Return on turnover
While I’m in the mood let’s talk about return on turnover as well. I’ve tracked my return on turnover for some time as I feel this is the key to sustaining longevity in the market. It also tells you a lot about trading.
Adam Heathcote recently put up a spreadsheet sent by Betfair detailing how much he had turned over and earned this year. On this sheet is shows that Adam’s return on turnover was 0.17%. If you wind the clock back to an era where software didn’t exist and traders used screen refreshers, we have detailed public records of another trader that allows us to calculate their RoT, in fact they did it for us. It was 0.23%, 0.19% & 0.13%. You can see their edge was eroding year by year to the point where they stopped trading.
There is so little data out there for us to compare against, its interesting to see data exposed in this way. I’ve measured my rate for some time knowing that it is the key to maintaining my edge. If I see the rate declining I need to step in and take corrective action or learn new tricks! As it is, my rate is probably very high in comparison to the others I have seen using a similar style, so it looks like things are OK, for the moment. Basically, if you are trading, your return on turnover is going to be measured in 10ths of a % and this tallys with my experiance.
We can use the stats detailed to throw up another metric though. Let us use the poorest rate out there which was our trader of 5-6 years ago. They managed a 0.13% return, let us assume we could match this, in fact given Adam’s 0.17% return, lets set the bar much lower at 0.10% on average. To get £1, on average, from a race would therefore require an average turnover of £1000 per race!
If you are trading with £10’s it suddenly looks a bit daunting to squeeze £1 out of a race, but in fact, it’s not as daunting as it looks. This is because Betfair offer instant settlement. You don’t need to put £1000 in one go you can put ten lots of £100 instead, or 20 lots of £50. Not so daunting after all is it?
Category: Trading strategies
