How do you stake when trading?

[Yirkaa]

There are many methods of staking you can use when trading. I am gonna write some and my understanding of them (which may be wrong, I am not a math person)

1) Level stake (e.g. Stake 10$ on 1.51 as well as on 7.6)
- Obviously thats not optimal at all. Larger the price the more money you need to have in your account and you are risking much more on higher prices than on lower ones.

2) Stake accordingly to the price level (e.g. put 40$ on 4,6 and put 100$ on 1,51)
+ Your tick has similar (not same in my case, I am mostly guessing) value after greening out thorough the ladder.
- You need to switch between prices, manually change them, it creates confusion and room for error.
Do you know how to calculate optimal stakes so 1 tick returns same money after greening out regardless of price?
- You will have larger liability on higher prices

3) Stake by Tick Size (e.g. Tick size = 1$)
+ Convenient, easy to use. Does scaling automatically
- Not objective when you green out. I will use example.
You are betting 1$ per tick. Price goes down from 5,4 to 4,4 = 10 Ticks. When you green out you have +2,27$

You do the same and lay 1,83 and win 10 ticks again. This time you green up for +5,78$ thats 2 times as much.

Of course its much harder to get 10 tick move under 2 than same move over 4 but I want to be rewarded same amount of money when I get it right. Its maybe silly but now I am reluctant to go in trades under 2 because 4 tick loss is suddenly much more than same 4 tick loss on different price.

Of course these things does not matter much when scalping but when swing trading it can have profound effect on profit/loss. Did anyone make a research (or is it obvious?) as to which staking strategy is the best for swing trading?

Which one are you using?

I really hope this post makes sense. I was writing it for 2 hours and got kind of lost in it.

[LeTiss]

When I first started out, I had problems with staking. I'd have a habit of punting too much on bigger prices, and so when it turned the losses were disproportionate to my winners on shorter prices

I started calculating my stakes so I'd win the same amounts, or lose the same amounts after greening. If it was £5 - I'd stake £750 on 1.50, or £340 at 3.4 etc

This meant I measured everything in ticks, it was crucial in allowing me mentally to take a red. I used to get blinded by my P+L, but now I just concentrated on having a day of more winning ticks than losers. I knew I could get a positive amount of ticks per day, so didn't bother at trading out for a £5 loss, because I knew I'd always make something at the end of the day

I know a few who trade like that, so I'm very surprised BA has never had a drop down for 'ticks after greening'

[Yirkaa]

Thank you LeTiss 4pm. I am having same problem as you had but I just cannot seem to figure out how to calculate my stake so the ticks are the same after greening out. I feel I need it to have objective results.

It hit me only today when I had quite a big loss on short price favourite (like 7-8 ticks) and then I thought I will recuperate on next race (went from 3,5 to 5+) and win from that race did not even cancel out my previous loss. (I was using tick size = 0,2)

That alone told me that I cannot focus on P/L because at these stakes its just not objective. I do not care about money won/lost. I need it in ticks to track my progress. Ticks are more important

I spent about 4 hours trying to figure out some formula for my 200 pound bank but I just could not. I feel pretty stupid now...but I will try tommorrow in practice mode. Trial and error and then use some reverse engineering and maybe I will get my stakes

[LinusP]

This might help, its something I use to calculate profit / loss when automating stuff.

Just put in the odds, amount and if it is a back or lay and the spreadsheet will tell you your profit and the amount of ticks.

[LeTiss]

It would be a lovely addition on BA, and fairly simple too, but here's a basic guide for you

If your bank is £200, then aim for £1 tick after greening, as backing Evens at £200 will be your maximum bet

Odds 1.01 - 2.00 = the price*100 (therefore a selection at 1.68 will be £168 stakes regardless of laying or backing, followed by laying £169 at 1.67, or backing £167 at 1.69)
If you were increasing those tick sizes with an increase in bank, then for 1.68 = £168*Tick Size(£1680 for £10 per tick etc)

Odds 2.02 - 3.00 = the price*50 (therefore backing 2.42 will be £121 stakes, followed by £122 at 2.40 for a £1 green up)

Odds 3.05 - 4 = the price *20 (therefore backing at 3.75 = £75, followed by £76 at 3.70)

Odds 4.1 - 6 = the price *10 (therefore backing at 5.5 will be £55 followed by £56 at 5.4)

Odds 6.2 - 10 = the price *5 (therefore backing at 8.2 will be £41 followed by £42 at 8)

Odds 10.5 - 20 = the price * 2 (therefore backing at 14 will be £28 followed by £29 at 13.5)

Odds 21 - 30 = the price * 1 (therefore backing at 27 will be £27 followed by £28 at 26.00)

[Yirkaa]

Thank you so much LinusP and LeTiss 4pm. I think I love you guys

I started to write reply to LinusP for being so helpful but that I would need it reversed (which I would probably figure out from the excel eventually)and wanted to ask him why do you need between every tick different stake because I thought there is no difference between 2,02-2,04 and 2,74-2,76 and it just did not made sense to me, when LeTiss 4pm answered and explained just that question.

I am really glad that I got it answered because this has bugged me since beggining and I could not even formulate the question until now. I agree that it would be lovely addition to BA and could be helpful to other newbie traders like me. Its extra work with manual stakes but this staking will not make your PL distorted and you can focus on what is really important. THE TICKS!

[LinusP]

Ok here is a very backwards spreadsheet that calculates it, just change the cells with borders and it will tell you what stake to use depending on the profit/ticks you are after..

[Yirkaa]

Thanks, I appreciate it a lot! I put link of this thread on my blog (not that anyone reads it anyway ) and I feel this really should help me a lot.

[switesh]

...Of course its much harder to get 10 tick move under 2 than same move over 4 ...

It's the opposite my friend.

On a general note, I don't use BA tick size, nor fixed stake - I find both these staking methods regimented.
I usually use the staking method very similar to the one you mentioned in point 2 and I often vary my stake according to what I think the volatility will be for any given price point.
Also, when the market is dense (big) I scale up my stakes accordingly and almost use entire amount of my small bank.

When opportunities are big you gotta swing big (especially if you have a small bank like me) - hit it with everything you got.

I've got a spreadsheet that calculates $1 green per tick for every price point. I'll upload it later tonight form home. Generally it consumes slightly less stake when backing first than laying.

[Yirkaa]

...Of course its much harder to get 10 tick move under 2 than same move over 4 ...

It's the opposite my friend.

I would say it depends but I agree that my statement was probably wrong and I have no data to back it put. It was just my feeling from that day of trading.

I've got a spreadsheet that calculates $1 green per tick for every price point. I'll upload it later tonight form home. Generally it consumes slightly less stake when backing first than laying.

If you could do that, it would be awesome!

I am gonna be using minimal stakes until my trading settles a bit and I get controls under my skin. Then I am gonna hit it hard

[LinusP]

Switish is right, the movement off the odds is often a function of the slack in the book. Have a look at this video from mugs..

http://www.quiteamug.co.uk/education ... et-part-2/

[switesh]

Here's the spreadsheet (attached).

I've uploaded a video explaining how to use it:
http://youtu.be/fvQGDO8YSd0

[Apex]

Thanks for sharing very much appreciated!

[Yirkaa]

Thank you switesh. Both, spreadsheet and video are much appreciated!