Money Management

Learn sports betting strategies and discuss key factors to consider when placing a bet.
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
Iron
Posts: 6793
Joined: Fri Dec 11, 2009 10:51 pm

Hi Peter

That works if Zenyatta lets his profits run as well as his losses. But if we assume, for argument's sake, that he has a modest profit target but lets his losses run, then long-term I'd say he's toast...

All that said, Zenyatta has said that he uses form to find value, so maybe his trading isn't quite as crude as I'm depicting it as being! :)

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

Hi Jeff,
Yes I understand what you mean and I know that James has some very good points too.

I guess that my personal approach (and one that I have tried to adopt right from the word go, be it an automated strategy or manual) was to trade at random initially (with no stop losses), which I know will break even (discounting premium Charge for a moment), and then hone and refine those strategies to see how I could reduce the losses, to move into profit.
This has worked well for me over the years, but I fully accept that it's not the only way to profit
Regards
Peter
James1st
Posts: 318
Joined: Thu Apr 16, 2009 10:28 am

Ah Peter, totally with you now.

For someone who only ever lays (or only ever backs) then, over time, they should break even because the fav, on average, will drift or steam in roughly equal proportions.

However, I was being more specific and addressing the post to Zenyatta and other newbies who trade both directions and in doing so have the potential to enter every trade on the wrong side. Doing this without using a stop loss, and in Zenyatta's example assuming that every market will retrace, is a recipe for disaster.

Zenyatta, judging from his prior posts, appears to be a "normal" trader who enters trades on both sides of the book and as such is open to extreme losses yet decries the use of a stop loss.
freddy
Posts: 1132
Joined: Sun Aug 01, 2010 8:22 pm

James1st wrote:
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.

But surely it depends on what Zenyatta entry points were, two people can have the same money management method but still produce massively varying results.

It's unlikely he would have picked the worst possible entry points for each of the mentioned races.
James1st
Posts: 318
Joined: Thu Apr 16, 2009 10:28 am

I think its fairly obvious what Zenyatta's strategy is from his example and his statement "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"

I repeat, waiting for a reversal whilst becoming more and more exposed is foolhardy.

It might never come and I quoted some races from yesterday where it simply didn't.
Zenyatta
Posts: 1143
Joined: Thu Mar 11, 2010 4:17 pm

Yesterday, I analyzed the form, and didn't place back bets on any of the horses that moved out :)
Photon
Posts: 206
Joined: Mon Nov 29, 2010 10:14 pm

Having stop losses and precise placement is part of risk management strategy so on that count this discussions are taking place on the wrong thread but they are interesting nonetheless. My view would that they should used as a last resort and therefore should be set at far enough distance for it not be invoked frequently and if you decide on a safe distance it should be used consistently or not at all.

My view on the original question about fixed % of bank to be used is a wrong approach as the size of the stake, although needs to be restricted by the size of the bank, should be determined more from the risk and potential return than bank. Soros wouldn't have risked billions and made billions if he had stuck % of bank as a strategy when betting against Sterling. If the possibility of successful outcome is more than certain then you should do all you could to increase your bank rather than by constrained by it.

But for a newbie % of bank should increase with experience and success you have experienced but should be constraining factor.
freddy
Posts: 1132
Joined: Sun Aug 01, 2010 8:22 pm

I think its fairly obvious what Zenyatta's strategy is from his example and his statement "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"

I repeat, waiting for a reversal whilst becoming more and more exposed is foolhardy.

It might never come and I quoted some races from yesterday where it simply didn't.
Yep i agree and it's not the method i would use either.

but as we don't know his entry points we can not possibly ascertain the outcome of his trades.

if he is adding to losing trades then he would of cause not need a full retracement either, depending how aggressive he is he many only need a few ticks to be in profit.

those trades you mentioned, yes he would have lost money if on the wrong side, but it may have only been a few ticks if he entered at a good time near the end of the trend.
Iron
Posts: 6793
Joined: Fri Dec 11, 2009 10:51 pm

Hi James

I agree.

If the market were perfectly rational and normally distributed (in terms of trend lengths), then Zenyatta's approach would work fine (even if it did give you some big drawdowns). The problem is that the market frequently trends strongly, as was illustrated by the how many big movers you identified yesterday out of the day's 30 races.

Peter - It intrigues me that, from what I can gather, you'll try to scratch your trade if it moves a tick against your position, but other than that you won't get rid of a trade that's moved against you. Have I understood your position correctly? If so, am I right in thinking that you generally focus on fairly quiet markets, where you're unlikely to lose out to a big move against your position?

Jeff
James1st wrote: Zenyatta, judging from his prior posts, appears to be a "normal" trader who enters trades on both sides of the book and as such is open to extreme losses yet decries the use of a stop loss.
freddy
Posts: 1132
Joined: Sun Aug 01, 2010 8:22 pm

Jeff but maybe that is part of his strategy to find opportunities like that , it pays to be open minded in this game i think.

there are markets that you know with an extremely high rate of probability will not go beyond a certain point.
adding to losing trades would work going by my stats in some circumstances, althoe it goes against all the textbooks in the land and is not something i would try myself .
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