Scale of Profits

[Jimbo95]

All,
I am still a relative novice to trading having been doing it on and off for the last month. Over the last 3 days, I focused a bit more on it and traded in 27 horse races using £2 stakes. I made a profit of around £2.80 so averaging roughly 10p profit for each race greening up each time. On this basis, I am assuming to make a reasonable income I would have to be placing a minimum £100 stake which would extrapolate to £140 profit for the bets stated. Just wanted to check that I am correct in my assumption and there is not a strategy I am missing which would potentially bring larger gains. For example, instead of greening every race, should I say one in five allow the free bet to ride in the hope that my selection wins. Also, is a 5% profit on stake per race a reasonable target to aim for(ie. 10p on a £2 stake).Any guidance would be appreciated. Cheers

[Euler]

If you are trading properly then your trading result will be outcome-independent. If you let a position ride to the end of a race you are basically taking a gamble on the outcome.

If you want to scale to large amounts you need to take a profit or loss at the point of exit. But there are upper limits to scale, but ultimately it's the process you need to get right first.

[gazuty]

If you are trading properly then your trading result will be outcome-independent. If you let a position ride to the end of a race you are basically taking a gamble on the outcome.

If you want to scale to large amounts you need to take a profit or loss at the point of exit. But there are upper limits to scale, but ultimately it's the process you need to get right first.

+1

There is a maximum amount that can be earned from any market from any particular strategy.

Scaling up does not necessarily result in linear scaling of profit. Each act you take in the market changes the market and market outcomes from that point. Eg. You enter the market, everything else that might have happened in the market may or may not happen as a result of your entry.

[Morbius]

If you are trading properly then your trading result will be outcome-independent. If you let a position ride to the end of a race you are basically taking a gamble on the outcome.

If you want to scale to large amounts you need to take a profit or loss at the point of exit. But there are upper limits to scale, but ultimately it's the process you need to get right first.

+1

There is a maximum amount that can be earned from any market from any particular strategy.

Scaling up does not necessarily result in linear scaling of profit. Each act you take in the market changes the market and market outcomes from that point. Eg. You enter the market, everything else that might have happened in the market may or may not happen as a result of your entry.

That rabbit hole goes very deep.....given the low liquidity in many horse racing markets, how much would you have to scale up to stake wise for the markets to be adversely effected by your own actions??

I recall reading about something similar in Reminiscences of a Stock Operator, great book by the way

[spreadbetting]

It all comes down to what proportion of the market you are, there are no set figures. It's a lot easier to get money matched closer to the off when money is being churned over by numerous parties compared to an hour out when few are even watching the market let alone betting.

[gazuty]

It all comes down to what proportion of the market you are, there are no set figures. It's a lot easier to get money matched closer to the off when money is being churned over by numerous parties compared to an hour out when few are even watching the market let alone betting.

+1

[Derek27]

All,
I am still a relative novice to trading having been doing it on and off for the last month. Over the last 3 days, I focused a bit more on it and traded in 27 horse races using £2 stakes. I made a profit of around £2.80 so averaging roughly 10p profit for each race greening up each time. On this basis, I am assuming to make a reasonable income I would have to be placing a minimum £100 stake which would extrapolate to £140 profit for the bets stated. Just wanted to check that I am correct in my assumption and there is not a strategy I am missing which would potentially bring larger gains. For example, instead of greening every race, should I say one in five allow the free bet to ride in the hope that my selection wins. Also, is a 5% profit on stake per race a reasonable target to aim for(ie. 10p on a £2 stake).Any guidance would be appreciated. Cheers

If you green up for free bets, in theory your wins and losses will average out so there's nothing to be gained except uncertainty. You'll hit a jackpot occasionally, more often you'll see a good green go down the drain.

Profit isn't just down to strategy but your skill in executing it. However, any strategy that works well on the bigger meetings has a much better chance of being scalable.

[jamesedwards]

Like others have stated you are part of the market. Every trade you make impacts supply and demand and therefore impacts the money available and/or price for Back and Lay for both that moment in time and for the rest of the market's life.

The bigger proportion of the market you are, the bigger the impact you will have on liquidity and price. A £2 trade in a UK horse race would have an imperceivably small impact. A £100 trade in a US horse race at 2am would have a huge impact.

Therefore theoretically the bigger your trades the less profitable as a % you will become. Obviously 10% profit on £10 trades is better than 20% profit on £2 trades so there will be (again theoretically) an optimum stake level for maximising your profit.

In answer to your specific question if you are trading UK horse races and reasonably close to the off I would expect scaling up from £2 to £100 trades would only have a small impact on your % return.

[goat68]

Like others have stated you are part of the market. Every trade you make impacts supply and demand and therefore impacts the money available and/or price for Back and Lay for both that moment in time and for the rest of the market's life.

The bigger proportion of the market you are, the bigger the impact you will have on liquidity and price. A £2 trade in a UK horse race would have an imperceivably small impact. A £100 trade in a US horse race at 2am would have a huge impact.

Therefore theoretically the bigger your trades the less profitable as a % you will become. Obviously 10% profit on £10 trades is better than 20% profit on £2 trades so there will be (again theoretically) an optimum stake level for maximising your profit.

In answer to your specific question if you are trading UK horse races and reasonably close to the off I would expect scaling up from £2 to £100 trades would only have a small impact on your % return.

I think about this when I'm trading my £6 stakes, that should I eventually get profitable at this(!), then at the moment my £6 out of the £100 sitting at the best price on some of the smaller UK races is not having much affect, but if I was to scale to £100 then ive just shifted the price... and if I wanted more I'm getting a worse price....
If I could scale to £100 I'd be well pleased!!