Hello,
today I have the time to write something about my analysis of August 2008. Here is an overview of my result of August 2008:
What an awful trading result!
Trading tennis:
number of matches I traded: 24
number of wins: 11
number of losses: 12
scratched trades: 1
number of wins > 3€: 8
number of losses > 3€: 8
total win: +58.12
total loss: -110.30
total pl: -52.18
average win: +5.28
average loss: -9.19
average pl: -2.17
win rate: 48%
max win: +13.57
max loss: -37.79
I had two trades, where I took my personal stop loss too late, so I lost more than 20€ twice. Most important factor for the bad result was impatience. Trading tennis at the Olympic Games was impossible, because I had no reliable live ticker.
The tennis circuit is also near the end of the season, so players are fatigued. That is something I have to keep in my mind for trading tennis in the next weeks.
Trading 5 set matches is also something I have problems with. Odds are moving a little different to 3 set matches.
Trading Motor Sport:
I was trading Formula 1 and MotoGP:
Trading the Fastest Lap market of Formula 1 races is working good. Trading MotoGP Winner market is also interesting, but I had to learn not to get involved pre race. Last weekend I got involved pre race and took my stop loss too late, so I had a loss of -€21.84.
Trading Soccer:
That's what I call discipline! Not because there is no loss, but I scratched so many matches. Even if there would be some small losses it would be a great result. I took all stop losses and closed the trades as soon as possible. I also selected the matches carefully. Every weekend we find many matches in many football leagues, so I can watch many matches and enter a market if there is a good opportunity.
The key is to identify matches with good opportunities. It is not good to watch a game and force a trade during this game, so you can not say "I trade the Chelsea vs Manu match tonight." It is similar to tennis trading. I watch matches live or via live ticker and if I can identify a good trading opportunity, than I enter the market.
Trading other sports:
During August 2008 I had a look at other sports to trade on. Handball and Basketball can offer also good opportunities. NBA is starting in October, I think, so I will have a look. Also NFL has started and I will trade some matches.
Overview:
Tennis: -52.18
Motor Sports: +14.34
Soccer: +26.65
Others: +3.45
total loss this month: -€7.74
What is the conclusion of this month?
First of all: Discipline, discipline and discipline! That is really a serious issue. I have to handle this trading as a business. If you make profit, you are not 'winning'. 'Winning' is something I associate with lottery or something else. I think I should not speak or write about wins and losses, but more about successful and unsuccessful trades. Every trade should be handled as an investment and if this investment does not move in your predicted direction, stop it and minimize your risk and live with this unsuccessful trade.
The next issue is money management. I did not write about it in the past, because I have not found a good money management strategy for me yet.
Actually I have the rule not to lose more than 20€ per trade. But this rule is not the best. If I back a player at 1.5 with 10€, I can let this trade run and lose my whole stake without breaking the rule, but afterwards I can not call this trade as a good trade, because I lost my whole stake. Also if my initial stake is too high, I have to take a possible stop loss very quickly, because my edge of a maximum loss of 20€ can be reached very quickly.
At the moment my stake size depends on self confidence and the trading opportunity I identify. If I am exactly, it depends on my feeling about my self confidence.
So what is possible:
- Flat stake - I have to use the same amount of money for my stake. That means I back and lay with the same amount. Depending on the odds my risk can be very low (f.e. if I lay at 1.1) or it can be very high (f.e. if I lay at 4).
- Flat liability - I have to calculate my stake size depending on the odds to risk the same amount of money each trade.
- Variable stake size - Sounds easy, just trade with the ideal amount of money.
I think there are more possibilities about staking. You also can adjust these three staking methods, f.e. you are using flat stakes, but the stake size depends on your bank, so maybe you say you are risking 20% of your bank on each trade.
The most important requirement for me is, the money management strategy should be simple. I do not want to calculate a complex formula to get my stake size, because very often you need to react very quickly.
I have read also articles and blog entries from other web sites about staking:
Mark Iverson - How Do You Like Your Stake?
He uses a staking strategy depending on his bankroll and the available odds:
1.01 - 1.50 = 40%
1.50 - 2.00 = 27%
2.00 - 3.00 = 13%
3.00 - 4.00 = 8%
4.00 - 5.00 = 6%
5.00 - 6.00 = 4%
The question is, how he uses this table? Only for backing or only for laying? I will explain what I mean:
Firstly, let me say I am calculating my explanation with a bank of €100, so it is easy to calculate stake size. I also only write about markets with only two outcomes.
If you lay a player or team @1.2, what is you stake and your risk? If you lay with a stake of 40% of you bank, you lay 40€@1.2, that means your risk is €8.
Remember, you want to lay a player or a team, that means, you think this player or team will not win, so you can also back the event, that the player or team will not win, so your back odds are 6. Now your stake size is 4€ according to the table above and your risk is 4€, 50% of the risk, if you lay the player or team.
Actually he has now a higher bankroll and he changed the percentage of the stakes, but the principle is the same. I will ask him and update this blog entry later.
The Betfair Trader - Trading and money management
He uses blocks of 250. That means he backs and lays with 250 and his risk is 250 if he back a selection and his risk is lower than 250 if he lays a selection because he always trades the favourite and laying the favourite seems to mean laying below odds of 2.0. He also changed this blocks of money depending on his trading bank. The most important thing is he defined an maximum amount of money he can afford to lose. When using blocks of 500 he takes a stop loss at -250, so his maximum loss should be -250.
Money management has also to do with taking stop losses, so I think it should be called risk management.
I have an actual bankroll of €96.22 and I will treat this as €100. So here is the maximum liability of every sport I trade on:
Tennis: €50
Soccer: €20
Formula 1: €50
MotoGP: €10
NFL: €10
Other Sports: €10
Depending on the liability I will set a maximum loss of 50% of the liability:
| Sport | Max. Liability | Stop Loss at |
| Tennis | 50 | -25 |
| Soccer | 20 | -10 |
| Formula 1 | 50 | -25 |
| MotoGP | 10 | -5 |
| NFL | 10 | -5 |
| Other Sports | 10 | -5 |
This month (September 2009) I have had some trades, but from now on, I will follow this risk management rules and I am really interested how it works.
Much written so far, so it is time to come to an end for this blog entry. This weekend is another Formula 1 weekend, so I will trade the Fastest Lap market. Later this day we have Tennis and Soccer, but I am not sure, if I am able to trade today.
All the best for trading!
Cheers, Loocie
Posts
4 comments:
Hi Loocie,
Thanks for including my post in your blog. I'll try and explain how I use my staking table.
My current maximum exposure depends on the odds of the selection I'm trading - this currently looks like this:
1.01 - 1.50 = 14% of my bank
1.50 - 2.00 = 9%
2.00 - 3.00 = 5%
3.00 - 4.00 = 3%
4.00 - 5.00 = 2%
5.00 - 6.00 = 2%
It's worth noting that I back and lay at the same amounts e.g. If I lay a selection at 1.44 for £2000 then I back the same selection for £2000 at 1.49 (and then green up).
The key thing here is that when the odds move my stake sizes change. By not doing this I would be failing to manage my risk.
From what I can see your maximum liability for each market looks way too high (my maximum liability for each market I trade is only 2%) - if you have a bank of 100 EUR then it would only take 2 maximum loses to lose it all. For me, that's way too much risk and you should look at lowering it as soon as possible.
If you don't do this the decisions you make will be affected by the fear of going broke even if you don't realise it at the time.
Anyway, I hope my comments help a little.
Good luck for the future and thanks for the best wishes regarding Caden :-)
Mark
Hi Mark,
thank you very much for leaving a comment.
This 50€ liability means that I will trade with 50€ stakes. If I back a selection, than my liability is my back stake.
For every sport I set a stop loss level, that means if the market goes against me I will take the stop loss and lose a maximum of 25€.
I agree with you it is a higher risk staking than your approach, but the maximum loss of 50€ can only happen, if my internet crashes or Betfair
is not available, but I have some backup solutions and it should not happen very often.
Do not call me greedy, but with a 100€ bankroll it makes no sense for me to trade with a liability of 2€ (compared to your 2% of a bankroll approach).
I will apply the same rule you defined, that means I will back and lay with the same stake, so if I lay a selection @1.5 I will lay it with 50€ which means I have a liability
of 25€. My stop loss then would be @12.50€, so my stop loss mark is 50% of the initial liability.
All the best with trading!
Cheers, Loocie
Hi Loocie,
I understand that with a bankroll of 100€ you may feel that it's necessary to incorporate more risk as when I started I was risking 40% of my bank. However, I'd recommend revaluing your bank at the beginning of every month to re-evaluate your stakes and if possible reduce the risk a little.
e.g. if next month you bank has grown to 200€ then reduce your maximum risk to 45% (90€). Try and keep going like this until the risk becomes smaller as even though it's unlikely, Betfair does crash and it's not always possible to get out via back-ups.
I hope this helps and good luck.
Mark
Hi Mark,
thanks again for your helpful comment.
Revaluing my bank at the beginning of every month sounds good. I will keep that in my mind.
All the best, Loocie
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