Loss Recovery Systems

[Morbius]

Just like to say a big thankyou for everyone who has taken the time to reply. I will read and digest your posts in detail later today and get back....I guess what Peter said in his article about "taking losses like a man" must mean that I perhaps have a lot of growing up to do

[Morbius]

What I forgot to mention in the OP and in regards to something that was troubling me was in the difference between a martingale on roulette which because of table limits must lose 100% of the time over time and something that is structurally similar in horseracing where there are factors that make it different.

My problem and what I couldn't figure out was if a loss avoidance system or whatever you want to call it wouldn't lose 100% of the time in the long run like a conventional martingale but would in fact be profitable over time but this time period and the stochastic process left it difficult to see the end of the road when large losses are warping our perception. So bottom line, I was wondering if long sequences of winning races were overcoming the large losses but it took maybe a much longer sample size to prove profitability than many people were allowing for.

Sorry if I am waffling again lol

By 100% of the time, I think you mean 100% certain of losing eventually. All loss recovery systems that involve increasing stakes will lose eventually, unless you have a system that will win for eternity! We all have limits whether it's a house limit or your bank limit.

I've explained the maths behind the Martingale in the post below and it really applies to anything where the true probability is worse then the odds you're taking - it applies equally to horse racing or trading.

viewtopic.php?p=225047#p225047

Actually Derek as one of the previous posters alluded to as did Peter, the title of this thread may have been worded badly and I apologise for that but as someone pointed out, the method I have been using while escalating has also been trying to use "dollar cost averaging" principles to erase a current red screen but I have run into problems when prices never retraced enough to go green and just like with options, theta (time decay) is a serious issue in these markets I am finding but is old news to all on here

[rik]

By 100% of the time, I think you mean 100% certain of losing eventually. All loss recovery systems that involve increasing stakes will lose eventually, unless you have a system that will win for eternity! We all have limits whether it's a house limit or your bank limit.

viewtopic.php?p=225047#p225047

mathematically you will lose eventually, that said not everyone using loss recovery is completely degenerate increasing stakes forever
its plausible someone didnt reach their limit for a while, paid out some money over time and on their max losing run what their willing to risk lost less than what they made overall
still anyone using higher stakes due to previous losses either doesnt understand math or likes to gamble

[Derek27]

By 100% of the time, I think you mean 100% certain of losing eventually. All loss recovery systems that involve increasing stakes will lose eventually, unless you have a system that will win for eternity! We all have limits whether it's a house limit or your bank limit.

viewtopic.php?p=225047#p225047

mathematically you will lose eventually, that said not everyone using loss recovery is completely degenerate increasing stakes forever
its plausible someone didnt reach their limit for a while, paid out some money over time and on their max losing run what their willing to risk lost less than what they made overall
still anyone using higher stakes due to previous losses either doesnt understand math or likes to gamble

That's unlikely to happen in a loss recovery system that recovers your entire losses, because you're winning peanuts and in a losing run you must have lost a massive amount to decide not to carry on increasing stakes.

[The Silk Run]

Welcome Morbious

From my personal perspective I do use Loss Recovery with great success, and long-term. I formulated my own system that is rather aggressive and used in my automation strategies. I think it works for some, and not others. And I think some members will listen to the responsible advice given by the Gambling Commission.

Good luck
Minnie LAI

[Derek27]

Welcome Morbious

From my personal perspective I do use Loss Recovery with great success, and long-term. I formulated my own system that is rather aggressive and used in my automation strategies. I think it works for some, and not others. And I think some members will listen to the responsible advice given by the Gambling Commission.

Good luck
Minnie LAI

'Loss recovery' is quite a broad term, but any strategy that involves increasing stakes or placing bets purely and solely because a previous bet lost is mathematically flawed. If such a system makes a profit it's not necessarily the staking plan that works but the strategy itself.

[rik]

By 100% of the time, I think you mean 100% certain of losing eventually. All loss recovery systems that involve increasing stakes will lose eventually, unless you have a system that will win for eternity! We all have limits whether it's a house limit or your bank limit.

viewtopic.php?p=225047#p225047

mathematically you will lose eventually, that said not everyone using loss recovery is completely degenerate increasing stakes forever
its plausible someone didnt reach their limit for a while, paid out some money over time and on their max losing run what their willing to risk lost less than what they made overall
still anyone using higher stakes due to previous losses either doesnt understand math or likes to gamble

That's unlikely to happen in a loss recovery system that recovers your entire losses, because you're winning peanuts and in a losing run you must have lost a massive amount to decide not to carry on increasing stakes.

thats incorrect, if your bets/trades were +expected value your more likely to double up than go bust
you had your example on roulette that covering a max losing run of 10 will result in 27% of doubling the bank
so if they paid out the 0 so you had a 52% instead of 48% chance to recover a loss that would therefore make 73% of doubling the bank

probably some guys will try to use the double bank to cover the 11th double up but others might still stick to their limit of 10

first problem is that 99% of people using martingale wont be able to find +expected value as they lack math in the first place

second problem doubling up 10times means your regular stake is 1/1023 so will take 1023 winning bets to double up, not efficient

third problem you still have 27% chance of losing your initial bank despite betting +expected value

on contrary if you bet a 1000 times with level stakes and 52% win rate your at 99% profitable. longer you bet the only realistic reason for being down is not getting value

[Derek27]

mathematically you will lose eventually, that said not everyone using loss recovery is completely degenerate increasing stakes forever
its plausible someone didnt reach their limit for a while, paid out some money over time and on their max losing run what their willing to risk lost less than what they made overall
still anyone using higher stakes due to previous losses either doesnt understand math or likes to gamble

That's unlikely to happen in a loss recovery system that recovers your entire losses, because you're winning peanuts and in a losing run you must have lost a massive amount to decide not to carry on increasing stakes.

thats incorrect, if your bets/trades were +expected value your more likely to double up than go bust
you had your example on roulette that covering a max losing run of 10 will result in 27% of doubling the bank
so if they paid out the 0 so you had a 52% instead of 48% chance to recover a loss that would therefore make 73% of doubling the bank

probably some guys will try to use the double bank to cover the 11th double up but others might still stick to their limit of 10

first problem is that 99% of people using martingale wont be able to find +expected value as they lack math in the first place

second problem doubling up 10times means your regular stake is 1/1023 so will take 1023 winning bets to double up, not efficient

third problem you still have 27% chance of losing your initial bank despite betting +expected value

on contrary if you bet a 1000 times with level stakes and 52% win rate your at 99% profitable. longer you bet the only realistic reason for being down is not getting value

Sorry rik, that's wrong. Here's the maths:

(1 - (18 / 37) ^ 10) ^ 1023 = 0.4677

That's a good example of how you could be given an opportunity to make a fortune and blow it by incorrect staking. Basically, even if you're backing value selections, overstaking, as Kelly shows will result in losses.

[wearthefoxhat]

What I forgot to mention in the OP and in regards to something that was troubling me was in the difference between a martingale on roulette which because of table limits must lose 100% of the time over time and something that is structurally similar in horseracing where there are factors that make it different.

My problem and what I couldn't figure out was if a loss avoidance system or whatever you want to call it wouldn't lose 100% of the time in the long run like a conventional martingale but would in fact be profitable over time but this time period and the stochastic process left it difficult to see the end of the road when large losses are warping our perception. So bottom line, I was wondering if long sequences of winning races were overcoming the large losses but it took maybe a much longer sample size to prove profitability than many people were allowing for.

Sorry if I am waffling again lol

By 100% of the time, I think you mean 100% certain of losing eventually. All loss recovery systems that involve increasing stakes will lose eventually, unless you have a system that will win for eternity! We all have limits whether it's a house limit or your bank limit.

I've explained the maths behind the Martingale in the post below and it really applies to anything where the true probability is worse then the odds you're taking - it applies equally to horse racing or trading.

viewtopic.php?p=225047#p225047

Actually Derek as one of the previous posters alluded to as did Peter, the title of this thread may have been worded badly and I apologise for that but as someone pointed out, the method I have been using while escalating has also been trying to use "dollar cost averaging" principles to erase a current red screen but I have run into problems when prices never retraced enough to go green and just like with options, theta (time decay) is a serious issue in these markets I am finding but is old news to all on here

Dollar cost averaging with leveraging (borrowing money to gamble with) was what broke Barings Bank (Nick Leeson)

Essentially, he got away with it the first time, covering their position and creating a chunk of commission along the way....the rest is history...

https://www.thestreet.com/opinion/5-inv ... r-13538186

[rik]

That's unlikely to happen in a loss recovery system that recovers your entire losses, because you're winning peanuts and in a losing run you must have lost a massive amount to decide not to carry on increasing stakes.

thats incorrect, if your bets/trades were +expected value your more likely to double up than go bust
you had your example on roulette that covering a max losing run of 10 will result in 27% of doubling the bank
so if they paid out the 0 so you had a 52% instead of 48% chance to recover a loss that would therefore make 73% of doubling the bank

probably some guys will try to use the double bank to cover the 11th double up but others might still stick to their limit of 10

first problem is that 99% of people using martingale wont be able to find +expected value as they lack math in the first place

second problem doubling up 10times means your regular stake is 1/1023 so will take 1023 winning bets to double up, not efficient

third problem you still have 27% chance of losing your initial bank despite betting +expected value

on contrary if you bet a 1000 times with level stakes and 52% win rate your at 99% profitable. longer you bet the only realistic reason for being down is not getting value

Sorry rik, that's wrong. Here's the maths:

(1 - (18 / 37) ^ 10) ^ 1023 = 0.4677

That's a good example of how you could be given an opportunity to make a fortune and blow it by incorrect staking. Basically, even if you're backing value selections, overstaking, as Kelly shows will result in losses.

your right i was too quick to assume could just reverse the probabilities
it must be skewed in that way because your winning more if you dont hit the 10 losing sequence in the 1023 bets
if you dont hit it you double up, but if you hit the losing sequence you still have the bets you won before you hit it, say you hit it after 500 wins your only down about half of your initial bank

[Kai]

I think averaging in general is a perfectly good trading approach, as long as your upside surpasses your potential losses.

[Morbius]

Welcome Morbious

From my personal perspective I do use Loss Recovery with great success, and long-term. I formulated my own system that is rather aggressive and used in my automation strategies. I think it works for some, and not others. And I think some members will listen to the responsible advice given by the Gambling Commission.

Good luck
Minnie LAI

'Loss recovery' is quite a broad term, but any strategy that involves increasing stakes or placing bets purely and solely because a previous bet lost is mathematically flawed. If such a system makes a profit it's not necessarily the staking plan that works but the strategy itself.

Am I being ignorant Derek because it seems to me to be different in regards to trading because your first "loss" isn't a loss if you don't take it. Many financial traders don't use stop losses and granted these are longer term markets as Peter alluded to in one of his replies. However a second larger entry not only has the ability to erase the previous "loss" but is entering the market at a new "breakeven" in a market that wildly oscillates. But I understand your point in that if such a staking system works then its the strategy and not the system but I do know that such systems work under certain circumstances albeit tiny and was wondering if this applied to horse racing pre-race markets. Or is the market simply behaving in a way that essentially makes such a strategy a "martingale" by default???

[Kai]

But I understand your point in that if such a staking system works then its the strategy and not the system but I do know that such systems work under certain circumstances albeit tiny and was wondering if this applied to horse racing pre-race markets. Or is the market simply behaving in a way that essentially makes such a strategy a "martingale" by default???

You would have to know your ranges quite well to make it work on prerace, would get murdered otherwise.

Since you're already familiar with the concepts of dollar cost averaging and such, I can say that I've used different averaging approaches to good effect on 4 sports, 2 of which were inplay, so I know there's a time and a place in the markets for most strategies, including averaging.

Although to be honest I didn't know about it beforehand and sort of stumbled into it naturally through my trading since it seemed the most effective way to manage my positions, and to be brutally honest with myself, a part of my trading style was for the most part born out of me trying to avoid some of the losses when I've read things wrong.

It's a massive topic for me, endless really, and I'd love nothing better than to discuss it at great length but there's always that annoying limit when you talk about your own trading. But yeah, it's one of the things I enjoy the most in trading, the game of managing your positions.

[Morbius]

But I understand your point in that if such a staking system works then its the strategy and not the system but I do know that such systems work under certain circumstances albeit tiny and was wondering if this applied to horse racing pre-race markets. Or is the market simply behaving in a way that essentially makes such a strategy a "martingale" by default???

You would have to know your ranges quite well to make it work on prerace, would get murdered otherwise.

Since you're already familiar with the concepts of dollar cost averaging and such, I can say that I've used different averaging approaches to good effect on 4 sports, 2 of which were inplay, so I know there's a time and a place in the markets for most strategies, including averaging.

Although to be honest I didn't know about it beforehand and sort of stumbled into it naturally through my trading since it seemed the most effective way to manage my positions, and to be brutally honest with myself, a part of my trading style was for the most part born out of me trying to avoid some of the losses when I've read things wrong.

It's a massive topic for me, endless really, and I'd love nothing better than to discuss it at great length but there's always that annoying limit when you talk about your own trading. But yeah, it's one of the things I enjoy the most in trading, the game of managing your positions.

Hi Kai, thanks for your response and as you have probably already deduced, this is a big topic for me too. I have spent a large amount of time studying financial markets without actually trading but with a view to possibly using some of the same principles on the exchanges but allowing for the nuances which I am hoping to pick up over time hence why I am on the forum. I always felt that there was something there with a dollar cost averaging strategy which I know isn't strictly speaking a loss recovery although it has elements of one.

I get what you are saying regarding ranges and the entry levels are key but as you also correctly pointed out, you can get murdered and I have been

But trying to not make the same mistake again although I am now leaning towards just having a conventional stop loss in this time sensitive market. A key problem for me was when a market trended substantially without adequate retracement to overcome losses and additional spread and then ranged at the end of it which all pre-horse racing markets do of course as they travel towards their respective SP's. This would be less of an issue in currencies assuming you were leveraged right but the cut off point of a horseracing market creates problems that I haven't solved as yet and not sure that I can and if I am barking up a tree that many older heads deserted years ago lol

[Morbius]

I am feeling a little self conscious already and its only been a day on the forum and all I ask is questions....hope the members don't mind but I don't know who else to ask

In regards to Dollar Cost Averaging strategies on the exchanges and to what Kai alluded to with ranges, do members think that this sort of strategy is better left to longer term financial markets and Investment Banks/Hedge Funds and the short term nature of horseracing markets makes it very difficult to execute???

I tried to estimate ranges on the pre-off markets but even when you get this right its the big trends followed by a ranging market that do you in. I can't find a way around this problem. Part of me thinks I am almost there because my strike rate is 90%+ but am finding it difficult to get ahead because of the aforementioned big losses which are also very disheartening but then a part of me thinks I am going down a blind alley with trying one of the financial market concepts that simply doesn't transpose onto a pre-race betting exchange.