Since eight days I trade with a new approach. Like already described, I shortened the timeframe, which I am involved in a trade. Obviously it's easier to make 1-2 ticks per trade as 20. As a consequence the hit rate rised.
I made exactly 25 trades (not positions!) so far and only lost three of them. One time I had ten winners in a row and the current streak is even eleven. I am really happy about these numbers. They are well above what I expected. I managed a yield of 27.7% and earned almost seven units. Of course I know that the sample size to judge a strategy and my trading skills are too low. With this pace (25 trades a week) I need at least half a year, better a whole one, to prove the edge.
Overall the following things were positive:
To improve I have the following points:
I made exactly 25 trades (not positions!) so far and only lost three of them. One time I had ten winners in a row and the current streak is even eleven. I am really happy about these numbers. They are well above what I expected. I managed a yield of 27.7% and earned almost seven units. Of course I know that the sample size to judge a strategy and my trading skills are too low. With this pace (25 trades a week) I need at least half a year, better a whole one, to prove the edge.
Overall the following things were positive:
- Discipline: I start to accept losses. To close a red position is part of the game. Beside I stopped to chase losses. The money management with very low liabilities is accepted as well.
- Hit rate: I couldn't expect 88% right picks. It speaks for a good selection process and decent entry- and exit-levels. Long term I try to have a value between 75-80%.
- Risk/Reward-Ratio: The biggest profit was higher than the biggest loss. In average the profits are lower than the losses. Nevertheless the ratio (0.6 after commission) is better than expected. In the long term I would be happy with 0.5.
To improve I have the following points:
- Hesitation: On one side the hit rate is fantastic. On the other one the amount of trades could be higher. I missed some opportunites (of course I also avoid bad trades), so the overall profit could be higher.
- Compounding: After I created green books I often destroyed (a part of the) profits. I guess that I gambled too much and didn't pick the value. It also could be bad variance. If you like to ride a longer swing, it needs more to succeed. Overall I had no clear plan to manage the greens.
- Speed: Sometimes I was too slow to green up. In generall I see here a problem. While the games are played (not in the breaks) the courtsiders often offer only bad value. The liquidity - which you need to hedge the trade - is not available. To be honest, this point can be critical to scale up the strategy... I will keep an eye on this issue, perhaps was also a problem of the tournaments size. Last week no big event was played.
In general I am very happy about the first week. It's still a long way to go, but the first step is done. The following week will be the last one as hobby full time trader. At 3th August I will start my new job. The quantity of tournaments (Hamburg, Gstaad, Atlanta, Baku, Florianopolis and Nanchang) will help to continue with the intense testing of the strategies.
On the left side you can see my trades. There are small differences to the KPI. First I didn't count the (big) profit from the injury bet. I wrote about it. Second I don't consider scratched trades (-0.10 to +0.10).
Good self-evaluation, which by the way is very important in this self-regulated activity that is trading!
ReplyDeleteAbout managing the greens, you can define a percentage that you are comfortable with losing (say 10-15%), to lay odds between 1.01 and 1.1. I sometimes do this in the final stages of football matches; of course and as always its long-term success depends on your ability to find value in those odds. The other and more obvious suggestion is not change anything and keep trading following your initial plan!
The issue that you described in the speed section is one of the reasons why I don´t find tennis markets attractive; the market is too fast and during the matches if you want to sell a position it has to be in kind of a “fill or kill” way, that has to be perfectly timed otherwise you´re offering value to the courtsiders. I would not worry a lot in this phase, but it definitely can be an issue scaling up like you told. Maybe the development of strategies, for which the entry and/or exit points are located in the rest phases, can overcome this issue as the market might be more stable when the game is paused. Sorry if this don´t make sense as I´m speaking out of my depth in this matter!
Thanks! Yes, it's very important to make a realistic self-evaluation. There is no teacher around. No good trader tells you his secrets. I have a person at my side, which is like a coach. He is not a professional, but is good to discuss the ideas and have feedbacks.
DeleteYes, I am working at an approach which goes in your direction. For the psychology (and cover the losses) is important to finish an originally green trade with a profit. In the future I will risk at most the half of the green book in the second stage. There I will go for a small swing and afterwards with the profit of the small swing I try to ride the big wave (3th stage).
Yes, it's difficult to get matched for a good price during a game. At least I know what I should not do. Backing 1.40, when the odd is going directly from 1.35 to 1.45. This hoovering is part of the edge from the courtsiders. Right now the liquidity and the hedging during a game are not my biggest issues, but in the future it will hopefully be. When thiese things will be a topic in the future, I made the breakthrough. I will only scale up the stakes if I can make consistent (small) profits. It was a good start, nothing more and nothing less.
It´s always good to be able to discuss the strategies and have some feedback! Although as a funny fact, i must say that I never met another trader in person and our exchange of ideas is the closest contact with a trader that I ever had! As I´m not trading for the rest of the year, blogging and commenting will be my way to stay involved.
DeleteAbout your trading, keep going and continue to replicate what you did this week, although it is not a huge trading sample, you seem to be doing something right! Even in the worst case scenario in terms of scaling up, you are improving your discipline and mindset which is invaluable.
I never met him neither, but we had several skype sessions and we work together since almost a year. This project helped me to improve steadily. The last week was impressive, but the way in the right direction already started in the last months of 2014. The developed ideas were okay, but had some drawbacks.
DeleteI really appreciate your feedbacks. They are honest and on a good level (you know what you are talking about). Why you make such a long break?
The trading sample is still very low. I need a lot more trades to feel really confident. Beside there is still the problem with skaling up. A lot traders reach the step I am now, but they are not capable to keep the good results over a longer timeframe and fail to scale up. It's still a long way to go...
Thank you!
DeleteBetfair is temporarily restricted in my country, although it is predicted in the law. This law is theoretically very good for the traders but its implementation will take time. Caan Berry´s last post is about this issue.
I studied all the alternatives way before this happened and due to my familiar and professional situation I decided to wait until the beggining of next year, where I´ll reassess the situation. The bottom line is that I will not risk my betfair account (even if it is a 1% risk) for a temporary solution.
My decision has some risks as I´ll be out of the markets for months, so my personal challenge for this year is to continue to watch football and analyse the teams from a trading point of view. It will be hard motivation wise, that´s why I´m thinking of opening a blog to stay involved. I haven´t opened it yet, because I don´t know if I can write interesting content without dwelling too much into my trading strategies, which for obvious reasons I´m not willing to share.
Yes, I heard about Portugal. The law is almost in every country a topic. In Switzerland is a grey zone, which nobody really cares about. I hope things get solved, in other case you have to go to Great Britain like Caan mentioned.
ReplyDeleteOnly analyzing without making trades/bets is really boring. Especially it goes on your nerves, when you would make a lot right conclussions without earning one cent of profit. I don't like paper testing. Even the smallest profit (like my ones at the moment) give you the better feeling as just watching and see your ideas winning.
Yes, it's difficult to keep a blog interesting. For example I don't like P+L blogs. Most of bloggers retire when they start to lose and a few stop when they made the breakthrough (like Sultan or Mark). For me is also part of the development process. When I make one day my steady side income, I will not have much interesting stories to talk about. Overall the best long term quality blogs are the ones of Moo, Grandstand and Cassini, but they are not real betting/trading blogs. And of course the one of Caan, unfortunately he is more involved in horses. I don't like this sports... so I would never watch some animals running in a circle. For me is good, I see the biggest edge at tennis and is also one of my favourite sports. So I enjoy watching the matches, even when I am not involved in a trade. Normally I am not involved, because the scenario is not good... you need to be patient, it helps when you are okay with just waiting and watching. With bigger stakes 2-3 good opportunites (where is trading and not gambling) per day are enough to make good profit. Real value is not coming that often... that's why you need a system which you can scale up. That will be the biggest challenge by far.
In Portugal it was also a grey zone like in Switzerland, until now. I have hope that things will be normalized next year, otherwise I will have to think about going to the UK.
ReplyDeleteIn this period, I don´t plan to look at the markets as it would be hard to handle without being able to trade. Also, I´m not in a testing phase as I have my strategies well established.
The thing is I love football and even if trading didn´t exist I would certainly watch a lot of it. So, my plan is to maintain the same level of knowledge about it even without trading. This includes watching less known teams playing against each other which might get hard as some games are not so well played. That´s where blogging might help as an extra motivation, to write about the teams and also a bit about trading. We´ll see, still have some time to decide before the main leagues start!
About your situation, I think you are in the right path to make the breakthrough. Just be patient and always think in a long-term sense!
Yes, blogging can motivate and keep the focus. That's the reason I am doing it. Beside it gives interesting communication and a change of ideas.
DeleteYou are right, I have to focus on the long-term. It's a bit like at the stock exchange. You can't judge a stock after one or two weeks. The only thing I do are stop losses (like at trading). It needs too much time to recover a stock loss of 20% (it has to go 25% in the other direction... and is getting worse with every % you lose). So I protect my bank.
Right now I am still optimizing my strategies. Very small adjustments, which improve my trust and feeling. Like Caan wrote, in the end you have to be comfortable with your approach and you will make the best results. I am still fragile, so don't overrate my current results.
To become a trader is a marathon and not a 100 meter sprint. Perhaps I am at kilometer 10, max. 15. It's still a very long way, only 0.1% make it to the premium charge. At least today's match between Nadal and Verdasco showed me, that the liquididty should not be an issue at bigger matches.