Trading bank

[redtra]

HI,

I've been trying to get to grips with trading for a few weeks now but seem to get to a point where my bank very gradually increases then quickly disappears It could be due to me wanting to increase it too quickly after a few days of trading and putting trades on which I shouldn't. Also, I have a feeling it is due to having a bank which is too small compared to the trades I put on. The bank I use is 50 and my trades are 5 or sometimes 10.

I've looked at loads of youtube videos about trading but they all start with large stakes...large to me that is of say 100 or 200...so am wondering if it is not possible to start trading without a substantial size of bank.

Any suggestions for bank size / trade size would be very much appreciated.

[mugsgame]

HI,

I've been trying to get to grips with trading for a few weeks now but seem to get to a point where my bank very gradually increases then quickly disappears It could be due to me wanting to increase it too quickly after a few days of trading and putting trades on which I shouldn't. Also, I have a feeling it is due to having a bank which is too small compared to the trades I put on. The bank I use is 50 and my trades are 5 or sometimes 10.

I've looked at loads of youtube videos about trading but they all start with large stakes...large to me that is of say 100 or 200...so am wondering if it is not possible to start trading without a substantial size of bank.

Any suggestions for bank size / trade size would be very much appreciated.

Your bank size must be able to withstand your losses. I think we all have different views on what this constitutes.

If you're talking about pre race ladder trading here (I presume you are). I would have no problem with using ALL my bank if I needed to. But there are some caveats with that. If you have been watching videos on YT I'm sure you will have come across mine. My starting point for most trades is £200. I then add to this as the odds move in my favour, I do this as it moves the point where I am going into a negative position further away and in effect gives more protection from a reversal. I don't want to compare my bank size as I get involved with trades that I use substantially more that this in, so I need the extra bank size. I'll use your bank as an example:

If my bank was £50 (and it doesn't matter how much it is, once you're confident of making money consistently you can use that money to make more money) I would be using £10 units. If I got 3 ticks I'd stick in another £10 etc. If I was 15 ticks to the good and the price was still moving, I would have no problem with putting the whole lot in. You will be a long way from a loss. If the price moved against me it's only 1 click to exit. The thing to remember is your loss postion. How much of your bank are you willing to loss on a trade? For me I would say around 25% of my initial stake so that would be £2.50 or 5% of my bank. This depends on your strike rate and how much you can make.

I think you have your stake size spot on. What you may need to do is manage your expectations about winning. What I found is that you can walk away with a £100 profit relatively easily. But that would be £2.50 on a £50 bank. You can be just as successful, but when dealing in amounts that don't really matter if you win or lose it can affect your decision making process massively. You're tempted to let trades run for longer. I get comments often about my videos. like "Why did you close there, you could have left it for a while longer and it would have come back". Yeah ok, You stick £1k of your money in and see how brave you are mate! See what I mean? In no way am I trying to demean your bank size, just trying to help you with perspective.
I would say stick at learning with £50, It's completely sensible. But treat every trade as if it's ten times that amount. If you walk away with £1 profit it could have been £100. Take heart from that. If you can increase your bank from £50 to £100, that is in effect the same as taking £1000 to £2000 or £5000 to £10000. Although you reach a ceiling quickly when you just cannot stick £2k trades in just any market. Getting in is always easier than getting out when it goes tits up. Hence my trade size. It isn't I don't trust my ability, it's because in volatile markets an exit route is the number 1 priority. The best way to make money is not to lose it!

Stick to this trade size until you have a bank of say £75. Then increase it as a percentage of this. If you lose it, then go back to the original staking. Good luck, Hope this helps. I am not saying this is cast is stone, it's just my perspective. Others will have different ones. It's about finding the right balance for you. MG

[Alpha322]

Your bank size must be able to withstand your losses. I think we all have different views on what this constitutes.

If you're talking about pre race ladder trading here (I presume you are). I would have no problem with using ALL my bank if I needed to. But there are some caveats with that. If you have been watching videos on YT I'm sure you will have come across mine. My starting point for most trades is £200. I then add to this as the odds move in my favour, I do this as it moves the point where I am going into a negative position further away and in effect gives more protection from a reversal. I don't want to compare my bank size as I get involved with trades that I use substantially more that this in, so I need the extra bank size. I'll use your bank as an example:

If my bank was £50 (and it doesn't matter how much it is, once you're confident of making money consistently you can use that money to make more money) I would be using £10 units. If I got 3 ticks I'd stick in another £10 etc. If I was 15 ticks to the good and the price was still moving, I would have no problem with putting the whole lot in. You will be a long way from a loss. If the price moved against me it's only 1 click to exit. The thing to remember is your loss postion. How much of your bank are you willing to loss on a trade? For me I would say around 25% of my initial stake so that would be £2.50 or 5% of my bank. This depends on your strike rate and how much you can make.

I think you have your stake size spot on. What you may need to do is manage your expectations about winning. What I found is that you can walk away with a £100 profit relatively easily. But that would be £2.50 on a £50 bank. You can be just as successful, but when dealing in amounts that don't really matter if you win or lose it can affect your decision making process massively. You're tempted to let trades run for longer. I get comments often about my videos. like "Why did you close there, you could have left it for a while longer and it would have come back". Yeah ok, You stick £1k of your money in and see how brave you are mate! See what I mean? In no way am I trying to demean your bank size, just trying to help you with perspective.
I would say stick at learning with £50, It's completely sensible. But treat every trade as if it's ten times that amount. If you walk away with £1 profit it could have been £100. Take heart from that. If you can increase your bank from £50 to £100, that is in effect the same as taking £1000 to £2000 or £5000 to £10000. Although you reach a ceiling quickly when you just cannot stick £2k trades in just any market. Getting in is always easier than getting out when it goes tits up. Hence my trade size. It isn't I don't trust my ability, it's because in volatile markets an exit route is the number 1 priority. The best way to make money is not to lose it!

Stick to this trade size until you have a bank of say £75. Then increase it as a percentage of this. If you lose it, then go back to the original staking. Good luck, Hope this helps. I am not saying this is cast is stone, it's just my perspective. Others will have different ones. It's about finding the right balance for you. MG

Intersting Post MG i have always wondered how traders have divided there banks. I felt i was over streching mine with things like Betfair crahes i think that is the real risk now and not PC failure or money management although the both still have to be taken into consideration 5% max staking of capital is a good measure on the back side of the trade, i take it all the layside traes must be 2.5% depending on odds

[mugsgame]

I should add that I am talking about the "bank" in use. Where I used to keep upto 30k in my Betfair account, those days are long gone. I have some back up banks in case of disasters like a crash.

The Lay depends on the odds, you would need to tailor the liability to the odds and bank size. I am quite undisciplined with my staking on ladder trading, it's more seat of the pants. I think if to create a maximum LOSS position you are willing to except, and then trade around that, regardless of you stake, that will keep you on the right side of things. Does this make any sense?

[redtra]

Thanks for your in depth reply MG...such excellent info that I am going to read it over a few times and then try it out for real! There are loads of youtube vids to watch and yes I have seen yours. In fact I've watched all of your vids and must say they are the best I have watched. They are teaching me so much more then all the time I've spent trying to find stuff out and I really like the way you show how to get out if things start to go the wrong way and also how to use stop losses...which I am doing now. Your videos which show how you go about finding a selection are so helpful that I now try and find my own,using your methods,then look at your video and see how I can be more selective.

It is good to know my bank is ok for starting with and I intend to increase along the lines you suggest. One of the reasons for it sometimes going pear shaped is that I seem to be able to find a selection in every race so if the odds are at say 6 or 8ish, then a large portion of the stake can get used up quickly if the market goes against. But after reading through what you say about ticks, I will now limit my selections to around odds of 4 or 5 max so each tick isn't so much.

Thanks again and look forward to more of your vids!

[L.o.S]

To add to what mugs has said, if you're worried about trading at larger odds, just use very small stakes. There's nothing wrong trading out past 6's and 10's with £2 stakes, just to get a feel for how it's going. You can always scale up later or even decide that you just don't like bigger odds and leave it.

If you are scalping @ 10's and it goes against you, your potential downside is getting out for a loss @ 9.8, or even 9.6. Whereas a tick for you is 10.5, so the upside far outweighs the downside so long as you're careful.

Hope this helps!

[redtra]

Thanks L.o.S that is really helpful and a great idea to use smaller stakes the bigger the odds. I won't mind trying out the trades now to get a feel for bigger odds. Cheers.