what to look for to do my first scalp trade ? advice from established traders please.

[Temujin]

What part of back on topic do you not understand? If you want to give me some sort of father son advice, do it in a PM. Apart from that, back on topic.

[WhyAlwaysMe]

Sorry - I thought that post was referring to this topic. It looked to me like some kind personal remark had been moderated.

Wouldn't it be better to hive this Kelly section off and create a new title?

[Nosmo-King]

Now if there is a discussion about staking and how to do it, it's perfectly fine to argue if it makes sense or not. But its utterly annoying if the whole discussion is about 'I am right you are wrong'... Using the same old arguments and pedantic hair-splitting over and over... Why not, once in a while, let a counter-argument stay as it is? Peace Nobel Prize is coming your way.

I would KILL for a Noble Peace Prize....evil

[Mickey Pearce]

"Using the same old arguments and pedantic hair-splitting over and over..."

I would KILL for a Noble Peace Prize....evil

Nobel ffs!

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BTW I would imagine the OP is still hiding behind the sofa.

[custard]

BTW I would imagine the OP is still hiding behind the sofa.

If he comes under this table, I'll get the dogs to bite him

[WhyAlwaysMe]

Robert Merton and Myron Scholes were joint Nobel Prize winners in economics in 1997. Three years later they had lost between $3 and $5 Billion on a hedge fund ironically called Long Term Capital Markets.

Anyone got any good scalping videos? . Is the one TheBarron had still available?

[Nosmo-King]

Nobel ffs!

Whoops! That's what 5 Stellas at lunch does for you. My "noble" attempt at humour fell flat with that one.

[custard]

Anyone got any good scalping videos?

Have you seen "Red Dragon" ? Sir Anthony Hopkins, Welsh gourmet, shows how it's done.

[custard]

Whoops! That's what 5 Stellas at lunch does for you. My "noble" attempt at humour fell flat with that one.

A friend of mine, now sadly dead, visited a doctor one day. The doctor asked him how much he was drinking every day. He replied, " About 12 pints of Stella". The doctor was horrified and asked him why he did that. He replied, " because it's all I can afford".

[doubleback]

He replied, " About 12 pints of Stella" ...

Didn't Nelson Mandela win the Nobel Peace Prize!?

Here is another reason to stay off the Stella ...

[rphi6876]

- If you assume your edge has a certain kind of variance, how much would this change (lower I guess) the optimum stake? Other than just recommending fractional staking, are there any numerical examples or simulations??

I have attached another script which will simulate this for you. The first Block of code performs a simulation where in the parameters section you have a fixed edge and a fixed kelly stake and you can see how your probability of bust changes as your confidence interval increases. In my code I have the confidence interval changing from 0 to 0.7 (play with this if you want) and have set an edge of 0.1. For confidence interval I am using a normal distribution around the mean. For example with an edge of 0.1 and confidence interval of 0.3 then 95% of the time the actual edge you are betting on will lie between -0.2 (0.1-0.3) and 0.4 (0.1+0.3). As such at the end of this sim you will see the probability of bust increase as your confidence interval increases. (Perhaps not as much as you would expect if a using small Kelly fractions as you are significantly dampened by overstaking.


The second block of code is very similar to the first but plots a 3d surface, (similar to the one I have attached, forgive the quality I had to shrink it down to size) this will plot your probability of bust as your confidence interval and Kelly Fraction vary across a range of different parameters. You will note that, with full kelly stakes and any variance then porbability of bust is practically 1, this highlight again the dangers of overstaking. I hope you find this of help.

- If you are trading, let's say laying @2 and planning to green up @3, could you somehow find the optimal stake for the initial bet? Assuming some kind of small edge for the trade?

As I have previoulsy mentioned for trading I wouldnt recommend leaving an open position and would always green up. But If you are trading and want to determine a stake size using Kelly staking, with some derivations and a few assumptions you will get the stake size of (2p-1), where p is the probability of the odds moving in the direction you expect. This has an intuitive result and most traders probably roughly follow this without knowing. Say I am looking to back and the probability of the odds going down is 50% then I bet nothing as all I would be doing is taking a 50/50 gamble. However, if there is a 100% certainty that odds will drop then I bet 100% of my balance, so to summarise bet more the more confident the price will move in your favor.

And again yes determining this probability if difficult, there are assumptions that can be violated etc etc. But I think we have gone down that path enough.

[nevermind]

Great, thanks rphi!

I have attached another script which will simulate this for you.

I will try to run the script. So far, with the 'R' software I could start the simulation, but not see any results. Think I need to RTFM.

The second block of code is very similar to the first but plots a 3d surface

It's a while I've dealt with statistics and I probably don't understand the attached graph very well (and I can hardly read the lettering). What I don't understand: At the lower front corner, isn't the confidence interval zero? Doesn't that mean there is no variance at all? For zero variance, shouldn't the full Kelly staking deliver a bust probability close to zero? (Instead of close to one?)

[nevermind]

If you are trading and want to determine a stake size using Kelly staking, with some derivations and a few assumptions you will get the stake size of (2p-1), where p is the probability of the odds moving in the direction you expect. This has an intuitive result and most traders probably roughly follow this without knowing.

So for value bets you take the probability to win. For trades you take the probability of the odds moving in the right direction. In practice, I think in both cases I would do about the same: I would just assume that I have some small edge.

Trading has a similar effect as fractional staking: it reduces the probability of going bust. Therefore I would say: The shorter I stay in the market, the lesser the need for fractional staking.

... I agree when you think we have gone down that path enough.