Wednesday 8 June 2011

Wayward Target Shooting

Wayward Lad commented on my last post that:

I always find it interesting when reading the posts of Traders that they never actually commit to stating what return on investment they are targeting or achieving. This isn't a criticism.
One trader I'm aware of has a max exposure of £1,250 for a target return of £75 per "play"; which he repeats 10 or 12 times a day, 6 days a week. If you max exposure is £5000, what return on that are you hoping to achieve (you don't have to answer if you don't want too)? I like your blog btw, but I'm not a trader.

The answer is that as an in-play trader, I am targeting as high a return on the investment as possible. For instance, when I lay at say 1.0x, I will let that bet ride until the point that it becomes value to lay the bet off, which may mean taking a loss at a lower 1.0x or greening up at a higher price, or indeed letting the bet run to expiry. I certainly do not enter the trade with a set goal of making one tick or two ticks or whatever. If my exposure is the full £5,000, it is in my conservative nature to at least reduce that amount a little sooner than I might if my exposure is £50, and while I would always hope to do that only if it is value to do so, I do accept that in my haste to trim my exposure, and bring my breathing back to normal, I may sometimes be giving away value. But it's good for my health!

I will also trade out of positions pre-game in the rare event that a price moves enough to take it from a value back to a value lay for example. To take an extreme example just to illustrate the point, I might have a team priced at 2.0 and find I can back it at 2.2. If closer to kick-off, the price drifts to 1.8, then I will lock in some green, but again, when I made the initial bet, I do not target a set return on the investment.

As a racing man, you likely view trading differently to myself. I am not trading to scalp one or two ticks of profit - I enter a position because I think that a price is wrong, and will correct itself. If circumstances mean that the price continues to represent value, I ride the wave.

I am not a big fan of setting targets, whether they be daily, weekly or a set number of ticks. I believe that they constrain you, and you end up losing money, either by forcing you to make poor value bets to achieve your target, or by encouraging you to trade out of a position simply because the target has been reached.

Daily targets are the most ridiculous. In the sports I mainly follow, some days there just aren't any value opportunities at all. Other days, there might be several. To force myself to bet when I shouldn't, or not bet when I should, is just nonsensical.

You enter a trade when it is value to do so, and you exit a trade when it is value to do so - not because your target (or stop-loss) has been reached.


Wayward Lad said...

Many thanks for your response to my query, and thanks too for putting a link to my own blog at

Since I posted the query on your blog, my daily "hits" have gone up about 20% via links from your site.

All the best.

Cassini said...

Pleased to help. Write it, and they will come...