Recent "Starting out as a sports trader" blog - A question

[ShaunWhite]

Peter, I read your latest blog posting with interest and not suprisingly tried to compare my performance with yours.

Q. One of the screenshots you posted shows a trade for £64, so I take it that you weren't always using a significant proportion of your whole bank. Difficult question I know but on average, how much was your exposure in order to make that £2.30? Basically do you have any sort of average return/exposure figure? If it wasn't close to £400 you did significanly better than the 8% ! The thing is I have a largish bank 'just in case' but don't use much of it, so I'm finding a comparison difficult.

[Euler]

Your return (or losses) will be limited to a % of your available funds so I always try and max out my position to what funds I have available. I'll risk my entire bank on a trade at these levels to max my return, but I wouldn't generally recommend that. Each trade has a standard deviation or return +ve or -ve, so if you are trading properly there is no reason why the -ve should equal -100%.

I'm confident at getting a +ve trade and not letting a loss get out of control. If you let the loss spiral here you could lose the entire bank, but I know that's really unlikely to happen unless there is an external factor of some sort. I.e. a Betfair crash.

For that reason, it would make sense to split a normal trading bank in two or more to have a reserve fund in case of catastrophe. I tend to find myself not able to put all the money I want into the markets, so I automatically park spare cash into another wallet. So I tend to run on a daily basis with whatever I feel I can use.

[ShaunWhite]

So the £64 'back first' trade in the screen shot wasn't typical ? Or was it simply that you had a preset £64 selected (for prices up to say 7.0) in case you wanted to react quickly and lay first?

Perhaps I'm being naive but couldn't you have used a much larger amount if you were backing first? I'm not saying you should....just inquisitive about the concept around maximising your bank as it's not something I've done, as I'm on relatively modest amounts still. I'm just checking if there was any technical reason you couldn't have placed a £400 back bet if that was the first side?

Sorry the question goes on and on but writing is never as easy as talking when it comes to explaining.

[ShaunWhite]

An example might help explain what I mean, and hopefully you'll be able to give me a nice short answer. (The 100% use of the bank below is obviously extreme but illustrates the point)

So with a bank of = £300

Scenario 1 : Back first
Back £300 @ 5.1
Lay £306 @ 5.0
Green £6 (maximum exposure was £300)

Scenario 2: Lay first
Lay 75 @ 5.0
Back 73.53 @ 5.1
Green £1.47 (maximum exposure was £300)

Scenario 1 returns 4x that of scenario 2, for the same use of your bank.

So to really maximise my bank, should I be looking to trade a larger amount if I back first?

The preset trade sizes apply equaly to both sides of the ladder, so doing this on the fly is tricky. Am I missing a trick with a setting/feature that will allow me to set my liability for each side equally?...in the example above that would be £300 for a bet and £300 liability for a lay?

[Euler]

I tend to flex my trade value up and down according to how confident I am with that particular market and trade. So I start low and build my position if I feel I am reading it well. So my stakes rise and fall on each trade up to the max I can use.

[LeTiss]

Don't forget Shaun, the example you gave will also return 4*losses if you get it wrong. If you get it wrong where the selection rapidly turns 5 ticks, you have lost 10% of your bank (£30) - overstaking is one of the biggest traps traders fall into

[ajdal]

I always think of backing first as leveraging.... very tempting, lovely when it works, but when it goes wrong....

[Euler]

You should use your liability as the reason to open a trade. Better to pick a decent trade then worry about the size or liability at that point.

[ShaunWhite]

Thanks all...

"if you get it wrong" LeTiss? "If" ? There's no ifs, I'll definately be getting it wrong, almost as often as getting it right actually

I'm not using my bank this agressively and don't plan to, i was just wondering why I'd never heard it mentioned, either as a do or a don't.

[ubetido]

Hi Shaun

That's a great question and something that i wrestled with for a while.

Back 500 @ 5 and your liability if a catastrophe happens eg internet issue etc is 500
Lay 500 @ 5 and your liability is 2000.

Catastrophes aside
I would think the increments come into play, .01 for an odds on 1.9 vs say a .20 for a 8.0 (2000)bank
Back 1000 @.01...10 per tick
Back 1000 @.20...200 per tick

You would start to get nervous i would think if the latter went 5 ticks against you vs the .01 which would be 50 v 1000. (50% of your bank)

I would think it comes down to working out your Bank / Max risk/ risk tolerance etc.

Regards
Ubetido

[ShaunWhite]

I appreciate everyone's input to this..

One of the reasons I've been thinking about this is that I seem to trade a bit one sided (maybe 80% lay first) without any conscious intention to. It made me think about any issues surrounding this. Staking/bank was obviously one consideration, excellently answered above, and the other bigger issue is the obvious lack of efficiency when greening.(bigger odds = smaller green).

The opportunites should come roughtly 50/50 as I only trade the favourite a vast majority of the time, but do/did you guys also have a natural tendancy to respond to either drifters or steamers more readily? I'm not sure my habit is one I should be allowing to become ingrained.

I know the correct answer is simply to find the best trade either way, and a profit is a profit, but given a choice, I do wish my 'trading glasses' were wired the other way round.

[Bluesky]

I seem to trade a bit one sided (maybe 80% lay first) without any conscious intention to.

I'm the exact opposite of this, vast majority of my trades are back first, but like you I am concerned that my trading is too one sided.

I also mainly trade the favorite or second favorite, and unless I see good reasons to oppose the favorite I assume it will carry on shortening in price. Unfortunately my assumptions don't always coincide with reality.

I would imagine the expert traders would end up around 50/50 back or lay first, it would be nice if some of them would comment on this though.

[Euler]

You should try and pick a specific entry on either side and become good at it. It doesn't really make a great deal of difference if you open on either side, just that it's a good position.

All prices in the market and inter-related so something coming in on one side will be sending something out in the other direction.

[Naffman]

I'd say I'm 75% inclined to put a lay in first so I guess we all have our preferences. But like Peter says if we are laying one horse its almost as if we are backing another.

[ShaunWhite]

It doesn't really make a great deal of difference if you open on either side,

Except for the fact that I'm losing more (gaining less) of my earnings by greening at a larger price, often by quite a lot.

All prices in the market and inter-related so something coming in on one side will be sending something out in the other direction.

The analogy I always use is that it's like squeezing a ballon.

Bluesky & Naffman, thanks. That's interesting to hear. No topic is ever far from phsycology. I wonder if it comes down to early sucess burning in a preference or something more fundamental like optimist vs pessimism.

The only thing I can think of for me, is that I probably perceive there to be more room above a price than below, so a move into that space feels more likely. On a scale of 1 to 1000, 4 naturally feels very off-centre. I know the maths doesn't bear this out, but try telling my brain that.