Newbies Trading in the Dark

Learn sports betting strategies and discuss key factors to consider when placing a bet.
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Horatio05
Posts: 8
Joined: Tue Apr 19, 2011 7:52 am

Hello again Ferru123

Many thanks for your response. Unfortunately it does not help. You have identified situations where the position could be scratched without profit or loss, where there would be a one tick profit and where there would be a one tick loss. You have not shown why the profit would occur more often than the loss.

1.49 1.5

Put in a back order at 1.5.

1.5 1.51 (unless this becomes the market position the back order is not matched and we simply begin the process again)
Back order matched and we have an open position. -1 tick to close

Suppose market moves to:
1.49 1.5
No P/L if position closed (but there is no reason to believe the market is moving against us – indeed it has moved in the right direction, just not far enough)

Suppose market moves to:
1.48 1.49
1 tick if position closed

Suppose market moves to:
1.5 1.51
-1 tick if the position is closed

Suppose market moves to:
1.51 1.52
-2 ticks if the position is closed

Suppose market moves to:
1.47 1.48
2 ticks if position closed

etc…..

Why would one of the above positive positions be more like to occur than the negative positions?

Not sure what your remark “depending on your reading of the market” means. I assume my reading of the market would be the same as when the process started. Namely that in the absence of an edge there is a 50/50 chance of the market going up or down. If my reading had changed then I would need some criteria by which to judge it. If I had such a criteria I would have adopted it ab initio (or simply observed the market until I had formulated it).

I am not saying you are wrong. How could I, I am not a trader, just a total newbie. However, from what I suspect is a typical newbie perspective I question whether you have demonstrated your basic proposition “James - Surely with the reverse offset strategy, you don't need to be able to forecast where the market's going to go next, providing you can quickly scratch a high proportion of your trades when the market goes against you?”

I do hope this post does not come across as churlish, it is not meant to be. Just a newbie facing a steep learning curve and trying to understand the points others are making.
Iron
Posts: 6793
Joined: Fri Dec 11, 2009 10:51 pm

Hi Horatio

Fair comment. :)

I wasn't trying to portray the strategy of going for a 1 tick profit if you have a 1 tick stoploss as a winning strategy. I was merely questioning how James could be confident that it wasn't.

However, James is successful and experienced trader, and I've since spoken with another accomplished trader who's told me that the method doesn't work, so I'd give it a miss.

Jeff
Horatio05 wrote:Hello again Ferru123

Many thanks for your response. Unfortunately it does not help. You have identified situations where the position could be scratched without profit or loss, where there would be a one tick profit and where there would be a one tick loss. You have not shown why the profit would occur more often than the loss.
Horatio05
Posts: 8
Joined: Tue Apr 19, 2011 7:52 am

Ferru123

I am really very much obliged for your help with this. I will now concentrate on the search for the elusive edge.
Iron
Posts: 6793
Joined: Fri Dec 11, 2009 10:51 pm

Good luck. :)

The edge might not be as elusive as you think.

You might want to think about the properties of markets, and design a strategy based around that.

For example, markets of all types - whether Forex or Betfair - are driven by fear and greed, which cause people to behave irrationally (for example, by exiting their trades too quickly or panicking when they are in a trade and the market turns against them). And it's well known that trends self-perpetuate, due to the people's herd-like behaviour (incidentally, this herd-like behaviour possibly also explains why more money is generally matched on a favourite than on any other horse).

Also, remember that your edge lies in your psychological appraoch as much as in what technical strategies you use.

Jeff
Horatio05 wrote:Ferru123

I am really very much obliged for your help with this. I will now concentrate on the search for the elusive edge.
Iron
Posts: 6793
Joined: Fri Dec 11, 2009 10:51 pm

PS To my earlier reply.

I once asked a successful trader what my edge was. He told me that it was the fact that I could offer prices. At the time, I was sceptical, thinking "isn't that what all traders do?"

But I now think he was right (at least inasmuch as doing so offers an edge, even though it's not the only edge available)...

Jeff
Horatio05 wrote:Ferru123

I am really very much obliged for your help with this. I will now concentrate on the search for the elusive edge.
PeterLe
Posts: 3715
Joined: Wed Apr 15, 2009 3:19 pm

Ferru123 wrote:PS To my earlier reply.

I once asked a successful trader what my edge was. He told me that it was the fact that I could offer prices. At the time, I was sceptical, thinking "isn't that what all traders do?"

But I now think he was right (at least inasmuch as doing so offers an edge, even though it's not the only edge available)...

Jeff
Horatio05 wrote:Ferru123

I am really very much obliged for your help with this. I will now concentrate on the search for the elusive edge.
Hi Jeff
I wrote something similar the other day about offering money to the market :-

viewtopic.php?f=2&t=4031

My way of thinking is that if you take what is on offer, you are accepting what someone else WANTS you to take, but if you offer money up you are only prepared to take what YOU want.
Sounds very simplistic; but it is a big difference.
The secret is to know what you want and having the patience to wait for it.
regards
Peter
Iron
Posts: 6793
Joined: Fri Dec 11, 2009 10:51 pm

Hi Peter

Do you usually take that approach both when opening and closing trades?

BTW, on the topic of general observations about the markets, I once read in a financial trading book that what you're aiming to do is to buy something when no-one wants it, and sell it when everyone wants it. To a point, I think that's also applicable to trading on Betfair...

Jeff
PeterLe wrote: [Offering rather than taking money] sounds very simplistic; but it is a big difference.
The secret is to know what you want and having the patience to wait for it.
regards
Peter
James1st
Posts: 318
Joined: Thu Apr 16, 2009 10:28 am

Ferru123 wrote:''''BTW, on the topic of general observations about the markets, I once read in a financial trading book that what you're aiming to do is to buy something when no-one wants it, and sell it when everyone wants it. To a point, I think that's also applicable to trading on Betfair...
I have a house that is currently worth only 60% of what it was 3 years ago. No one wants it and no one in their right mind would buy it when the market is still falling. That caveat also applies to Betfair and a savvy person will buy near the bottom but only when there are definite signs that their investment is likely to rise and not fall after they buy.

On the subject of single tick scalping at random, a discussion that was done to death a long time ago; what is important to remember are a few key facts. Firstly, scalping between 2 points can only work when the market is static and the stats suggest that odds will only trade between 2 fixed points for a very very small %age of the odds life; the vast %age of the time odds will move away from 2 fixed points ie they will move 2 ticks+. Secondly and over many iterations with random offsets, odds will move against you equally as many times as they move in your favour, so ignoring scratches it is still a zero sum strategy. Finally, Scalping without a correct direction prediction in excess of 55% will result in a post commission (I wont say tax!) loss.

Newbies who want to learn how to scalp MUST have an edge that includes a predictive direction. Forget the VT's that "randomly" show scalps on the one click screen; you just cannot successfully trade using this method without using some other indicator.

Newbies, Welcome to the house of fun.
Iron
Posts: 6793
Joined: Fri Dec 11, 2009 10:51 pm

James1st wrote:A savvy person will buy near the bottom but only when there are definite signs that their investment is likely to rise and not fall after they buy.
Surely it doesn't matter whether it's likely to rise or fall, so much as whether you have an edge.

A mate of mine scratches 70-80% of his trades, but still makes a nice profit at the end of the week.
James1st wrote:Firstly, scalping between 2 points can only work when the market is static and the stats suggest that odds will only trade between 2 fixed points for a very very small %age of the odds life;
Agreed, although you do get horses which are fairly static for long periods of time. And there are frequently static markets towards the start of a race, when the price is no longer being buffeted about by momentum traders.
James1st wrote:Scalping without a correct direction prediction in excess of 55% will result in a post commission (I wont say tax!) loss.
That assumes that you take a loss every time the market goes against you. What if the market is ranging, and when it goes against you, you don't scratch immediately, but wait for it to return to you (assuming the WOM suggests it will)?
James1st wrote:Newbies who want to learn how to scalp MUST have an edge that includes a predictive direction.
Even in a tightly ranging market?

BTW, if anyone is interested in scalping, have a look at this thread: viewtopic.php?f=17&t=4128

Jeff
PeterLe
Posts: 3715
Joined: Wed Apr 15, 2009 3:19 pm

James1st wrote:
On the subject of single tick scalping at random, a discussion that was done to death a long time ago; what is important to remember are a few key facts. Firstly, scalping between 2 points can only work when the market is static and the stats suggest that odds will only trade between 2 fixed points for a very very small %age of the odds life; the vast %age of the time odds will move away from 2 fixed points ie they will move 2 ticks+. Secondly and over many iterations with random offsets, odds will move against you equally as many times as they move in your favour, so ignoring scratches it is still a zero sum strategy. Finally, Scalping without a correct direction prediction in excess of 55% will result in a post commission (I wont say tax!) loss.
HI Jim,
I agree with the points you have made above. The only reason I undertook that experiment in random trades was two fold:-

- To prove that you could trade at random and get it right 50% of the time. If this was true, I would then attempt to establish where my biggest losses occurred and try to eradicate them next time round (you only need a slight edge to succeed. the difference between success and failure in this game is much smaller than people think).

- To establish what the stop loss function had overall on the overall results and also to dispel (in my own mind at least) that stop losses were worthwhile*. I concluded that even with a one stop tick stop would decrease the overall effectiveness as it had a detrimental effect overall (albeit minute). Every triggered negative stop loss moves you away from 50:50. It seems obvious now although not at the time.
I've said it before but I never use stop losses now (plenty of net zero trades but not a negative stop loss)

Regards
Peter

* Footnote: This wouldn't be completely accurate in all markets, for example the draw price in a 0-0 game would naturally decrease in the absence of goals so stop losses may be appropriate? I was only interested in pre race horses.

PPS: Hope you had a good holiday!
Photon
Posts: 206
Joined: Mon Nov 29, 2010 10:14 pm

As far I can see a static market only occurs when i) low liquidity which Jeff referred to when say half an hour before the race small amounts get matched or ii) where certainty of outcome e.g. when say See the Stars or Black Cavier trading at 1.1 even then they move more than 2 ticks. Either way there's little to gain but lot more loose even in a static market unless you can reasonably predict which way its going to go first. Scratching trade is fine that alone is not going to give you a positive return unless you can predict, with a reaonsable certainy, which way and why its going to move.
James1st
Posts: 318
Joined: Thu Apr 16, 2009 10:28 am

Ferru123 wrote: Surely it doesn't matter whether it's likely to rise or fall, so much as whether you have an edge.
In the opening posts in this thread, I was very pedantic about the need for any new trader to establish an "edge" and although I thought the general principle of understanding of an edge in pre race trading was clear, perhaps I should be even more pedantic in defining it.

The only "edge" that a pre race trader can develop is one that necessarily tells him whether his prediction of market direction is up or down. By its very nature trading involves buying first or selling first and therefore a trader has, de facto, made a decision about the direction of his trade. You simply cannot have or apply an edge without the basic presumption or knowledge of whether the market is about to rise or fall.

Of course there are many ifs and buts about what to do next should a trader make a wrong call (and there is no use denying the fact that its a wrong call, or in dressing it up as anything other than a mistake). He may well decide to run with his wrong call in the hope that it will rebound in his favour, but we have all experienced the catastrophic consequences that may happen.

Ranging markets (one that has apparent fixed highs and lows) can only be detected after the event, so following a wrong call, it seems to me additionally foolhardy to presume (hope) that this particular market will now settle into a trading range. Most markets want to steam or drift and it is only though sheer bloody mindedness and disagreement that markets can appear to rise and fall like a sine wave.

The definition of an "edge" is an advantage and it is not (unless you have discovered Nirvana) a "certainty" that if X, Y and Z conditions are met then the market is more likely to rise than fall or vice versa. Exploitation of this edge is how we make money as traders but when the edge turns blunt then how we recover determines whether we are profitable traders or not.
Innertube
Posts: 215
Joined: Mon Mar 14, 2011 9:18 am

I trade pre-race very successfully but have no view on direction. Amusing to see people say this is so important.
Iron
Posts: 6793
Joined: Fri Dec 11, 2009 10:51 pm

James1st wrote: The only "edge" that a pre race trader can develop is one that necessarily tells him whether his prediction of market direction is up or down.
Hi James

By 'prediction', do you mean that there's a higher than 50% chance that the market will go in the direction you hope it will?

If so, how do you reconcile your view with the fact that some successful traders have strike rates well below 50%? For example they may combine lots of small losses with a few haymakers, or scratch a high proportion of trades.

Also, there are people who profitably predict that the market will go up and down (if they're trading a flat range, for example).
James1st wrote:Of course there are many ifs and buts about what to do next should a trader make a wrong call [by predicting the wrong direction](and there is no use denying the fact that its a wrong call, or in dressing it up as anything other than a mistake).
It's not a mistake if the trader has an edge and applies proven techniques to the letter.

There are 4 types of bets: Good bets, bad bets, bets that win and bets that lose. You only come out behind long term by not placing bad bets. The fact that you lost doesn't make your bet a bad one - if I back a horse at 10.0 when its true odds are 6.0, it can't be said that I made a mistake if the horse loses... :)
James1st wrote:Ranging markets (one that has apparent fixed highs and lows) can only be detected after the event.
I'm sure there are traders who regularly profit from trading a narrow range, so surely, in some circumstances, it can be safely assumed that a ranging market will continue ranging for a while.

Jeff
Iron
Posts: 6793
Joined: Fri Dec 11, 2009 10:51 pm

Hi Innertube

Do you trade in both ranging and trending markets?

Do you basically work on the principle of cutting your losses and letting your profits run?

Jeff
Innertube wrote:I trade pre-race very successfully but have no view on direction. Amusing to see people say this is so important.
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