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

[spreadbetting]

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.

I'm no expert but I'd have thought the opposite, I'd imagine most traders have a preference for their entry points and backing/laying both have their positives and negatives.

One thing I noticed with a lot of novice traders was they were more inclined to let trades go in play when laying first, I guess a screen of green with one red was worth taking a chance on compared to a sea of red with one green.

If you want to get nerdy about it you can do some number crunching to see if you're more successful spotting steamers rather than drifters. If we break trading down to the basics it's simply a set of back bets and lay bets. The only way we win is by getting value on at least one side of those bets. The ideal situation is that we get value on both sides of our bets, but for numerous reasons we may sell that value back to the market too cheaply. So simply downloading your betting history by sport and subtotaling the lays and backs separately should give some indication of where you're acheiving value if your bets are purely traded only.

[LeTiss]

Your dilemma with staking is one I faced in the early days, especially as I had a natural tendency to gamble

The way I transformed myself, was to forget about pure money, and treat everything in ticks. So, every trade I done was with a view to make £1 after greening for every tick. Therefore, if I backed 1.80 - it would require £180 stakes. If I layed 1.80, it would also require £180 stakes, but with £144 liability. This meant all I needed was more winning ticks than losing ones to be in profit. My stakes and losses were finally under control, something that all traders with gambling insticts would appreciate

I done my calculations with Excel, and have asked BA on a number of occasions to add a drop down box for Tick Size After Greening

Sadly, PW hates the idea

[sharkky]

Tick profit after greening is something I've wished to have to for a while also. First time I used '£ per tick' i thought that's what it would do, then ended up confused before I realised that it was running the calc pre-green, which seemed daft to me since I'm always hedging anyway. I wanted the green/red figures in the p/l column to be in set increments so I could operate in terms of standard ticks.

What am I missing? Why is it a hateful idea

[ShaunWhite]

Step changes are the issue with '£ per tick' I'd have thought. And is it even linear when you hedge?

I'm trying to deliberately do the opposite today, just as an exersice...feels like my gloves are on the wrong hands . ..i'll read all your comments properly later. thx

[LeTiss]

I understand what you're saying Shaun, and I can only assume that's why BA consider it difficult to implement. They already have a Tick Size option, however if you're backing odds of 3.00 to lay off at 2.98, that would require different stakes to laying 3.00 and backing for a profit at 3.05

I suppose it's because PW doesn't come from a betting background, or doesn't understand how gamblers struggle with discipline and staking.

Ticks with Greening is the only reason I'm still here trading, otherwise I would have disappeared into the abyss years ago with many others

[Crazyskier]

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.

Backing ALL of the others, in fact

[ShaunWhite]

I'm convinced my lay first tendancy is costing me money, enough to make it a real concern. I realise I may be teaching my granny to suck eggs here but for my own sanity:

Take a hypothetical trade starts at 3.5 and makes 10 ticks profit.

Hedging at 3.0 returns 32% more profit than hedging at 4.0 or from the other view...hedging at 4.0 returns 24% less profit than hedging at 3.0.

Also when laying first, each tick up earns you less than the cost of each tick down.

I don't understand why this isn't mentioned more, or is just passed over as being largely insignificant. Maybe the game doesn't work if we're all pulling on the same end of the rope? But I'm sure that's not the reason as there's plenty of other parties with an interest in pulling in the opposite direction.

The real answer is undoubtedly "do what works best for you". Afterall 32 extra points profit won't make up for being 50 points worse at doing it. But in people's early development, where they're neither left or right handed, so to speak, they might find it useful to know.

[Naffman]

Its okay to have a tendency but its no good just putting a lay bet in willy nilly you have to actually have reasons to and expect something from the trade.

[spreadbetting]

I'm convinced my lay first tendancy is costing me money, enough to make it a real concern. I realise I may be teaching my granny to suck eggs here but for my own sanity:

Take a hypothetical trade starts at 3.5 and makes 10 ticks profit.

Hedging at 3.0 returns 32% more profit than hedging at 4.0 or from the other view...hedging at 4.0 returns 24% less profit than hedging at 3.0.

Also when laying first, each tick up earns you less than the cost of each tick down.

I don't understand why this isn't mentioned more, or is just passed over as being largely insignificant. Maybe the game doesn't work if we're all pulling on the same end of the rope? But I'm sure that's not the reason as there's plenty of other parties with an interest in pulling in the opposite direction.

The real answer is undoubtedly "do what works best for you". Afterall 32 extra points profit won't make up for being 50 points worse at doing it. But in people's early development, where they're neither left or right handed, so to speak, they might find it useful to know.

I think you're confusing yourself as you're not comparing like with like. Imagine you're scalping would you rather take a 1 tick lay starting at 10 or 1 tick backing? A back at 3.5 closed at 3 is the same spread as laying at 3 and closing at 3.5. Laying at 3.5 and closing at 4 is not the same thing, the market will dictate which way it'll move from your opening position not which way is more beneficial in terms of %.

[ShaunWhite]

the market will dictate which way it'll move from your opening position not which way is more beneficial in terms of %.

I'm not confusing the two, I'm just illustrating that when you hedge at a higher price you effectively lose value. You're talking spreads when I'm talking #tick swings from a given point.

I'm certainly not suggesting adopting a particular strategy, it's just the maths not a modus operandi.

But isn't it the case though, that if you're sat there with a free bet, just about to hedge, you'd rather be looking at a price shortening than lengthening

[ShaunWhite]

its no good just putting a lay bet in willy nilly

? I was never suggesting that, that would be ridiculous.

[spreadbetting]

I'm not confusing the two, I'm just illustrating that when you hedge at a higher price you effectively lose value. You're talking spreads when I'm talking #tick swings from a given point.

I'm certainly not suggesting adopting a particular strategy, it's just the maths not a modus operandi.

But wouldn't I get more profit taking 5 ticks laid at 10 rather than taking 5 ticks backed at 10?

[ShaunWhite]

But wouldn't I get more profit taking 5 ticks laid at 10 rather than taking 5 ticks backed at 10?

You would in that case because of the step change. 9 (5 ticks ) <-10 -> (5 ticks) 13

That's why I chose 3, 3.5 and 4, the interval is constant. Rising or falling through step changes adds a lot more twists, as does whether you've got it wrong or right (red or green). No doubt a lot of these pros and cons balance out.

Thank goodness for Excel, i feel a heat map might be necessary to find the hot spots for a given movement, at all initial prices, starting one side of the other.

Yes I know it's all become over complicated , and I only really started this by saying it's better to hedge at low prices (true?); but how's a man supposed to accumulate lots of pretty speadsheets if he's not allowed the occassional over complication? I'm just as happy to be proved wrong as I am to be proved right.

[spreadbetting]

All I'm pointing out is you can't just cherry pick points on the ladder that will back up your point when there's numerous other points on the ladder that disprove your theory. If you want to compare backing and laying you need to compare them with the same exit and entry points otherwise like I pointed out with 2,6,10,50,100 as a starting points it's just not equal.

If we consider your point about laying off free bets ,obviously it's more beneficial to lay that off at the lowest price possible, when laying first we've already that.

[ajdal]

... and I only really started this by saying it's better to hedge at low prices (true?).

True