Newbies Trading in the Dark

Learn sports betting strategies and discuss key factors to consider when placing a bet.
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followthatcamel
Posts: 73
Joined: Thu Apr 16, 2009 12:54 am

Hi James, thanks for sharing your thoughts; yet another post to stimulate the "little grey cells" * as Poirot would say.

* or in our case the the pink or blue cells!!

Regards
Doug
James1st
Posts: 318
Joined: Thu Apr 16, 2009 10:28 am

On reading a thread yesterday “Inplay trading .... Quitting tips please" I am tempted again to put pen to paper and adding this article to the current thread for Newbies.

As someone pointed out in the thread the psychological aspects of trading raise their ugly head from time to time and unless new traders learn how to handle them they are doomed to failure. It seems that one of the most common mistakes new (and some experienced) traders make is reacting badly to a losing series of trades in a race and going off the rails by attempting to recover that loss on the In-Play market.

Just imagine a futures trader losing £100k in the markets in the morning and then telling his boss that he was taking the afternoon off to visit the dog track to recover his losses. Absurd? Of course it is.

A circus high wire performer goes through a series of training exercises in which he learns the techniques that are safe and those that are not and in the process he is permitted the use of a safety net. However, once he has learned the ropes, his safety net is removed and he is thus compelled to perform only the safe routines that have been properly learnt and practised. Awareness of danger concentrates the mind in a way that no other emotion can. The mere fact that he is performing without a safety net ensures that he takes minimal risk whilst swinging 100 feet in the air.

The In-play market is the poor pre-race traders safety net and traders who rely on it are failing to properly learn their craft. There is no compunction for a trader to remain concentrated and diligent in his trading when he has a set of crutches by his side. Remove all the safety nets and ones trading takes on a brand new outlook; one that ensures that losses are not allowed to run and run whilst at the same time recognising that losing races are inevitable in the course of a days trading.

[Out of interest, anyone who has read Adam Heathecotes blog will not have failed to notice that he averages 4/5 losing races in a 21 day card]

Whether ones trading loss in this race is as the result of poor judgement, volatile markets, dodgy software, mad bombers, false money, ISP or power failures we all know that such losses are an inevitable consequences in the trading game. There are many good trades to compensate for those losses. I used to reward myself for every successful trade by indulging in a weakness of mine, eating a jellybean after every race where I made a profit. In a blinding flash of inspiration one night and being always concerned how I reacted to a losing race, I reversed the reward process and only allowed myself a jellybean when I had a losing race but only when I didn’t react badly to that loss. As a result, my trading improved many fold and another bonus was that I also lost a few pounds.

Several guys have already hit the nail on the head in their suggestion as to how to prevent yourself going in play. The solution is to remove all the safety nets for once and for all and expose yourself to the real dangers of pre-race trading.

I encourage pre-race traders to attach an Excel sheet to BA (whether you think you need one or not) where the sole function of the sheet is disbar any further bets by instructing the sheet to Globally Green up either at the off or In-play (or both). By removing the means to place an in-play bet, we eliminate temptation.

(Link to Peter Webbs tutorial) http://www.youtube.com/watch?v=T8wSGQ2zLrg&feature=fvw
Last edited by James1st on Fri Feb 18, 2011 1:58 pm, edited 1 time in total.
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oddstrader
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Location: Surrey

nice post James
Predicton
Posts: 281
Joined: Sun Sep 13, 2009 3:41 pm

Hi J,

a thoughtful and, thought provoking, post, as ever and chock full of good advice. I'm almost at a loss as to how to proceed from here (very useful word "almost" isn't it?)

I'll have another go, as I think that my point has got a little lost in translation.

I'll start from the premise that everybody has a tolerance level to pain (physical and emotional). Once that tolerance level is exceeded, they will do anything to stop the pain (a factor known and used extensively during torture). As a species, it's not our fault, it's a built in survival technique, there to prevent us doing things that will harm us, over and over again.

In trading terms it is exceeding that tolerance level, that makes people go "off the rails" (we've seen this, even with some of the full timers, as detailed on this forum) and I believe that it could happen to any one of us. The difference isn't that some of us develop a greater tolerance, or a more iron will, no, the difference is that, as we improve, we reach a level of capability which prevents us making sufficient mistakes to trigger the unbearable emotional pain (Mark Douglas has covered emotional pain in his books but from a slightly different angle).

What I was trying to point out, was, no matter how many times traders are told not to go in play, they simply wont be able to prevent themselves if their emotional tolerance level is breached and not to beat themselves up over it. The answer to not going in play is to become good enough to not trigger the unbearable pain, only then will they be able to exert the required control.

Well, that's my view, anyway,

cheers, P
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to75ne
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Prediction

I can see the logic in what your saying but I think it is far more fundamental/deeper than a persons tolerance to pain (physical or mental).

I believe that it’s a far more older/primitive emotion involved mainly fear/greed which at its deepest level is possibly our oldest emotion and very different from the two emotions we normally refer to as greed and fear. The older emotion seems to be the same thing like two sides of the same coin, and is very different to what we understand as greed i.e., Im not hungry, im full up but im gonna eat that pie; or I don’t like what he is saying but hes a big lump, and he is well capable of kicking the crap out of me.

This older emotion is “located” in the oldest part/structure of our brain and is common the all mammals, birds, amphibians and reptiles. It is sometimes called the r complex or reptilian brain (according to the triune theory of the brain). Its function is to protect all your assets (food, water, offspring etc), and kicks in when you are under threat, giving you the highest probability of passing on your genes because that is the only reason life exists as far as it is concerned. There is no down connection from the later evolved higher brain structures where the conscience you/ego would seem to exist, only upward from the more primitive r complex. This is so that you don’t waste time thinking about things when the r complex detects a perceived threat to your assets, it’s a luxury you cant afford, its there to kick in fight or flight responses, not much else.

This as served very well since the first lizard arrived on the scene, and as served humans and their ancestors well over millions years right up to fairly recently when we started living in cities etc. but in the modern world as/can cause us problems.

When your trading and things go wrong and you go inplay by accident for instance, I believe your primitive brain is in control, no matter what you do you rational brain cant seem to do anything about it because it cant send a direct instruction to override the primitive brains function. You know its stupid, you know it will end in disaster, you can see it happening in front of your eyes, but your finger may as well be paralysed.

But your primitive brain is interpreting events as, im gonna loss some of my assets, might only be £2.31p but it does not understand its value, its purpose is to protect my assets at all times no matter what. It as no logic to rationalise things, your higher brain cant directly intervene, and risking £200 to save £2.31p as no meaning to it. As things get worse and you are now potentially gonna lose £185 trying to save a paltry £2.31, it perceives its gonna lose even more of its assets, and now there is no way your rational brain is going to take control . You/your rational brain is now suffering a bad internal conflict along the lines of “click the button for fecks sake” your feeling real bad, getting angry, preying/pleading to God to perform a minor miracle, even if your atheist, but still you do nothing.

Then you lose the lot and rot will truly set in.

Likewise you inadvertently go in play and your liability is £60, and the price goes down you can easily green out for £63.03p, you hesitate, giving time for your primitive brain to see the situation as a threat to your potential assets. Your rational brain can see if you hang a bit longer you can green up £15, a bit longer £70, and possibly £170 if it wins. All this as done as given total control to your primitive brain, which does not see a difference between potential profit and actual profit. All profit is your asset even if you don’t have any yet, as far as its concerned, there is no way your gonna green up and lose your assets. As above thing go pear shaped. Big internal conflict, curse the heavens etc.

I don’t know if you can learn to control your more primitive mind, reading about it, it would seem to be almost mission impossible, and I think we tend to take the wrong approach by concentrating solely on entry/exits points, looking for swings etc. I think we need to spend as much time if not more on learning about our own rational minds and training it not to allow or limiting the primitive minds ability to perceive threats and taking control.

Personally the only way I have found is by knowing what I intend to do before I trade to cut things short knowing how may ticks im willing to lose before I scratch, how many ticks before I green, how many ticks I will take before I red, what time im out of the market etc. ive just stuck to this to where im at the point where its become no more then a habit. By developing habits/reflexes to various situations I believe I give little or no time for my primitive brain to perceive a threat to my real or potential assets, and causeing me any gut wrenching internal conflicts.
Predicton
Posts: 281
Joined: Sun Sep 13, 2009 3:41 pm

Hi T,

I suppose that it boils down to whether or not you believe that the pain barrier/ fear, greed/ primitive brain response can be controlled by training, meditation, willpower or whatever. I believe that in the same way we're unable to leave our hand on a glass partition when a snake bites, or we're unable to not blink when heading a football, we're unable to avoid behaving irrationally in a trade, if it all becomes "too much for us to bear". I hope that you're correct and that this emotion can be controlled, I just have a nagging feeling that it can't, but who knows?

cheers, P
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to75ne
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Predicton wrote:Hi T,

I suppose that it boils down to whether or not you believe that the pain barrier/ fear, greed/ primitive brain response can be controlled by training, meditation, willpower or whatever. I believe that in the same way we're unable to leave our hand on a glass partition when a snake bites, or we're unable to not blink when heading a football, we're unable to avoid behaving irrationally in a trade, if it all becomes "too much for us to bear". I hope that you're correct and that this emotion can be controlled, I just have a nagging feeling that it can't, but who knows?

cheers, P
i believe you can take measures to stop it from taking total control.i know its not easy, this fear/greed thing is not clear cut (just like all emotions), but i dont believe you can completly control it, it is after all a fundemental part of our make up.
woohoojd
Posts: 27
Joined: Sun Feb 13, 2011 12:26 am

James1st I'm totally new to bet angel and found your posts very interesting. I think all your comments are valid and I like your responses to some of the less supportive posts.

I have a couple of questions some directly in response to your posts and others that are general queries from experimenting with the software:

(1) is there an easy way to get hold of historic data to enable analysis of trends... I have seen the excel 'charting' sheet but suspect there is already resource available

(2) you discuss strike rates and their correlation with profit / tick size (i.e. you can accept a lower strike rate if you are trading for more ticks as part of your trading strategy) - please can you expand on this? Are you looking for 5, 10, 20 ticks? Surely there is a point when this moves away from trading and becomes gambling as I imagine there are only so many ticks you can 'trade'. Do these larger tick trading strategies typically involve longer term trades which will tie up your bank for a longer period?

(3) do you have one trading strategy you stick to solely or do you have multiple trading plans for multiple markets (i.e. you trade like this for certain horse races and a different way for other horses and a different way for football or do you just focus on one strategy and one market)?

(4) do you use the dutching and bookmaker features regularly or are these just a tool you use occasionally?

(5) I want bet angel to repeat a previous trade I have placed and closed in a market. For example lay at 2.5 back at 2.52, if this is closed out I want betangel to place anotha lay at 2.5 and so on. Is this only possible through excel integration? I've seen the automation tool but don't fully understand it - does it only place one trade so I wouldnt get the second trade and it seems like you can only state one set of automation rules which will then be applied to all markets where you tick the back / lay automation button. This is no good when you want to apply different prices to different markets.

Any comments much appreciated

Thanks

JD
James1st
Posts: 318
Joined: Thu Apr 16, 2009 10:28 am

First of all let me thank Prediction and to To75ne of the original thread, for their invaluable contribution on this thread. No one has mentioned the human condition about achieving perfection and the extraordinary lengths some people will go to, to be right all of the time. Trading is a game of risk v reward, so it’s impossible to be correct 100% of the time and accepting that there are some races you will lose is part of trading.

Welcome to the forum woohoojd. I will try to answer some of your questions here.

I am not aware of historical trend data being available although the charting from Betfair and from BA will give you an overview of what typical trends look like. If you screen captured the graphs for a period (typically 10 minutes before the off) you would get the general idea and that is all you may need since there are similarities to many financial instruments. Personally I capture the data in Excel and save the data and charts from each race but developing the means necessary is both complex and time consuming.

There is a mathematical relationship between the odds, the stake, the tick size and the number of ticks won/lost and it is something that is fundamental to the money management aspects of trading. It is probably a safe option to use the auto staking feature when you are starting out in trading, such that you will not be overstaking. Basically there are 3 methods of trading: scalping, range trading and trend trading. Each of them have their own relationship formula as typically scalpers look for single ticks, range traders for 1-3 ticks and a trend trader rides the wave for as many ticks as are available in a single trend.

Assuming you are using proportionate stakes (to the odds) then a scalper making 1 tick has to achieve a greater than 50% success rate (some claim to make 85%). It is a fairly simple formula to work out the %age success rate for any average tick gain.

Trend traders can capture many ticks from a trend, although it’s generally the middle third of the whole move but there is nothing to suggest that it is any more of a gamble than other types of trade. It is true that trend traders are not in and out of the market as quickly as scalpers or range traders, so in that respect they are exposed to risk for a longer period.

Every market is different, some trending, some ranging and others pretty static, so it is useful to learn all the skills to maximise profits.

I don’t use Dutching/Bookmaking or the Auto trading function in BA, so perhaps I will leave that question to others with more experience of those techniques than myself.
marcbrennan
Posts: 4
Joined: Tue Apr 26, 2011 12:19 am

Hi James
im a newbie.ive saturated myself in this BA ,videos etc for 6 weeks now .ive blown my 100 euro bank 4 times now.i am verry verry greatfull for your posts,ive taken a alot of great info from them that would have cost me endles financial losses,frustration,and loss of valuable time..i thank you verry much.
sincerly
marc
Iron
Posts: 6793
Joined: Fri Dec 11, 2009 10:51 pm

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?

Mug - Unless the market remains static between now and the off, surely there's a 50/50 chance of whether its next move will be up or down.

Jeff
Mug wrote:
James1st wrote:Mug, I don’t think you are following the crux of my rationale and whilst there is nothing wrong with a reverse book offset strategy, but used at random and in isolation of other qualifying rules for Entry, it is simply not a profitable strategy.
I think you are getting a little mixed up on this one. If you reverse the book and trade on the opposite side then if the price goes one tick against you, you scratch. You don't need a two tick move as you quoted. Also it's not a 50/50 chance that the price can move up or down.
Horatio05
Posts: 8
Joined: Tue Apr 19, 2011 7:52 am

Ferru123

As this thread is headed ‘Newbies Trading in the Dark’ I wonder if you would mind giving a simple worked example of the point you are making in your first paragraph. Such an example would illuminate the situation for this Newbie at least.

Your second paragraph appears to accept James 1st’s point that, in the absence of a known edge, there is a 50/50 chance of the market moving in either direction. This being the case, an example of how you scratch in the 50% of cases when the market moves against you would assist the Newbie in understanding the mechanics of trading.

I am only asking for a worked example of the mechanics of scratching within the context of the reverse offset strategy when the market moves against you - not one that reveals any edge that you may have developed.
Iron
Posts: 6793
Joined: Fri Dec 11, 2009 10:51 pm

Hi Horatio

The current back price on Horse A is 1.49 and the current lay price is 1.5.

You put in a back order for £50 at 1.5, and it gets matched. The price moves up by a tick. You now put in a lay order for £50 at 1.5, which gets matched, meaning you break even.

Let's say that 80% of the time you break even, 15% of the time you make a tick, and 5% of the time you lose a tick (these are hypothetical figures). Long-term, you'd make a nice profit.

There was actually a video a while back produced by a well known trader, in which he kept tossing a coin to decide which way the market was going to go, yet still made a profit!

Jeff
Horatio05 wrote:Ferru123

As this thread is headed ‘Newbies Trading in the Dark’ I wonder if you would mind giving a simple worked example of the point you are making in your first paragraph. Such an example would illuminate the situation for this Newbie at least.
Horatio05
Posts: 8
Joined: Tue Apr 19, 2011 7:52 am

Ferru123

It is very kind of you to explain this issue.

I am with you up to the end of the second paragraph. But if you scratched by putting in the lay bet at 1.5 then under what circumstances would you make (or lose) a tick?
Iron
Posts: 6793
Joined: Fri Dec 11, 2009 10:51 pm

If the price were to move 1 tick down, then you could put in a lay order for 1.49. If it got matched, you'd made a tick profit.

If the price suddenly moved 2 ticks up, you might choose to offer a lay, and you'd take a 1 tick loss if it were accepted.

If the price moved 1 tick up, you might judge from your reading of the market that, if you were to offer a lay, it would be unlikely to get matched. So you opt instead to close using the money available at 1.51, rather than risk letting the market run further away from you.

I hope this helps.

Jeff
Horatio05 wrote:Ferru123

It is very kind of you to explain this issue.

I am with you up to the end of the second paragraph. But if you scratched by putting in the lay bet at 1.5 then under what circumstances would you make (or lose) a tick?
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