Money Management

Learn sports betting strategies and discuss key factors to consider when placing a bet.
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LeTiss
Posts: 5386
Joined: Fri May 08, 2009 6:04 pm

Jeff, I'm going to be honest and not at all confrontational. You seem to have it in your head that stop losses are absolutely crucial, they are not, in fact they drain your bank quicker than marriage.

Stop losses are for very nervous traders, and nervous traders will never make decent money, you need confidence in this game.

Also, I found in my early days I was obsessed with churning out Peter Webb like figures. Once I realised that was unrealistic, I went back to basics and just concentrated on studying and learning markets. The hefty green figures then followed. Stop losses do not help you become a better trader. Good traders need to manage losses themselves, I wouldn't recommend them to anyone
Iron
Posts: 6793
Joined: Fri Dec 11, 2009 10:51 pm

Zenyatta wrote: Yesterday, I had placed a $400 back bet on 'Trail Blaze' (the 3.25 at Ayr) around 5 minutes before the off. Immediately the market started moving against me and continued moving against me by a huge number of ticks (over 12 ticks in fact, the price of 'Trail Blaze' went from around 3.60 to over 4.00 in the space of a minute).

If I'd "stopped loss" (and my old self would have) I'd have lost a fortune.
Question for the pros - Would you recommend letting a position go 12 ticks against you without closing your trade? Except in an extremely volatile market, it strikes me as suicidal...

Zenyatta wrote:Instead, here's what I did do: I simply kept putting more and more and more cash on to back as the price kept moving out and out. I think I ended up with an exposure of over $1000 on it before finally getting the big price reversal.
That sounds like a Martingale strategy...
Zenyatta wrote:The price then proceeded to crash all the way down again, ended with an SP of 3.45 and reaping me huge profits.
But it might not have done. Often there is no reversal, or only a very small one.
Zenyatta wrote:That's confidence.
It's over-confidence IMHO.
Zenyatta wrote:Not chasing prices (and stop-loss is really just chasing prices), but backing yourself and confidently betting against the market. That's the secret to real profit.
I've nothing against the contrarian approach, but simply betting more and more money on an eventual reversal which may or may not happen is a road to the poor house...

Jeff
PeterLe
Posts: 3715
Joined: Wed Apr 15, 2009 3:19 pm

I'm with Zenyatta and LeTiss here, we've proved it Time and Time again
Jeff - Have a go at this today. Lets stick with the fav for illustration purposes.
5 mins out of each race make a note of the current back price and a note of what you stop loss would be. See how many times your stop loss would be hit (guaranteed loss), then see how many times it comes back into profit.
If you use stop losses, you will be on a red, if you dont then you will be be be not far off break even. The secret (if there is such a thing) is the entry in my opinion. If you get a good entry there will be lots of opportunity to exit.
Regards
Peter
Iron
Posts: 6793
Joined: Fri Dec 11, 2009 10:51 pm

LeTiss 4pm wrote:Jeff, I'm going to be honest and not at all confrontational. You seem to have it in your head that stop losses are absolutely crucial, they are not, in fact they drain your bank quicker than marriage.
Thank you for your advice.

I don't think that automated stoplosses are necessary. But I do think that it's important to get out of bad trades (whether by scratching or by taking money from the queue). Would you agree with that?
LeTiss 4pm wrote:Also, I found in my early days I was obsessed with churning out Peter Webb like figures.
I suspect that's a common mistake, and one I've made myself in the past.
LeTiss 4pm wrote:Once I realised that was unrealistic
Who says it's unrealistic? :) As I believe Peter once wrote, the word 'impossible' should be used with great caution...
LeTiss 4pm wrote:I went back to basics and just concentrated on studying and learning markets.
I think that's excellent advice for someone wanting to become profitable. Rather than worrying about what other traders do or don't do, they should focus on what they reason is likely to lead to profits, and then test out their theories.

BTW, I wouldn't have thought you were being confrontational. :) I get the impression that you are a very direct person, and I appreciate that. I like people who tell it like it is, and I have a low tolerance for bs! :lol:

Jeff
Iron
Posts: 6793
Joined: Fri Dec 11, 2009 10:51 pm

PeterLe wrote:I'm with Zenyatta and LeTiss here, we've proved it Time and Time again
Hi Peter

Thank you for your advice.

You don't agree with Zenyatta's belief that you should let the markets go 12 ticks against you without exiting, do you? :) IMHO, that's a dangerous belief, and I hope that we don't get newbies taking a leaf out of his book.

Surely one of the basics of trading - whether financial or Betfair - is that you need to be able to cut your losses.
PeterLe wrote:If you use stop losses, you will be on a red, if you dont then you will be be be not far off break even.
To clarify, when I write of stoplosses, I'm not referring purely to automated stoplosses, nor do I mean that you necessarily need to take the available price to close. All I'm saying is that sometimes you need to exit your trade when the market moves against your position (whether by scratching the trade or by forcing the close).

I appreciate, btw, that it's also possible to have a stop that's too tight, and you need to adjust your exit strategy to the current market volatility.

Jeff
PeterLe
Posts: 3715
Joined: Wed Apr 15, 2009 3:19 pm

Hi Jeff
Well, Zenyetta's approach is interesting. I cant remember ever having such a trade myself, but that's not to say his approach is wrong. If you have firm belief that there is value is certain odds and those odds increase, then it follows that you should maximise them?? Very debateable I agree, but isnt that the approach Warren Buffet takes?

Scratching - ABSOLUTELY all in fav of that. I scratch many trades. That is one of the most important tools in your kitbag. After placing a bet I always let the mouse hover over the scratch (if I miss it though and I feel I have entered at the correct price I will wait to see if it comes back. If it doesn't then I always hedge just before the suspend
Regards
Peter
Iron
Posts: 6793
Joined: Fri Dec 11, 2009 10:51 pm

PeterLe wrote:Hi Jeff
Well, Zenyetta's approach is interesting. I cant remember ever having such a trade myself, but that's not to say his approach is wrong. If you have firm belief that there is value is certain odds and those odds increase, then it follows that you should maximise them??
As long as you don't over-commit yourself relative to your betting bank, and you're sure you know what you're doing, then I agree. But I get the impression that Zenyatta isn't approaching this from a form study perspective, working out the approximate true chances of horses. Rather, I think he views the market as being a bit like a boomerang - it might go strongly in one direction, but sooner or later he thinks it will generally retrace massively. The problem with that theory is that, whilst V shaped markets do happen, I'd say it's far more common for the market to strongly trend in one direction and then stagnate or retrace only slightly.

Jeff
freddy
Posts: 1132
Joined: Sun Aug 01, 2010 8:22 pm

I would have no problem letting a trade go 12 ticks against me with one of my stratagies because i have stats showing that i would be worst off in the long run if i did ,
but sure it can ruin the day if you have a few of them :lol: .

I wouldn't do what Zenyatta does though,
not saying it's not possible, but you would be taking some huge huge hits at times :oops: , but as long as the wins cover the losses it works ;) .

not sure if you are a profitable trader yet Jeff, but i would strongly suggest you set up excel and collect some data on the markets, try different stop losses / tick offsets etc,

i think alot of us have done this and it really helps you understand how it all works and a break even strategy (which are incredibly easy to find) can with a few tweeks be turned to a winning one.
Zenyatta
Posts: 1143
Joined: Thu Mar 11, 2010 4:17 pm

In fact Jeff, I do put in the form study and try to calulate the odds. Looks like after a couple of years it does seem that I've finally crossed the threshold of profitability.

It was basically money management and lack of confidence that was doing me in, not the wrong selections. I didn't have a big enough bank and was over-staking, and that combined with the lack of confidence (price chasing, stop-lossing) etc. was doing my nuts in. I believe it's money management that's killing most people, not wrong strategy.

My goal was 150 per day, which I believe I've reached. Therefore, I'm off on a round the world trip. This will be the sternest test of my trading skills, since I will be relying solely on trading to cover my travel costs (Betfair will be my primary trading exchange, but I do have BetDaq as a back-up if it all goes pear-shaped at Betfair). Is my trading now good enough to be my sole source of income under travel conditions? I'm about to find out... 8-)
Iron
Posts: 6793
Joined: Fri Dec 11, 2009 10:51 pm

Good luck! :)

How would you respond to the argument that the true fundamentals about a horse aren't always known to the public? For example, you see a horse drift to 4.0 from 2.5, when your analysis says that 2.5 was about the right price. That might be a fantastic value betting opportunity, or it might be that the horse picked up a minor injury in training last week, and the true price is much higher than 4.0...

Jeff
Zenyatta
Posts: 1143
Joined: Thu Mar 11, 2010 4:17 pm

Ferru123 wrote:Good luck! :)

How would you respond to the argument that the true fundamentals about a horse aren't always known to the public? For example, you see a horse drift to 4.0 from 2.5, when your analysis says that 2.5 was about the right price. That might be a fantastic value betting opportunity, or it might be that the horse picked up a minor injury in training last week, and the true price is much higher than 4.0...

Jeff
Well, yes, horse racing is notorious for hidden info. But my approach can't do anything about that, I can only take into account the info I know about. So I'm relying on the fact that in at least *some* markets, form fundamentals shine through at least *some* of the time (enough to be profitable). Being selective is the key.

The trading needs to work for me. I'm from New Zealand and I will be flying out to the other side of the world soon to begin my world tour. So if my trading fails, you can imagine me stuck in say a cubicle in Japan somewhere (one of those internet cafes for the homeless). I don't win I don't eat. It's that simple. The trading had better work man :lol:
James1st
Posts: 318
Joined: Thu Apr 16, 2009 10:28 am

Zenyatta wrote:
What markets is it (stop loss) useful on?
A few simple markets where there is likely to be clear price trends.


Regardless of whether you offer to the market to close or take the available price, would you not agree that there comes a point in a losing trade where you should say 'This trade has gone far enough against me - it's time to get out'?
Unless it's the particular type of market I mentioned above, no, I wouldn't agree.

As an example for yesterday, I had placed a $400 back bet on 'Trail Blaze' (the 3.25 at Ayr) around 5 minutes before the off. Immediately the market started moving against me and continued moving against me by a huge number of ticks (over 12 ticks in fact, the price of 'Trail Blaze' went from around 3.60 to over 4.00 in the space of a minute).

If I'd "stopped loss" (and my old self would have) I'd have lost a fortune. Instead, here's what I did do: I simply kept putting more and more and more cash on to back as the price kept moving out and out. I think I ended up with an exposure of over $1000 on it before finally getting the big price reversal. The price then proceeded to crash all the way down again, ended with an SP of 3.45 and reaping me huge profits.

That's confidence. Not chasing prices (and stop-loss is really just chasing prices), but backing yourself and confidently betting against the market. That's the secret to real profit.

Adopting an approach of no Stop Losses would have seriously tested your mettle yesterday, Zenyatta. The following races all produced a "run" (fav) of at least 10 ticks where there was no let up before the off. With no retracement and your strategy of adding to your losses, you would have lost your £1000 bank 9 times. I would have cried for you in the 3.40 Uttox where the fall was a 30 ticks loss.

2.15pm 15 ticks 4.5 to 6
2.20pm 10 ticks 3.75 to 4.5
2.30pm 16 ticks 3.3 to 4.2
2.50pm 16 ticks 2.94 to 3.65
3.30pm 12 ticks 3.75 to 4.7
3.40pm 30 ticks 3.9 to 2.76
4.20pm 21 ticks 3.8 to 5.7
4.45pm 16 ticks 5.4 to 8
5.20pm 23 ticks 3.4 to 2.7

Hardly the occasional race and holding a bet against the trend isn't "confidence"; its simply foolhardy.
PeterLe
Posts: 3715
Joined: Wed Apr 15, 2009 3:19 pm

Hi James,
I'm not sure what time frame you observed these swings (ie was it five minutes out or five hours?)

I just added those up and it amounts to :-

-94 Ticks
+54 Ticks

As the sample rate gets bigger these will ultimately offset each other. For example over the course of the day; week or month, then the difference would be very close I would have thought?

regards
Peter

PS I think this is a great example where there is no one correct answer. If you had a fully automated system, the peaks and troughs even themselves out, but if you are trading selected races having analysed them then a different approach is needed. Both ways could be employed?
James1st
Posts: 318
Joined: Thu Apr 16, 2009 10:28 am

Hi Peter,

All the races were inside the last 10 mins up to the off (in some cases maybe 8 mins). These were only the drifts with NO pullbacks and excluded those < 10 ticks with no retracement. eg the 3.15pm race had an 8 tick drift close to the off. I also didn't count any races where there was a small pullback (that did not reach the base of the run) because most of the races were of that type eg the 4.00pm race fell from 6's to 4.7 and retraced to 5.4.

There are dozens of races every week where a fav has a significant run with no/little retracement and these races are in the majority over those that have a retracement back to or beyond the source odds.

What are the figs -94 and +54 Peter?

Anyone unlucky enough (or foolhardy enough) to have entered (at source) all of the examples I quoted would have lost (without a stop loss) 159 ticks with zero compensation due to the lack of retracement before the off.

IMO it is complete madness to assume or trade in a manner that assumes that every run (trend) will retrace.
PeterLe
Posts: 3715
Joined: Wed Apr 15, 2009 3:19 pm

James1st wrote:Hi Peter,
What are the figs -94 and +54 Peter?
Hi James
I was just adding the the number of ticks you mentioned and assigned either a negative or positive to them i.e.:-

2.15pm 15 ticks 4.5 to 6 (-15)
2.20pm 10 ticks 3.75 to 4.5 (-10)
2.30pm 16 ticks 3.3 to 4.2 (-16)
2.50pm 16 ticks 2.94 to 3.65 (-16)
3.30pm 12 ticks 3.75 to 4.7 (-12)
3.40pm 30 ticks 3.9 to 2.76 (+30)
4.20pm 21 ticks 3.8 to 5.7 (-21)
4.45pm 16 ticks 5.4 to 8 (-16)
5.20pm 23 ticks 3.4 to 2.7 (+23)

Sorry it should have read :-

-106
+53

So if you take Zenyatta as an example; I was trying to say that over a big enough number of samples if he was to place back bets and then never trade out via a stop loss, they would cancel each other out over time. Ie sometimes the market would favour you, others not.
regards
Peter
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