Today's Horse Racing

[Zenyatta]

If you simply rely on mean reversion to kick in at some point, you'll get mauled by the market when it just carries on trending in a particular direction.

Let say's you back at 4.0. What are your exit criteria? Do you bail when the market hits 4.4? How about 4.8? 5.2? 6.0? Or do you just sit back and hope that the market will eventually turn around?

Jeff

Jeff, since last year, I've noticed far more price spikes...where the price of a selection suddenly moves in or out by a huge number of ticks, only to suddenly snap back again shortly afterwards.

The trouble is that if you get caught by one of these price spikes, trying to use stop-loss is going to cost you a lot of money. Say you have an open position, the price starts to move against you... you stop-loss, but it turns out to be a price spike...You can't get back in again because the price just snaps back again so fast and smoothly, and then it goes on moving in the way you predicted all along.

These sudden spikes constitute a nasty psychological attack. It is hard for me to believe it isn't being done intentionally. Whether it's manipulation or not, the fact is, these constant price spikes are very annoying, and render stop-loss very difficult to employ most of the time.

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The view I take is that stop-lossing is actually a form of price chasing (trend following), and if you are chasing prices around (trend following) and its not based on your own independent information about what is happening in the real world (i.e., objective form, commentaries, pictures from the track etc.) , you are very likely to lose money.

For the most part I've come to agree with Peter that its usually always better to oppose price movements. The only time I've ever been able to get away with following trends in horse racing is in very simple markets where only one horse dominates the book. That's the about the only situation that trend following works for me.

[Euler]

Card looking much better today.

[Iron]

Jeff, since last year, I've noticed far more price spikes...where the price of a selection suddenly moves in or out by a huge number of ticks, only to suddenly snap back again shortly afterwards.

Some spikes go in your favour, and others against you. It evens itself out.

Say you have an open position, the price starts to move against you... you stop-loss, but it turns out to be a price spike...You can't get back in again because the price just snaps back again so fast and smoothly, and then it goes on moving in the way you predicted all along.

Sometimes it does, but sometimes a counter-trend spike marks the beginning of a new trend.

These sudden spikes constitute a nasty psychological attack.

No-one ever said trading is easy. Simple, perhaps, but not easy...

The view I take is that stop-lossing is actually a form of price chasing (trend following), and if you are chasing prices around (trend following) and its not based on your own independent information about what is happening in the real world (i.e., objective form, commentaries, pictures from the track etc.) , you are very likely to lose money.

Many successful traders know nothing about the fundamentals - they just respond to the market.

For the most part I've come to agree with Peter that its usually always better to oppose price movements.

Whether you go with the trend or counter-trend, you need a way of cutting your losses (whether you use an automatic stoploss or say to yourself 'When the market passes this resistance point, I'm bailing manually').

Jeff

[gutuami]

yesterday was better for me. Today felt a bit erratic at times. May be just me because of poor sleep last night. How is today in comparison to yesterday's card?

[hgodden]

Today was very good, better than yesterday, though that was also good

[Zenyatta]

Whether you go with the trend or counter-trend, you need a way of cutting your losses (whether you use an automatic stoploss or say to yourself 'When the market passes this resistance point, I'm bailing manually').

Jeff

Here's an alternative to stop-loss: Put on half the normal stake. If the price moves against you, don't put any more on. If it's moving your way, get in again and double up. This way, you will only have 1/2 the amount on if the price goes against you.

It's a bit ironic that the advice traders give is somewhat contradictory. Peter, for example, advises to go counter-trend, then he says to stop-loss when things go wrong, but stop-loss is exactly the same as following a trend!

The fact of the matter is, I personally have found it near impossible to distinguish genuine trends from noise, except for the special case where only one horse dominates the book. So stop-loss is pretty pointless for me except in that special case.

[Iron]

Here's an alternative to stop-loss: Put on half the normal stake. If the price moves against you, don't put any more on. If it's moving your way, get in again and double up. This way, you will only have 1/2 the amount on if the price goes against you.

That's a convoluted approach that offers no protection against losing your shirt long term.

It's a bit ironic that the advice traders give is somewhat contradictory. Peter, for example, advises to go counter-trend, then he says to stop-loss when things go wrong, but stop-loss is exactly the same as following a trend!

There are similarities, but there's no contradiction. With both approaches, you ride the momentum in the direction of your trade for as long as it lasts, and get out ASAP if the market goes against your position.

The fact of the matter is, I personally have found it near impossible to distinguish genuine trends from noise

The kind of movements you see in the Chart of the Day thread are only knowable with hindsight. Often you will get stopped out several times for small profits or losses before you end up riding a market that steams in from 4.0 to 2.2. That's the nature of hunting the big move!

Jeff

[switesh]

If swing trading's your thing - Ayr is the place to be today.

[Euler]

Making more from Yarmouth that Goodwood today!

[switesh]

Was watching this fella in the last at Goodwood. Seemed to be stable at around 10 and then just flew any which way.
Not so 'good' wood for me today.

[chuck536]

Making more from Yarmouth that Goodwood today!

Really? supprised you should say this ..... today Yarmouth being the lowest quality grade card with what i thought huge amounts of manipulation?? nearly decided to skip it out altogether!!

[Zenyatta]

Here's an alternative to stop-loss: Put on half the normal stake. If the price moves against you, don't put any more on. If it's moving your way, get in again and double up. This way, you will only have 1/2 the amount on if the price goes against you.

That's a convoluted approach that offers no protection against losing your shirt long term.
Jeff

The reason I'm forced to try to devise such 'convoluted' approaches is because of the constant cynical price manipulation and/or price madness that seems to go on in most of the lower quality races.

Yes, I agree stop-loss can work for a small minority of races , but I think stop-loss is of very limited use for the low-grade stuff (which is most races).

[Iron]

I'm not advocating an automated stoploss per se - I'm advocating an approach of 'if this happens, I'm going to cut my losses'. Without that, I struggle to see how you'll succeed in trading.

If you find you are getting stopped out too often, that's a case for giving the market a bit more slack before you bail, not for letting your losses run (which is madness)...

Jeff

Yes, I agree stop-loss can work for a small minority of races , but I think stop-loss is of very limited use for the low-grade stuff (which is most races).

[Zenyatta]

I'm not advocating an automated stoploss per se - I'm advocating an approach of 'if this happens, I'm going to cut my losses'. Without that, I struggle to see how you'll succeed in trading.

If you find you are getting stopped out too often, that's a case for giving the market a bit more slack before you bail, not for letting your losses run (which is madness)...

Jeff

Fair enough. It's just that I personally have never got stop-loss to work for me manually. It's not through lack of trying. I've tried 'letting profits run and cutting losses' until I'm blue in the face, I still lose money. I just don't know when to hold 'em and when to fold 'em basically. That's why I have to look for alternative automated methods that will work for someone as dumb as me

[Euler]

The problem you have, especially in these markets at the moment, is that the price can snap back 6-7 ticks quite quickly. So even an arbitrary stop will ensure a loss.

My attitude is to build a position into the market and increase my stop that way, the green spreads out and buys me plenty of room for manoeuvre. I can tolerate the jumpiness of the market without stopping out a perfectly good position.