Spotting Value

[Morbius]

Hi guys, something that is bugging me that I hear many people including Peter speak of is "spotting value" in the market. I am sure I can speak for nearly all newbies here and say that I am confused as to what this means in a trading sense on the exchanges. Coming from a punting and poker background, the concept of value is different and it is in financial markets.

So I am curious to know how experienced traders "spot value" in the market. Is it a feel? Is it subjective? Or is it down to your system and results or am I missing something here??

Not asking anyone to reveal their edge (or maybe I am for all I know) so feel free to tell me to do one

Everyone keeps saying Pete's videos and I have seen hundreds (probably too many) and maybe the message was lost. My gut feeling is that value in trading just like punting is subjective and no clear metric exists so that means someone like Derek or Kai etc will come along and tell me otherwise

[Kai]

Unfortunately I ran out of memes

My gut feeling is that value in trading just like punting is subjective and no clear metric exists so that means someone like Derek or Kai etc will come along and tell me otherwise

IMHO it's just a cognitive skill like any other, you build it through (deliberate) practice.

If it was a metric that every quant could easily measure then the success rate would be ridiculously high, that's probably why academics are notoriously bad at things like trading, lol. If it's not black on white, they struggle to perceive value and risk.

[TheRiddler]

For the vast majrity value will be based on a fuzzy huncch from a recalled memory from a previous similar situ. However value can be metricised and if high efficiency is your main target then it is paramount, more so when taking a full position witbin the market. Talking about it is simple, working out floating values and their application to real world markets make being programming your own software and automation very simplistic equivalent to learning how to count from one to three.

Good luck.

[alexmr2]

I believe spotting value is something that comes with experience (just like a car dealer can spot value when ripping people off with a trade-in).

Be careful as a newbie though, it can be a double-edged sword. Horse racing is a very complex sport and there are 100 reasons why something may be moving away from the price you believe is value. As soon as you start falling in love with a trade you can be staring at it like Victor Meldrew saying "surely that's value now" and then "I don't believe it" as it moves further and further away from what you thought into the red. Don't underestimate the momentum of the market.

[jamesg46]

Have to drop this in here (Alan Watts moment.)

https://youtu.be/CZpQHuM06gA

[darchas]

Hi guys, something that is bugging me that I hear many people including Peter speak of is "spotting value" in the market. I am sure I can speak for nearly all newbies here and say that I am confused as to what this means in a trading sense on the exchanges. Coming from a punting and poker background, the concept of value is different and it is in financial markets.

So I am curious to know how experienced traders "spot value" in the market. Is it a feel? Is it subjective? Or is it down to your system and results or am I missing something here??

Not asking anyone to reveal their edge (or maybe I am for all I know) so feel free to tell me to do one

Everyone keeps saying Pete's videos and I have seen hundreds (probably too many) and maybe the message was lost. My gut feeling is that value in trading just like punting is subjective and no clear metric exists so that means someone like Derek or Kai etc will come along and tell me otherwise

Coming from a punting background as you say the concept of value I imagine is pretty much the same. Even the most gambling punter won't place a bet at any odds. Value is just this instinct further and further refined. As it applies to trading this is something that is honed over time I'd say, experience in the markets is all.

[Morbius]

Hi guys, something that is bugging me that I hear many people including Peter speak of is "spotting value" in the market. I am sure I can speak for nearly all newbies here and say that I am confused as to what this means in a trading sense on the exchanges. Coming from a punting and poker background, the concept of value is different and it is in financial markets.

So I am curious to know how experienced traders "spot value" in the market. Is it a feel? Is it subjective? Or is it down to your system and results or am I missing something here??

Not asking anyone to reveal their edge (or maybe I am for all I know) so feel free to tell me to do one

Everyone keeps saying Pete's videos and I have seen hundreds (probably too many) and maybe the message was lost. My gut feeling is that value in trading just like punting is subjective and no clear metric exists so that means someone like Derek or Kai etc will come along and tell me otherwise

Coming from a punting background as you say the concept of value I imagine is pretty much the same. Even the most gambling punter won't place a bet at any odds. Value is just this instinct further and further refined. As it applies to trading this is something that is honed over time I'd say, experience in the markets is all.

These replies (and thanks for replying to everyone by the way) just backed up what I figured. Value is highly subjective in punting and is seemingly evident but the only real proof that it exists is in the long term results. If they are positive enough to overcome the costs of trading then you can find adequate value and it you are showing losses over a sample size with a high confidence level then you aren't and profits and losses are the ultimate metric of finding value....just wondered if I was missing something that was all

[TheRiddler]

Just thought I'd add that Ascot (saturday) was a very good opportunity to understand true value. A friend who trades large sports events ( not myself as I trade other markets nowadays) has used this opportunity to gain a six fig. sum simply by recognising it when offered and acting appropriately. Sometimes you need to use (coerce) traditional traders into offering value from a place they struggle to understand and/or work effectively from.

Happy trading.

[TheRiddler]

Profits from taking a position either side of the book - should have stated.
Don' forget to pay early attention to commission structure otherwise you will have a full-time job keeping it bearable on a low 0.00...ROI unless using bank balance ( not advisable )