trading.
i love that your username is luckytrader and that post was your 13th -lol
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Derek27
Posts: 23477
Joined: Wed Aug 30, 2017 11:44 am
Location: UK

Xeres wrote:
Thu Jun 13, 2019 2:18 pm
Maybe I should have been more explicit, I said 'mostly' paper traded, I made around £18k in real money, which is about 1/4 of what the total was adding in all the paper trades (also around 1/4 of my salary). There were times of significant downturn which were hard to stomach and I often dipped out and lost more than I should have.

I figured trading would be more stable, downturns I assume are inevitable but at least with a trade I have more control over what I lose. My current system just places bets at a certain point in the day and lets them run through.

With my betting strategy 'working' was hard to define because some months it would make nothing and then in other months it would make £10k so doing it full time is just too unstable.
I'm rather puzzled that you made £18K in real money (you didn't say how long it took) but still don't know if it's working, and why you continue to predominately paper trade?

Surely the amount of profit you make over a fair period of time is the be all and end all?

If you're trading for a living you don't have to and it's not advisable to live off last months earnings so it's not crucial that you're monthly profits are consistent as long as they average out to a sufficient amount.

You also need to be satisfied that you can successfully scale up without adverse consequences. Good luck.
LinusP
Posts: 1871
Joined: Mon Jul 02, 2012 10:45 pm

Xeres wrote:
Thu Jun 13, 2019 2:18 pm
Maybe I should have been more explicit, I said 'mostly' paper traded, I made around £18k in real money, which is about 1/4 of what the total was adding in all the paper trades (also around 1/4 of my salary). There were times of significant downturn which were hard to stomach and I often dipped out and lost more than I should have.

I figured trading would be more stable, downturns I assume are inevitable but at least with a trade I have more control over what I lose. My current system just places bets at a certain point in the day and lets them run through.

With my betting strategy 'working' was hard to define because some months it would make nothing and then in other months it would make £10k so doing it full time is just too unstable.
Now I am even more confused, you have a profitable strategy although without knowing what you are doing its hard to tell as it sounds like you are just effectively laying high prices which long term doesn't work. Ignoring that you have something profitable but you plan on quitting your job to trade?

"but at least with a trade I have more control over what I lose"

:lol:
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Kai
Posts: 6095
Joined: Tue Jan 20, 2015 12:21 pm

Xeres wrote:
Thu Jun 13, 2019 1:13 pm
The question I am being asked is how do I know its working?
Well, there's only one way to keep score. You need results and paper trades aren't really results. People can easily lie to themselves and others but the numbers can't lie. Get the results behind you and you won't have to ask if it's working or not. It doesn't sound like you developed a strong edge to be honest, it's very difficult to find a strong one at first in general, but the problem you have with a minor edge is that you're constantly on thin ice and it can easily go wrong for whatever reason, so I'd say try and keep the pressure at a minimum and build on it until it gets stronger. Quitting your job at the first sign of success doesn't sound like a sensible idea, it sounds like you're adding a ton of unnecessary pressure on both yourself and your relationship with your wife.

Think there was a similar thread a few weeks ago (viewtopic.php?f=32&t=18491), there was a number of threads like this over the years so you can do a search as well.
Xeres
Posts: 52
Joined: Mon Jun 03, 2019 2:56 pm

[/quote]
I'm rather puzzled that you made £18K in real money (you didn't say how long it took) but still don't know if it's working, and why you continue to predominately paper trade?

[/quote]

I started paper trading in Jan 2018 having back tested during in 2017, I paper traded for a few months to ensure the real results were consistent with back testing, They were slightly down which is what I expected but in line with overall expectations so the £18k is from a little over 1 year.

I had a really bad patch in July which had 23 losses in a row so I stopped for a while to recover some confidence. I was actually running 2 strategies so I paper traded one and then used the other. This went well until October when I suffered another bad period of 15 losses which I knew was statistically possible but hadn't happened in testing or simulations I had done - my bad for not doing enough testing!

I don't like the volatility of gambling, it probably is a winning strategy but I don't seem to have the stomach for it - hence my move to trading - rightly or wrongly I guess I will find out.
Xeres
Posts: 52
Joined: Mon Jun 03, 2019 2:56 pm

[/quote]

Now I am even more confused, you have a profitable strategy although without knowing what you are doing its hard to tell as it sounds like you are just effectively laying high prices which long term doesn't work. Ignoring that you have something profitable but you plan on quitting your job to trade?

"but at least with a trade I have more control over what I lose"

:lol:
[/quote]

The model I developed is for back bets only, I have never had the time to look into lay bets. I basically calculate a prediction for every single horse and then from there run another optimiser that slects a subset of them. There are plenty of academic papers on this subject (Noah Silverman being one) which is where I got the inspiration from.

Yes obviously I have more control with a trade than my current strategy in terms of losses, right now all bets are places at a fixed point in time so unless I pick the winner its a 100% loss. In the very limited time that I have traded so far I've been able to limit losing trades to a small fraction of what I was prepared to lose - that is the point right or am I missing something?
LinusP
Posts: 1871
Joined: Mon Jul 02, 2012 10:45 pm

I guess it depends when you are betting, the value is from your initial back bet so any closing trade will likely have a negative ev. If you are willing to pay that price for a better nights sleep then fair enough but you won’t make as nearly as much, if anything.

Have you looked into the place market? Lower odds so smaller pnl swings.
Xeres
Posts: 52
Joined: Mon Jun 03, 2019 2:56 pm

LinusP wrote:
Thu Jun 13, 2019 7:53 pm
I guess it depends when you are betting, the value is from your initial back bet so any closing trade will likely have a negative ev. If you are willing to pay that price for a better nights sleep then fair enough but you won’t make as nearly as much, if anything.

Have you looked into the place market? Lower odds so smaller pnl swings.
I've never looked at the place market to be honest, the limiting factor has always been time. One of the reasons I tried dutching was to reduce the swings and it does to an extent, the margins are just a lot smaller and requires a lot more outlay.
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ShaunWhite
Posts: 9731
Joined: Sat Sep 03, 2016 3:42 am

Your paper testing might not have a sufficient sample size if your strategy strays a significant distance from a 50/50 strike rate. With 50/50 a few 100 might give you a guide but one that is nearer 1/99 either way would need 1000s.

Have you tried this on several years of historical data? It's often the case that very high/low strike rate strategies can exhibit periodicity that spans years rather than months.

I think you said your strengths were programming and maths? Use that! It's a massive positive, and attack this with some hardcore analysis on a decent dataset. The free stuff is a start and goes back 10years but priority #1 and #2 for you is to start capturing data, ideally something fairly niche, and get 100 strategies tested in a few months not just 1 or 2.
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ShaunWhite
Posts: 9731
Joined: Sat Sep 03, 2016 3:42 am

.... and when you've proved something by backtesting, you'll find that going live with them is a whole other world of pain. ;)
kingsmark
Posts: 11
Joined: Tue Nov 22, 2016 6:26 pm

£18k profit demonstrates some identified value and success. However, 23 subsequent losses cannot really be attributed to statistical possibility. There is a problem with method, execution or data. July losses confirm this.

Unless you can fix the flaw(s) your model is unreliable. Trading is a different concept and using it to exit losing bets is not a viable solution. Any significant variance between paper trading and actual results inidcates a subconcious bias, probably aversion or reaction to losses.

You might find that extending your dutching selections in some markets, to return zero profit, would be a step in the right direction.
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Kai
Posts: 6095
Joined: Tue Jan 20, 2015 12:21 pm

Didn't realize those were betting results, you would probably need to start from scratch when learning to trade, it's a whole different game. Nobody sane would tell you to quit your job for a betting strategy. You can always revisit your betting strategy at a later time, if it doesn't become obsolete by then, you could potentially automate it with Bet Angel or at least use it to churn more commission to mitigate some of the premium charge.
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napshnap
Posts: 1189
Joined: Thu Jan 12, 2017 6:21 am

You said you're programer, if so, then soon you'll want to automate your trading (if not already), and then you're gonna be hit with premium charges. So it's maybe reasonable to sacrifice good looking flat graphs for a money you can save by generating more commission by betting.

So, read about premium charges and plan your business accordingly.
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