Risk Management

Yesterday we saw two very different finals at Rome. First Karolina Pliskova met Iga Swiatek in a very one-sided encounter. The Pole double bageled the former Rome winner Pliskova. Some hours later Djokovic and Nadal played almost three hours until the winner was found. The Spanish clay king won 7:5, 1:6, 6:3.

What you can expect with a swing trading approach? With a volatility based system is (almost) impossible to make money in such a one-sided match like Swiatek vs. Pliskova. You need a risk management which helps to reduce losses in such a case. My target is a maximal loss of 1.25 units per trade. One unit is more or less 1% of my account balance. In the mentioned female final I lost around 1.20 units. The risk management worked, even a worst case match can´t make serious damage to the bank.

Nadal vs. Djokovic should been a great opportunity to make a good profit. My strategy brought a "non trade outcome". Probably you would say, that´s a bad strategy. Perhaps you are right, but my model said that Novak Djokovic was no (great) value after the first set. Like I mentioned in an earlier posting, I have an automated trading strategy. Perhaps I missed a manual opportunity (because it´s Djokovic and not a no name player), but in general I prefer a missed chance instead of a lost trade. 

I would call my strategy a risk based approach. Automated trading can´t consider names or a game history... but in the long term the number based trading should be the right one (for me). The numbers don´t lie and told that Djokovic was (at least based on the starting odds) no value. Of course there is no guarantee that the starting price is right and the market corrects itself during the first set. In my opinion the starting price is quite fair and not based on emotions (like it often happens while the match is inplay).

Next days I will test a lot. At the moment I focus on quantity. It´s important to have enough tests to find mistakes in the automatisation. Afterwards I have to consider more and more the quality as well. Like I mentioned in the last post... the key is the match selection. The best automated betting strategy will fail, when you trade the wrong matches.