Breaking (otherwise set) staking limits - exceptions to rule

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stueytrader
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I have a set of staking limits that I always adhere to.

However, on occasion I sit and look at a selection, and long to break a limit in those cases, due to being especially good chances, or value if you like.

Wondering if, from experience, anyone uses a staking plan that allows the occasional 'exception' to the rule in staking (like a special reserve fund allowance for staking). I get this would not have to be ridiculous of course, such as staking 50% of a trading bank or the like, but just a 'special reserve' staking plan for those selections you see on the very rare occasion and feel you want to extract more than the usual max stake from?
stueytrader
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Just to add, a good example might be where you see what looks like a fat finger price, but your usual staking would only allow a small amount of profit from taking it. There's numerous other examples of course, but that's a good one.
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Derek27
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There are two ways of looking at it. You can have a rigid staking plan and allow for exceptions. Or you can, as I do, treat your staking plan as a guideline with no strict rule to follow it religiously.

As long as you're disciplined enough your judgment in any situation should always have priority, as you pointed out in your example, there are times when a much larger bet is justified.
LinusP
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Have a read on kelly criterion, a few on this forum but loads on the web, its basically what you are describing.
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Derek27
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LinusP wrote:
Thu Sep 12, 2019 3:35 pm
Have a read on kelly criterion, a few on this forum but loads on the web, its basically what you are describing.
The Kelly Criterium is only strickly applicable when you know the probability of the event and can place bets indefinitely. It may be good guidance for betting on sporting events but judgement needs to be applied to account for your level of confidence. But it's even less useful for trading.
stueytrader
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Derek - I like your approach, though in the past using that sort of idea has lead me into poor discipline sadly. It tempts the 'silly' ones to appear in your staking? Obviously you may well use that approach better than me, with giving yourself allowance based on judgements.

Linus - I can see something of the relation to the Kelly idea, though as Derek says I don't think it's completely appropriate for trading often, more so maybe for straight betting. I do have an element of betting/position taking in my trading, however, so something I should perhaps ponder more deeply still.
LinusP
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Derek27 wrote:
Thu Sep 12, 2019 5:05 pm
LinusP wrote:
Thu Sep 12, 2019 3:35 pm
Have a read on kelly criterion, a few on this forum but loads on the web, its basically what you are describing.
The Kelly Criterium is only strickly applicable when you know the probability of the event and can place bets indefinitely. It may be good guidance for betting on sporting events but judgement needs to be applied to account for your level of confidence. But it's even less useful for trading.
Yes but if you can quantify your edge then you can use it or a variation of it to maximize your return and reduce your risk.
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Derek27
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LinusP wrote:
Thu Sep 12, 2019 8:07 pm
Derek27 wrote:
Thu Sep 12, 2019 5:05 pm
LinusP wrote:
Thu Sep 12, 2019 3:35 pm
Have a read on kelly criterion, a few on this forum but loads on the web, its basically what you are describing.
The Kelly Criterium is only strickly applicable when you know the probability of the event and can place bets indefinitely. It may be good guidance for betting on sporting events but judgement needs to be applied to account for your level of confidence. But it's even less useful for trading.
Yes but if you can quantify your edge then you can use it or a variation of it to maximize your return and reduce your risk.
Are you referring to automation?

If a horse crashes from 3.0 to 2.4 and you feel it's likely to bounce back, quantifying your edge won't have any relevance to this particular trade and if you get a calculator out or switch to a spreadsheet to calculate the appropriate stake, you would almost certainly have missed the opportunity.
TipTopTrader
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stueytrader wrote:
Thu Sep 12, 2019 5:40 pm
Derek - I like your approach, though in the past using that sort of idea has lead me into poor discipline sadly. It tempts the 'silly' ones to appear in your staking? Obviously you may well use that approach better than me, with giving yourself allowance based on judgements.

Linus - I can see something of the relation to the Kelly idea, though as Derek says I don't think it's completely appropriate for trading often, more so maybe for straight betting. I do have an element of betting/position taking in my trading, however, so something I should perhaps ponder more deeply still.
stuey I'm like you,

I need the structure of a solid staking plan to keep me under control.

I have Watched Peter trade with various stakes, due to his confidence levels, adding when more confident. I know that this is the most profitable way to trade.

So if the best do it, than it has to be the most profitable way to trade.

I have found trade staking really hard to control, but really easy with betting. Maybe because I have bet for longer, and I have the amount I want bet already work out before the race starts,and I'm only shopping for the best odds.

I would suggest, trying 1.5x or 2x your stake for your great spots, if you end up making every trade a so called great spot, just go back to plan A.

I know I'm leaving some extra profits on the table in certain spots, but I feel like I save more by not going on a mad chase after a max bet or trade gone wrong.

Good luck with your trading.
stueytrader
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Cheers tiptop, you sound like you've had some similar issues that I've been through in the past with staking.

Like you say, allowing less regulation relates easily to going into a spiral of staking and possibly tilting ultimately (Been there lost a few t-shirts). I'm sure many traders like Derek and Peter can be flexible in staking without that problem appearing though.

I do like the idea of allowing a specific amount as a set addition to staking though, as it's easier to follow and therefore not consider jumping into more random amounts staked.

It is also interesting you mention betting being easier to control for staking as you set specific amounts. When I am staking on a purely position based market (one of my straight bets) I never even consider jumping my staking up, but when trading I have in the past. I think the trading thought of 'oh it's just a trade, I'll lay it off' is the root to that issue. With a bet, you know it is all risked every time.
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Derek27
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stueytrader wrote:
Fri Sep 13, 2019 11:28 am
I'm sure many traders like Derek and Peter can be flexible in staking without that problem appearing though.
In all honesty my relaxed staking has bitten me on the bum, on occasions. It's probably even more important for new traders or experienced traders in a new sport to regulate staking.

Last night in the CPL, the best batsman getting whacked on the side of his head (hope he's alright), followed by 4 of his fielders dropping easy catches - the market was as unbelievable as the match! I'll certainly be reviewing my liability limits on cricket, at least until I'm more familiar with the game.
stueytrader
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Glad to hear your honesty with that Derek. Many successful traders like to pretend they have never had those 'bad' ones, or overtraded in their lives etc.

I'd guess we all have done stupid things trading at some point, maybe even Peter... :o :lol:

I've pondered this issue, and decided that for now I'm going to keep to my strict staking without allowances for going bigger. I know myself too well in that respect!
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