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Strategy/method with high percentage of losers
- Thread starter bln
- Start date
You're right about the spread. Its only purpose is to make the fav look as bad as the dog. The vig is where bookies make their $.Quote from Maverick74:
Eusdaiki, right. Guys rarely play the moneyline in football as that is just a straight up win or lose, no spread. Most people either take the spread or lay it. The money the bookie makes is on the juice, which can be paid either by the loser or the winner, depending on the bookie. My issue was with him saying bookies don't make money on the juice, or the vig rather they make money on the spread.
The lines are very tight and I can call around if a bookie is making a line too high, he won't get my business. Say the Bears are favored -3 1/2 over the Packers. Some bookie can't be a wise ass and offer me Chicago -5 1/2. The going spread in the market will be -3 to -3 1/2. And yes, you can buy or lay that extra half point if you want.
And like you said, if one wanted to play the moneyline, that is usually fixed at 110/100. You don't move that line to 140/100. LOL. Again, if you did, I wouldn't bet. Bookies make their money on the "juice" or the "vig" or whatever you want to call it, but it's usually fixed at 5% or 10% of the betting amount and is paid either by the winner or the loser, not both.
But the mixed lines are quiet common, specially for halftime & such.
If you call a few bookies, and you get lines 3 1/2 on one side and 3 laying 30% (dog gets 110 for 100 bet +3 spread) on the other they're both competitive lines
exactly, almost any system you can come up with will over time break even minus the spread and commissions, that's why I always advise traders not to abandon a system in a drawdown. That's a sure way to take the slow grind down into the big washout. Especially if you follow a system until the drawdown is more then you can handle, and then switch to a new system with a now reduced account.Quote from Maverick74:
This doesn't really exist. The reason most traders lose is not because of bad trades but commissions. It's the vig over time that will grind your account down to zero. The other way people lose is just the old fashioned martingale. Averaging into one bad trade. You can't reverse that because usually they are not following a signal, they are just having a psychological break down.
once I had a paper account that had gotten way far ahead of my real account. So instead of resetting the paper account I decided just to lose the money to get it back even.Quote from bln:
Anyone know of bad/failing strategies that have 80% or more losing trades?
If you take a losing system (negative edge) and inverse it, you will inverse the profit/loss ratio?
or if you take the order flow of a losing trader and inverse it in realtime, you will win?
I would like to test this teory out.
It was harder than heck. I did everything, took small profits and add to losers. No matter what I did I couldn't lose. Finally I figured out the only sure way was to just HFT until the spread and commissions got me back down. After about two hours I was completely exhausted.
otherwise, it's just as hard to come up with a losing system as it is to come up with a winning system.
The only losing system I know has a target but no loss prevention program. I saw it in action with a client and it is quite awesome.
So for instance, you trade ES for one point and will not take a loss no matter what.
It's amazing how long that will work. After a while it actually starts to look like a good idea. But eventually the big move against you comes.
So to answer your question, after watching that losing system, I just did the opposite and that is when I became profitable.
But it certainly isn't as easy as using stops. All that will do is get you to BE minus the spread and commissions.
Quote from eusdaiki:
This strategy could produce "small" losses for years, and still turn to a massive profit by a single winner when something completely unexpected highly improvable and extraordinary affects markets making your deep out of the money options go deep in the money.
When is the last time something "completely unexpected highly improvable and extraordinary" happened? Maybe in 2001 because the financial crisis was not so unexpected.
I let you pay premium for the next ten years while I trade normal, expected events.
You also confuse trading with gambling. The system you described is a gambling system. It has nothing to do with the systems in the OP.
Many have construed my handle here as signifying that I concern myself and/or try to protect myself from "Black Swan Events" but nothing could be further from the truth. No one can afford to pay premium because it makes them feel safe. Bill has it correct here. More than nine out of ten events that are portrayed as completely unpredictable are in fact rather predictable. While few could get the timing as right as Paulson, that the Greenspan insanity would end badly and end in a significant decrease in home prices was inevitable.
Just because the press, Washington and the talking heads on CNBC call at as a fluke does not mean it was a fluke.
Just because the press, Washington and the talking heads on CNBC call at as a fluke does not mean it was a fluke.
Quote from intradaybill:
When is the last time something "completely unexpected highly improvable and extraordinary" happened? Maybe in 2001 because the financial crisis was not so unexpected.
I let you pay premium for the next ten years while I trade normal, expected events.
You also confuse trading with gambling. The system you described is a gambling system. It has nothing to do with the systems in the OP.
Quote from intradaybill:
When is the last time something "completely unexpected highly improvable and extraordinary" happened? Maybe in 2001 because the financial crisis was not so unexpected.
I let you pay premium for the next ten years while I trade normal, expected events.
You also confuse trading with gambling. The system you described is a gambling system. It has nothing to do with the systems in the OP.
Wasn't the downgrade of the US credit rating August last year unexpected? If not, then why would the market drop so dramatically. The market didn't appear to discount that event and seasonality predicted a year different from what occurred.
Could you please outline what you mean by a gambling system and by a trading system. I am unclear on what you mean.
Quote from StarDust9182:
Wasn't the downgrade of the US credit rating August last year unexpected? If not, then why would the market drop so dramatically. The market didn't appear to discount that event and seasonality predicted a year different from what occurred.
The market did exactly the opposite when US was downgraded. Bonds rallied to the lowest yields in decades. Those that hoped for easy money got killed including famous fund managers.
Quote from StarDust9182:
Could you please outline what you mean by a gambling system and by a trading system. I am unclear on what you mean.
Let us start by the simple fact that in gampling the expectancy is known and except in a few cases outlined in Thorp's book (if I recall correctly now), it is always negative.
To the contrary, the market can be a game with positive expectancy, sometimes for many years. This is one of the most informative blog posts I have found. It shows how some markets can be a game with positive expectany for a long time
More on Games with Fancy Names that People Play
There are other differences between trading and gampling but this one is the most important. But one thing is for sure: gamblers choose to play a negative expectancy game and rely on luck or do that for fun. Traders try to capture the available positive expectancy. This is different.
A black swan is almost never "completely unexpected" to all parties...Quote from intradaybill:
When is the last time something "completely unexpected highly improvable and extraordinary" happened? Maybe in 2001 because the financial crisis was not so unexpected.
I let you pay premium for the next ten years while I trade normal, expected events.
You also confuse trading with gambling. The system you described is a gambling system. It has nothing to do with the systems in the OP.
e.g. 911 was not an unexpected event for the terrorist who committed the atrocity... it was unexpected for everyone else. Still a black swan.
Same goes for the collapse of Lehman & bear... as well as other near-collapses that we saw in the 2008 crisis (the world's biggest bank losing >95% of its value and going subdollar for a couple of days counts as the type of event that puts the black swan hunting strategy into profits). The black week had several days > 20 sigmas... it broke many statistical models...
The correlations meltdown of 2007 was also an unexpected event that impacted many hedgefunds and stat arbs around the world...
But the swan hunting strategy is not concerned strictly with catastrophic events. One flavour of this strategy consists of buying out of money calls on small biotechs (or similar) hoping for one of them to find gold and grow exponentially... (similar to buying all lotery tickets on a lotery that has no cap for profits)
This strategy is not a gamblers martingale system where you double on every losser hoping to get a massive payday later... (before you go broke)
this is more similar to placing small bets on every number of the roulette or buying one of every lottery ticket... but unlike the casino the possible profits are not limited by the house... so the system is not fixed against betting every number...
I've personally never traded this strategy, but I believe that it is a valid system that has an interesting and counter-intuitive risk-reward... since it is basically the opposite of the LTCM system (which would get many many small profits and one HUGE catastrophic-take-down-the-world's-financial-systems-in-one-shot loss...)
Quote from eusdaiki:
I've personally never traded this strategy, but I believe that it is a valid system that has an interesting and counter-intuitive risk-reward... since it is basically the opposite of the LTCM system (which would get many many small profits and one HUGE catastrophic-take-down-the-world's-financial-systems-in-one-shot loss...)
The system you are describing has negative expectancy depending on the time period a black swan takes to occur. In that respect, it is gambling. Only gamblers elect to play negative expectancy games.