Profit to Loss Ratio's

[Morbius]

Hi guys, I would just like to ask some of the more experienced sages on here what profit to loss ratios you aim for trading the horseracing markets pre-race??

I know this is strategy dependent as a scalper may opt to go for 1 tick and have a single tick stop loss etc and some traders over longer time frames may go for more ticks or bigger profit to loss ratio's. So without asking anyone to divulge anything they don't feel comfortable with and some may say "it depends" anyway...I just wondered what you guys aimed for

[Derek27]

I calculate my P/L ratio for individual meetings so I can see how I'm doing relative to other meetings. My overall P/L ratio has never interested me, but now that you've mentioned it, it would be interesting to run a query.

[Euler]

It will vary by style so there is no general answer.

[Morbius]

I calculate my P/L ratio for individual meetings so I can see how I'm doing relative to other meetings. My overall P/L ratio has never interested me, but now that you've mentioned it, it would be interesting to run a query.

Seeing as I don't know how you trade and I am not asking the correlation between your average P/L and your strike rate is something you should look at Derek IMO. However it is interesting that you do this on a meeting to meeting basis.....could I be so bold as to ask why???

[Derek27]

I calculate my P/L ratio for individual meetings so I can see how I'm doing relative to other meetings. My overall P/L ratio has never interested me, but now that you've mentioned it, it would be interesting to run a query.

Seeing as I don't know how you trade and I am not asking the correlation between your average P/L and your strike rate is something you should look at Derek IMO. However it is interesting that you do this on a meeting to meeting basis.....could I be so bold as to ask why???

There are different ways of calculating P/L ratios and strike rates. I've honestly never understood what's relevant about strike rates. You can win 99% of the time and lose it all and more the other 1%!

I calculate my P/L ratio by profits / (profits + losses), so it's on a 0-100% scale where 50% is break-even. I calculate it on a meeting by meeting basis because that's all that's relevant. I want to know what areas work best for me. It's all relative to a particular trader. One trader might make millions with a P/L ratio of 52% whereas another could make 80% but struggle to get his bets match, due do different trading styles and markets.

[eightbo]

i do that as well derek, I've imaginatively called it P.Ratio, generally aim for 65%+ by the end of the week but often fall short

[wearthefoxhat]

i do that as well derek, I've imaginatively called it P.Ratio, generally aim for 65%+ by the end of the week but often fall short

Nice work.

Here's an example of mine over last 7 days or so. (cumulative)

current.jpg

[goat68]

My losses are about 1.5x my winners on average, but I'm not profitable in the long run yet....... probably explains it!
How do you guys have such great smooth PnL graphs???

[goat68]

Agree with what others said ratio itself doesn't matter, if I reduce my loss size I then reduce my win strike rate... In the end I'm just interested in how profitable I am and trying to improve that........

[rik]

There are different ways of calculating P/L ratios and strike rates. I've honestly never understood what's relevant about strike rates. You can win 99% of the time and lose it all and more the other 1%!

I calculate my P/L ratio by profits / (profits + losses), so it's on a 0-100% scale where 50% is break-even. I calculate it on a meeting by meeting basis because that's all that's relevant. I want to know what areas work best for me. It's all relative to a particular trader. One trader might make millions with a P/L ratio of 52% whereas another could make 80% but struggle to get his bets match, due do different trading styles and markets.

agree of course strike rate is useless without average win/loss
depending on strategy or if your a beginner letting losing trades run etc you might have a good strike rate but overall loss

i dont get why dont you just divide your wins by your losses instead of your wins+losses that way you get a percentage of how much bigger your wins are compared to your losses

say you won 1000 and lost 800 in a time period youd have a ratio of 1.25 or in percentage won 25% more than you lost
by your calculation youd get 55.5% but why would you want a percentage compared to your turnover rather than your losses

generally if you have a long term ratio of 2 or 3 to 1 you should think about increasing your stakes and adding more marginal trades your not maximising your profits

have to be careful though if your having many trades in one market your edge can be much less than youd think say you were trading in and out every service game or every changeover in tennis or trading many runners at the same time your prof loss ratio for each trade will be a lot worse.
you average 20 trades in a tennis match or horse racing market you could have a ratio of 40% even though per trade its just a couple percent

[Morbius]

I calculate my P/L ratio for individual meetings so I can see how I'm doing relative to other meetings. My overall P/L ratio has never interested me, but now that you've mentioned it, it would be interesting to run a query.

Seeing as I don't know how you trade and I am not asking the correlation between your average P/L and your strike rate is something you should look at Derek IMO. However it is interesting that you do this on a meeting to meeting basis.....could I be so bold as to ask why???

There are different ways of calculating P/L ratios and strike rates. I've honestly never understood what's relevant about strike rates. You can win 99% of the time and lose it all and more the other 1%!

I calculate my P/L ratio by profits / (profits + losses), so it's on a 0-100% scale where 50% is break-even. I calculate it on a meeting by meeting basis because that's all that's relevant. I want to know what areas work best for me. It's all relative to a particular trader. One trader might make millions with a P/L ratio of 52% whereas another could make 80% but struggle to get his bets match, due do different trading styles and markets.

.


Sorry...I may have misled people with the wording of the OP. Clearly strike rate on its own is insufficient otherwise as you say...99% can still lose and you would fall victim to every scamming system seller who promises a high strike rate. All you have to do is Dutch the contenders randomly for that

What I was referring to was if you have a stop loss of say 5 ticks etc....what do you aim for on the plus side...0.5:1......1:1......1.5....etc etc....thats probably worded better

[rik]

i doubt a generic approach is optimal
what if there is large bet large looking to get matched at 4 ticks you your trying to get matched at 5?
what if there is a clear drift/steam your going to trade out because you reached your target?
you close your position if you think its more likely price will move the wrong way or you run out of time

[Morbius]

i doubt a generic approach is optimal
what if there is large bet large looking to get matched at 4 ticks you your trying to get matched at 5?
what if there is a clear drift/steam your going to trade out because you reached your target?
you close your position if you think its more likely price will move the wrong way or you run out of time

Hi Rik, thanks for replying buddy

It probably wouldn't be optimal if you were trading manually but then again it most certainly could be for one big reason. This is because human psychology isn't ideally suited to trading (talking horseracing pre-race markets here) and basically cannot be trusted to make efficient decisions especially under time pressure or financial pressure. There is too much cognitive bias in the decision hence why people strive to automate because these flaws are removed.

So automation or an "algorithmic process" performed manually when compared to an entirely manual process where the trader was using their own experience and "live feel" and each would have their advantages and disadvantages.

Clearly an experienced manually operated style would pick up more detail than a bot in some instances but that wouldn't automatically make that process more efficient from a perspective of maximising return. So I think this rabbit hole goes quite deep Rik but so as not to generalise too much and get more into what I was driving at, somewhere IMO there is a trade off with this because one approach is trading directionally while the other is leaning towards trading volatility.

[Derek27]

i dont get why dont you just divide your wins by your losses instead of your wins+losses that way you get a percentage of how much bigger your wins are compared to your losses

I used to do that but I prefer a 0-100% scale. Simply dividing profits by losses means 100% is break-even and all winners becomes infinity.

[Morbius]

i dont get why dont you just divide your wins by your losses instead of your wins+losses that way you get a percentage of how much bigger your wins are compared to your losses

I used to do that but I prefer a 0-100% scale. Simply dividing profits by losses means 100% is break-even and all winners becomes infinity.
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Derek... I don't quite follow what you've just said... Could you give an example please