Cut Your Losses?? (Mean Reversion)

[abgespaced]

Well, because this post was bumped I'll chime in. Now that I feel I've got some kind of trading sense, "cutting your losses" to me means that I've made the wrong decision and the true value is now being reflected in the market price in opposition to what I thought the value was. It doesn't necessarily mean the price has gone against me after taking a position. The price often goes against me after taking a position, because the market is on the wrong side of the true value. So I hold my nerve and wait for a correction. But if I really have go it wrong, some signs will show and I will close out.

[Thebest147]

If your opening order is taken quickly and it moves against you your on the wrong side and cut,
There aren't to many dummies playing on betfair you have to assume they know move the you,

[Vaz0202]

I started trialing a new system this weekend and I noticed my stop losses were taken before my trades. I watched the market carefully. The price then came in. This happened again over the next 5 events. Price came in.

Had there been no stop loss, all my trades would have gone green, and then some.

When automating, it is difficult to place that red exit

[ShaunWhite]

I started trialing a new system this weekend and I noticed my stop losses were taken before my trades. I watched the market carefully. The price then came in. This happened again over the next 5 events. Price came in.

Had there been no stop loss, all my trades would have gone green, and then some.

When automating, it is difficult to place that red exit

You've discovered the issue with stop losses, they don't give you any advantage, and over time they break even at best.

I suggest you simply approach each bet with the same thought process, a reason to back and a reason to lay. That reason is never that you're £x up or down because the market doesn't know or care about that, so therefore you shouldn't. The market also doesn't care if you're opening a position or closing one, so respond to the market rather than considering what bets you happened to have some time before. I automate too, and the logic is just to bet, bet ,bet whatever side is appropriate, and then at the end, hedge any outstanding positions if there are any.

[sIGNAL]

Interesting thread and tallys up with my stop loss experiment on my IR horse bot I've been dabbling with. I figured out today before seeing this thread that the stop losses (tried various types and different exits) actually gave a worse P&L.

[firlandsfarm]

I don't use Stop Losses, I have a similar thought as Shaun. If for example you back at 5.00 and set a stop loss for 6.00 then if your stop loss fires you are effectively saying laying the runner at 6.00 is a good price ... that being so why did you back it at 5.00! You are looking for the point that if it drops to Y it's on a trend and will not recover.

[jamesedwards]

I have a similar thought as Shaun....

Speaking of which, where is Shaun? Not been on the forum for three weeks.

[Kai]

I have a similar thought as Shaun....

Speaking of which, where is Shaun? Not been on the forum for three weeks.

Probably taking a political detox

If we're considering sending out a search party already I propose to not send Dex and FF

[jamesedwards]

I have a similar thought as Shaun....

Speaking of which, where is Shaun? Not been on the forum for three weeks.

Probably taking a political detox

Sounds like a good idea.

[senti]

Traders generally use much larger percentages of their capital to trade than gamblers so if you let the bet run you're just trusting a large chunk of your capital to luck, which defeats the object of trying to make money trading.

I've found this to be true.

With betting my level of control is low so I have to mitigate it with small stakes and a high volume of bets.

With trading live my level of control is high since I'm more reactive to the behaviour of the market. Rather than a fixed stop loss, there are certainly moments when I know I should get out to not ruin the risk to reward in a short period of time. And yes even if it's +EV in the long run I will get out because my risk is too high to let it run, simple as that. I'm trading the moment, so the time frame is crucial. I will not turn my trading into betting. I treat them as different businesses.

As I trader I don't want to "pay" for the bad moments in the market. But when I bet I'm willing to do that, but the risk will be reduced.

[Emmson]

Maybe I'm the reason Shaun has gone

In the This Forum thread I posted

Shaun's post had a trace of superciliousness about it as if I'm maintaining standards but the rest of you rabble have turned the place into a bear pit. That is how I read it anyway.

viewtopic.php?f=2&t=28300&start=15

Don't think it was outside the bounds of civility but it was what I thought at the time. Hasn't been seen since

PS I also misspelt supercilliousness

[Atho55]

Too much drivel, bickering and not enough moderation.... in a nutshell