Replace the cap and watch the water level. This is the first thing to do. More than likely that is your problem. The tank cap is designed to hold a certain pressure in the tank. Anything in excess of that pressure and it alows it to leak out through the overflow tube. It also has a gasket that can be bad.
Now what is causing the "overpressure". the caps do get old and allow the antifreeze out at 15 Lbs. of pressure instead of the 23 or 25 they are designed for. Of you cap would be the problem in this case.
The bad senario would be a blown or leaking head gasket. My sons Mustang had the heads off 3 times because of a leaking headgasket. The symptoms, pissing out antifreeze and bubble in the radiator. A couple of tests can let you know. A CO test can determine if hydrocarbons are getting into the antifreeze. The use a dye and draw some of the antifreeze into the tester. If it changes color they you probably have headgasket problems.
Now don't get upset. The majority of the times its the expansion tank cap. I would say 95% of the time. Especially if you have never replaced it. The gasket on the cap goes bad and ruins the seal.
So replace the cap. And watch the water level. If its still goin down ask a independent shop to do the CO dye test.
1970 220D, owned 1980-1990
1980 240D, owned 1990-1992
1982 300TD, owned 1992-1993
1986 300SDL, owned 1993-2004
1999 E300, owned 1999-2003
1982 300TD, 213,880mi, owned since Nov 18, 1991- Aug 4, 2010 SOLD
1988 560SL, 100,000mi, owned since 1995
1965 Mustang Fastback Mileage Unknown(My sons)
1983 240D, 176,000mi (My daughers) owned since 2004
2007 Honda Accord EX-L I4 auto, the new daily driver
1985 300D 264,000mi Son's new daily driver.(sold)
2008 Hyundai Tiberon. Daughters new car