Do Traders Typically Give Up Value when Closing Their Positions?

[Anbell]

I think this just illustrates why even using the word 'closing' is misleading. People make a series of back and lay bets, quite often offering no doubt, then the big special 'close' comes long and they have a rush of blood to the head and take whatever price is there. Closing is just another back or lay so why treat it differently? All it is is adjusting your position to maintain the required level exposure for the current situation, usually because the market is about to enter a more volatile period (ie in-play). Sometimes that's about going to a zero position, ie greening, and sometimes it's about taking out some or even non of your position if you think it still have value.

Every mouse click should follow exactly the same thought process and if you want to call one 'opening' and another 'closing' then you've already setup a mental barrier and start to think of them as different somehow. They're not...it's simply "how confident am I that the market will move in certain direction, and how much money do I want to bet on that"....and repeat.

But that's not true in all circumstances.

An entirely reasonable logic might be that you think that, on average, the favorite's will reduce will shorten between the 5 minute mark and race time, so you set up an automation to back it at 5 mins and green up at race time.

There's no rush of blood. There aren't any mouse clicks. There aren't any issues about whether or not you still have value because you haven't taken a position on value. And yes, you take whatever the price is, because that's the model. (or the model might be to offer the reverse price so you don't pay the spread every time, and as you often say, the swings and roundabouts will balance themselves out)

[drwho]

A strategy only has positive expected value if each bet that you take is a value bet (e.g. you think there's an 80% chance of something happening, market thinks there's only a 50% chance, so you back it).

Assuming your opening trades *do* take value then you should not trade out of it _unless_ your closing trade is ALSO a value trade. If you close 100% of your opening trades by default without considering value then your closing trades are going to have negative value over time (due to fees and spread), and you'll lose money through them.

Ideally, forget the idea of "closing" a trade. Just run two strategies independently, a backing strategy and laying strategy. Ensure each of them only takes a position when there's value, and that'll make sure they have positive EV in long term. Sure, there'll be cases when you back something cus you think there's value, and 10 mins lay it because you think there's value given new stuff that's happened in the game. It looks like you closed your original back, but really you just took two value bets.

Unless you take the same approach with scalping, you're just taking an uneducated guess and over time will lose money. To apply the same principle to scalping, you ought to think: my prediction of no goal over next 5 mins is X% and the market says Y%. If X% > Y% then open your scalping position as this is value. Then when the 5 mins is over, revaluate your forecast. If X% > Y% then there's no reason to close your scalp. If X% < Y%, then you will close your scalp with a value bet.


Of course this assumes that your detection of value is actually somewhat sensible.

Great to see an intelligent and well thought through forum post

[rik]

A strategy only has positive expected value if each bet that you take If you close 100% of your opening trades by default without considering value then your closing trades are going to have negative value over time (due to fees and spread), and you'll lose money through them

generally youd save fees by trading out as its opposing your initial bet so less turnover - less comission
also why would you have to lose spread when trading out more so than when the trade

[Tuco]

Do Traders Typically Give Up Value when Closing Their Positions?

...the answer to that is it depends on the market dynamics.

That said, if you close or green at current odds you are generally giving up some value - better if you can close and/or green at reverse odds. However there is always the risk you won't get matched and the price could move away from your position, so as with everything in life, for the additional reverse odds reward, there is some risk.

It always struck me as a little strange in Peter's excellent YouTube videos that having traded a horse or two at reverse odds, he would then close his position by greening up at current odds, thereby giving away some value.

Anyone who doesn't want to give away any value, or at least would like the chance not to do so really should be asking for the following "Trade Closure P & L column" additions and updates to be added to the next BetAngel version:

viewtopic.php?f=20&t=21562

If you would like these one-click column additions and updates, please post a +1 in the above suggestion link. Thank you.

I'm a big fan of reverse closing and reverse greening. For more information on this subject please see Dallas's excellent tips and tricks posts, links as below:

"What is Reverse Greening and How to use Reverse Greening"
viewtopic.php?f=47&t=14200

"Reverse Greening & Greening at Custom Reverse Prices on One-Click Screen"
viewtopic.php?f=61&t=21159

[nivi7]

you need a reason for closing a trade
and usually it is not because you want to lose value
rather you want to not lose your money

[firlandsfarm]

… closing my trades early (before the final whistle) has cost me potential profits … my profit margin would have been much higher in the long term had I just let my trades run … I lost count of the amount of times I have opened a value back position around half time mark on 2 more goals to be scored, and have closed my position for over 50% stake loss around 70 minute mark when goals haven't arrived yet, only for them to arrive several mins later. And I lost count of the amount of times I laid the leading team, and again closed my position for a loss sometime later, only to see the team get the equaliser in the last minute of the match.

I have no idea if you are right or wrong but a simple test would be to OPEN an opposing 'closing' bet after 70 mins i.e. if you would have layed to close then back and forget and see if you accumulate a profit. You will need to think how you might structure the Automation file but assuming it can be done then run an instance of BA in Practice Mode and see what happens.

[firlandsfarm]

It always struck me as a little strange in Peter's excellent YouTube videos that having traded a horse or two at reverse odds, he would then close his position by greening up at current odds, thereby giving away some value.

Greening-up is all about adding certainty … whoever wins I get X green/red. If you go for reverse greening you are adding an element of uncertainty to your quest for certainty. Neither is right nor wrong it's all about the degree of certainty you strive for and that can vary depending on how the market is behaving.

[Anbell]

Greening-up is all about adding certainty … whoever wins I get X green/red. If you go for reverse greening you are adding an element of uncertainty to your quest for certainty. Neither is right nor wrong it's all about the degree of certainty you strive for and that can vary depending on how the market is behaving.

This is true, but that certainty can be expensive.

I recommend to have a reverse greening profit column, just so that you can see the difference. My reverse greening column often shows a profit value double or more of the greening column, so that certainty costs a whole lot of bucks over a year. Presumably the variance equals out, but that's not certain.

One other option is to reverse green some seconds/minutes before the off, and then clean up with a pure green immediately prior to the off. At least then you are paying the spread on a smaller $ figure.

[firlandsfarm]

This is true, but that certainty can be expensive.

Yep, I think it would be interesting to at least have the option and see the price.

[Tuco]

I recommend to have a reverse greening profit column, just so that you can see the difference.

Yep, I think it would be interesting to at least have the option and see the price.

Suggestions : 'Trade Closure P & L' (current odds) column AND 'Trade Closure P & L' (reverse odds) column

viewtopic.php?f=20&t=21562

...perhaps you guys could add a '+1' to the above BF suggestion?

I'm sure everyone would welcome these updates and additions.

[spreadbetting]

The problem with most traders is that they put a lot of effort into their entry points but very little effort into the exit which is usually based on financial reasons more than anything else. But there are numerous reasons why traders won't want to take the 'value' betting approach so any loss in 'value' is usually a worthwhile loss in the long run. The sooner traders realise they won't ever hit those perfect exit and entry points, 100% of the time ,the easier trading becomes or at least a lot less stressful.

[Jukebox]

The problem with most traders is that they .......

How many have you observed?

[spreadbetting]

Plenty, you only have to read this forum

[Jukebox]

Plenty, you only have to read this forum

I thought so - that many.

[spreadbetting]

You only need to see the amount of people using tick offsets or percentage offset to realise there's maybe not too much effort being placed, maybe next time I better add 'imo' to any posts in case people may worry they're getting pigeon-holed.