Newbies Trading in the Dark

[Alpha322]

A Pre-race trader executes his business, scalping or swing trading, before the start of a race, according to his own plan. His expertise is very specific to gaining more ticks than he loses, hence it is unwise to allow incomplete trades to go in running where the outcome is unpredictable. That is not to say that punters who specifically play the in-running markets should not do so, if that is their chosen playing field. Even this form of gambling requires discipline and anyone who flys by the seat of their pants in any market will soon find themselves crashing to the ground.

Good points James i understand where you are comming from, you have posted some good points for newbies, but in my experience some of it may be to deep for the newbie to take on. We all have to learn to lose money (that is money we can afford too) before we can gain, any business is like that, i look at trading as a business venture (without Tax hedache etc). I use to loose hand over fist in play till i worked out the point where you have to say bye with a little loss. If you know your game /sport then in play is not a gamble, it is just like pre trading. It is a gamble when you dont know what your doing. We all Gamble on pre race market trading, but the skill is to have a edge, your edge like alot of others on here is reading the markets. I have just now managed to read the markets as prices move, knowing when to click that mouse, i lay so i look for the dancers(drifter dancing away from price.) I have had some great success over the pass weeks which indicates to me my skill is improving. It will take a newbie to read read and read, even invest in a course like Peter,s. There was alot of bad web press about them on other sites, but i actually employed some information from the course that has brought me to this stage.
In play trading can build your bank quite rapid if you have dicipline and can trash it if you dont, the edge with inplay is not about fast pictures its about knowing what you can have out the trade and where you must leave the trade. As in Forex they call this a limit order. Limit Order + sceonds = your profit. I do this mostly on Favourites, BA greens up my Liability and then in go,s the favourite to win, not dangerous at all and very profitable
Keep the posts going as i said newbie traders must not expect the golden goose over night, i havnt even got it yet but in time i know it will be inbeded in my laptop with more studying and paitence.

[mattiebee99]

James, thank you for your help.I wish I had read this thread earlier. Im from Australia and have just spent the past couple of (late)nights testing and coming to grips with BetAngels functions and the theory behind trading. Indeed its not for the faint hearted. I made pretty much all of the mistakes you mentioned(except I dont have a loft at home). I actually won more money by missing lay bets. Its amazing, one night I felt untouchable, picking up movements at the blink of an eye then the following night every movement went in the opposite direction. Frustrating! Im determined so I'll keep practicing. Thanks again.

[CaerMyrddin]

Completely OT, but as you're trading from Australia I would like to ask you, what are the response times you get when trading from Australia to the UK, and the times you get when trading Australia races. Thank you!

[mattiebee99]

Betting inside Australia b/ween 30-50. Into G.B. around 350. Too sluggish?

[CaerMyrddin]

I don't think so, it's as if you had switched times with me, which was to be expected. Thank you!

[bapanties]

Very interesting thread.

As an old newbie (as old as new) there seemed to be two sub threads:

Small vs Big Stakes
I don't recall James1st ever advocating NOT to use small stakes; rather he was more concerned with establishing reasons to open any trade at all.

Reverse Book
I use it quite often, with some success. But as others have mentioned, when the market settles enough to alternate between just two prices the volume of money available at those prices rapidly increases. Your stake will only be matched after bets placed earlier. Therefore there is an optimum time (as in all trading - "before anyone else notices!") to open your trade.

Trading is betting. There I've said it. Whether it be financial or sports, we want to buy cheap and sell dear. And we're simply betting on our ability to predict that.

I wouldn't expect that ability to be for sale at an affordable price - it's a skill to be honed and thus worth more to the owner. BA is a tool to be used, in the same way you can cook with a wok, but owning a wok doesn't necessarily make you a cook.

[Alpha322]

Very interesting thread.

Reverse Book
I use it quite often, with some success. But as others have mentioned, when the market settles enough to alternate between just two prices the volume of money available at those prices rapidly increases. Your stake will only be matched after bets placed earlier. Therefore there is an optimum time (as in all trading - "before anyone else notices!") to open your trade.

Trading is betting. There I've said it. Whether it be financial or sports, we want to buy cheap and sell dear. And we're simply betting on our ability to predict that.

Good points something i use to question. Trading is actually not betting to a point. You have 2 edges that the regular high street punter doesnt. Dicipline (if you can endure it) and indicators that tell you when to open your trade, yes you can lose but if you manage your position properly you lose a tiny proportion of your stake. The GAMBLER will lose all his stake with no come back. Thats why i believe in redding up when you get it wrong. To sit there with £100 etc sitting on a traded selection hopping it doesnt go in is a gamble. Here,s a paragragh from a forex tutor


>>Cut Losses and Let Profits Run - Cutting the Wrong End

A trader may be in the red by $1000. If the trader were to cut his losses now, he knows exactly what his loss is, $1000. However, by staying in a losing trade, he is taking a chance that he might recover. But this also leaves him open for deeper losses of an amount he is not aware of. That known amount is put aside in favour of possibly making it much worse. Thus, a gamble at best.<<<

Reversing the book is ones preference i found. I perform with it set normal

[BLUFFdisko]

Regarding your post, i have a lot of bad thing to so, but i wont be crying them out ,because its always a god thing when someone is trying to help new traders.
Ofcouse there are some god advice in your post, as money mannegement, tradingplans,and stoploses.
I have my(as many others) own way of trading, and i wont be telling anybody about it, but if i was to give some advice to new traders it would be this, and its quite simple.

1:Get camtasia software
2:Make a trading screen where you can see the betfair graph of the 3 first favorites, the ladder of the first favorite, and the advanced chart of the first favorite, setting it at, candlestick, 10 secound refreshrate, use slow moving average, envolope for slow M A, and a 200 widt data points.
3: set guardian to automatically switch markets every 600 secounds.
4: Press record

Make recordings for 5 days mon to friday
When there is a big move you can now reweind to see what really happend before the move.
keep an eye out, when the odds break the boilingerbands

It all comes down to getting a feel for the markets, and nobody can teach you that.

OK POST JAMES, BUT TOO COMPLICATED FOR ME.

Sry for my english, im from denmark

[jimbob04]

hi guys im new just saying hi

[James1st]

Welcome Jimbob!

I haven’t been back to this thread in some time after my treatise outlining my thoughts as to what might be useful to newcomers to trading. Along the way there were a few “old school” detractors but in the main the response both in the Forum and via PM was generally appreciative and there were some interesting remarks posted about my more formal and structured approach to the betting markets.

One of the first indicators any newbie discovers in BA is the Weight of Money (WOM) indicator and indeed it features prominently in the graphing of that product. However, most people new to observing how the WOM %age behaves (at the top of the ladder) will miss some very important points.

Notwithstanding the fact that the WOM is a simple %age calculation based on the sums in the ladder in the foremost 3 “back” positions expressed as a %age of the “back+lay” figures (totals at the bottom of the ladder), the premise that WOM in itself is a useful measure couldn’t be further from the truth (without several other important considerations). Whilst it would appear that WOM’s in excess of 50% should imply that the market odds are rising and falling when the WOM falls below 50%, this is very rarely the case in practise.

1. Without an understanding of market liquidity and its timing one would be foolish to take any observation of the WOM behaviour as indicative and its usefulness is in question until there are meaningful amounts of money being traded in the market.
2. Since WOM is a measure of the sums “on offer” to back or lay a selection; this is no guarantee that ANY of those particular sums of money are currently being traded. Simple observation of the last traded odds will often highlight the fact that the ladder odds may be several points ahead or behind the last traded price and consequently the sums on offer (WOM) are in fact simply declarations of intention rather than a measurement of what is actually happening.
3. Every market has “spoofers”, people who corrupt the WOM by placing relatively large sums of money, just off the pace, without ever having the intention that they be matched. Equally there are spoofers on both sides of the WOM equation.
4. There has been a lot of debate whether or not WOM is a “leading” indicator or whether it lags behind the price action. The truth is that it can be both at various times in its cycle and a clearer understanding of those cycles is necessary to utilise its usefulness.

After studying many hundreds of price actions I have observed that the WOM is a much-misunderstood indicator that is often put to misuse by newbies (and others) seeking to capitalise on one of the very few over hyped indicators available in most trading software.

Firstly it is necessary to clarify that WOM is a “momentum” indicator and is a measure of price action “when price is actually on the move”. The more static the odds, the less effective the WOM is as an indicator of price action. Most times when the odds are moving fast the WOM will be seen changing from eg 35% to 85% in the blink of an eye.

Secondly, the WOM often reverses during an up or downtrend long before the top or bottom is reached and when there is no other visible evidence that it should do so.

Finally and this brings me to an important point in relation to the WOM; because the WOM rarely “carries through” a momentum move, it falls short simply because it has already predicted the following reverse move in the market odds and therefore can appear both predictive and lagging in nature (before/during/after a momentum move). I am aware that some traders make use of the WOM to assist with entries/exit trades but for a newbie to take this indicator at face value is asking for trouble. A hint in the right direction would be to look at the 5/6/7 period moving average of the WOM and compare those to the original values. This will open up a world of insight to those who haven’t yet looked.

[Caerus]

Hi James,

Very insightful post...

Can you explain the 5/6/7 period in the wom?

Thanks

[James1st]

Hi Caerus

The WOM plotted on a graph is a very erratic beast and difficult to make sense of to the untrained eye. For example in a strong downward move in odds, the WOM will move down with the odds, often overtaking them. However, the WOM will have reversed AND moved back to the top (say 85%+) BEFORE the odds have reached their lowest value and turned around..viz the WOM will show as increasing as the odds are still falling. This is a momentum oddity (about which I will write more at a later date).

In order to "see" the WOM in relation to odds movements, we need to slow down and smoothe the graphing using a moving average (averaging wom over the previous 5/6/ or 7 readings). Only then will you see just when the WOM is predictive and when it is lagging.

[Exacta]

Why not just switch on the moving average? You are making it more complicated that it really is.

[followthatcamel]

Hi James, Happy New Year!!

I have always enjoyed reading your posts and found them to be very informed and thought stimulating. Still looking forward to your views on "momentum oddity" that you mention and was wondering if this is something you still plan to post?

Regards
Doug

[James1st]

Why not just switch on the moving average? You are making it more complicated that it really is.

Exacta. There are many settings for moving averages and equally many time frames. The default BA settings will not show what I explained.

Hi James, Happy New Year!!

I have always enjoyed reading your posts and found them to be very informed and thought stimulating. Still looking forward to your views on "momentum oddity" that you mention and was wondering if this is something you still plan to post?

Regards
Doug

Hi Doug.

Ages since I did a post in this thread, so the subject of "momentum" is as good as any to restart.

Momentum is a key advantage for trend traders and whilst scalpers seek to avoid periods of instability, trend traders pray for good momentum. It is all very well being able to recognise a trend and to jump on board but no trader likes his money languishing too long in the market, so trends that have good momentum are the home runs that trend traders need to survive. Like a crab, the trend trader spends a lot of time moving sideways ever ready to strike at the first opportunity. The less time a crab spends on open ground the less likely he is to be eaten alive.

In my last post I described the WOM as a momentum indicator and how plotting it can show you when it is leading or when it is lagging. For the most part the WOM (as recorded in BA and notwithstanding the abberations I previously mentioned) is a useful tool but knowing when to use it and how to use it is often contrary to its face promise. The “oddity” to which I referred in an earlier post is that the WOM can appear to be out of sync with price movement but remain fully in sync with price momentum (you may need to think about that for a moment). WOM is a combined expression of the market makers intent to move the market in a particular direction; it is not a measure of any move that has yet taken place nor is it a guarantee that any move will happen. WOM is in fact a much more useful as a tool in determining the end of a run rather than the start of one.

Graphically, momentum moves appear as acute angled as opposed to slow trends that will appear as obtuse. Momentum moves in a market are always good news since there is a very short time between entry and exit of a trade. It is never a good thing for any trader to hang about in the market being filled on only one side of his trade. One could argue that the ladder is just as useful in illustrating momentum when it flies off in one direction but then again, the rate of change in the ladder movements are subject to many variables eg refresh rate, other software running on your PC, personal observation etc. A picture presents a much clear view in my opinion.

Much like the WOM is another indicator I developed myself to help define momentum. For the purpose of this post I will call it the Doppler (google it) and its purpose is to measure price action over time and produce an expression that swings across a zero line. This marker is a much truer indication of the velocity of price swings and when used in combination with the WOM has proven to be a very valuable trading tool. Trend traders need to use a different set of tools than a scalper since their entries/exits must be clearly defined, measurable and reliable. Momentum indicators are important since they visibly show us just when the momentum is increasing or decreasing, allowing the trader to enter or exit his trade efficiently.

Just a short note to readers who find these posts too complex or too long.

Out there in the real world there are millions of words, books and videos written on the subject of trading since the 18th century. My concise summaries only scratch the surface of what real traders do but I hope in some small way my few words save a newbie a bob or two by making him think about what he is doing or is about to do.