Market moves - right or wrong?
Both are valid questions in my opinion.
When embarking on a venture, it makes sense to ask 'What could go wrong?' as well as 'What could go right?'.
I think it only becomes an issue when you become excessively cautious and condemn yourself to failure by default.
Jeff
When embarking on a venture, it makes sense to ask 'What could go wrong?' as well as 'What could go right?'.
I think it only becomes an issue when you become excessively cautious and condemn yourself to failure by default.
Jeff
Euler wrote: I think you could have two what ifs:-
what if?
what if!
Two entirely different things.
A somewhat distorted view, Zenyatta.Zenyatta wrote:Good to see stern warnings by Peter Webb on his blog about the dangers of trend following. I hope newbies heed the warnings.
http://www.betangel.com/blog_wp/2014/10 ... n-trading/
"One of the most common mistakes I see in newbies is trend following."
The only way it is possible to extract profits from pre race trading is by "following a trend". Whether you invest in following the trend or follow it and invest in its reversal, the fact is that the "trend" is the key element that produces the profit. If the odds didn't move then you would be left with scalping between 2 huge sums on the lay and back side.
The Blog article is a bit ingenuine insofar that it uses a "non time limited" example, the weather, to illustrate the point that, sooner or later, there will be a reversal. Of course, if we could trade forever on pre race odds, there too we would eventually see a reversal in odds, but pre race trading is a "time limited" event and it is perfectly possible and does happen that odds move in one direction. Proof of the pudding is that in 95% of races there is a valuable difference between the opening odds (10 minutes out) and the closing odds (at the off); this is a trend and oppose it at your cost.
In Peter's blog example, try restricting the weather forecast to just 3 months at a time and you will not only "see a trend" but would be foolish to oppose it.
There appear to be two views of trends: one that says that you should join them, and another that says that you can profit from anticipating a reversal. Maybe they are both right, and what determines your success with either approach is trade management and staking.James1st wrote:Proof of the pudding is that in 95% of races there is a valuable difference between the opening odds (10 minutes out) and the closing odds (at the off); this is a trend and oppose it at your cost.
Jeff
My apologies guys & gals for posting and then doing a runner. It wasn’t planned. Anyway, I’m back now and thank you all for your responses. I found them most helpful.
I have another question: In theory, people such as JollyG are ideally placed. Not only has JollyG demonstrated an excellent knowledge of horses, he has also demonstrated an excellent knowledge of trading. My feeling is that when these two are combined effectively, they must be very profitable.
Let’s take this example:
A horse’s odds begin to increase and so we place a lay bet in the hope that the odds continue to increase and we are able to place a back bet at some point in the future and trade out for a profit.
Unfortunately, shortly after we place our lay bet, the trend runs out of steam, goes into reverse and prevents us from trading out for a profit.
We now have three options:
1. Trade out for a small loss.
2. Remain in the trade and hope that the odds begin increasing again so that we can trade out for a profit. This may come to fruition or we may end up with a larger loss because the odds continue to fall.
3. Remain in the trade because we believe that horse won’t win.
If we are solely a trader and know little about horses, then we only have options 1 and 2 available. However, if we also understand horses and form etc, then, we have a third option available which we wouldn’t have if we knew little about horses.
I wondered if any of you good people wish to comment on the above?
I have another question: In theory, people such as JollyG are ideally placed. Not only has JollyG demonstrated an excellent knowledge of horses, he has also demonstrated an excellent knowledge of trading. My feeling is that when these two are combined effectively, they must be very profitable.
Let’s take this example:
A horse’s odds begin to increase and so we place a lay bet in the hope that the odds continue to increase and we are able to place a back bet at some point in the future and trade out for a profit.
Unfortunately, shortly after we place our lay bet, the trend runs out of steam, goes into reverse and prevents us from trading out for a profit.
We now have three options:
1. Trade out for a small loss.
2. Remain in the trade and hope that the odds begin increasing again so that we can trade out for a profit. This may come to fruition or we may end up with a larger loss because the odds continue to fall.
3. Remain in the trade because we believe that horse won’t win.
If we are solely a trader and know little about horses, then we only have options 1 and 2 available. However, if we also understand horses and form etc, then, we have a third option available which we wouldn’t have if we knew little about horses.
I wondered if any of you good people wish to comment on the above?
Most of us know, or know of, people who have lost large on the ponies. Theories abound as to why some people win and others lose.
Given that exchanges are zero sum, there has to be winners and losers and which camp someone ends up in could be purely down to luck.
It could also be that the psychological makeup of winners and losers differs and whether someone is a winner or a loser may be determined by their psychological makeup.
The problem with the theory that someone’s psychological makeup determines their ability to win is that it is difficult to prove and Freud didn’t help this cause either when it transpired that he may not have conducted some of the research that he claimed. It also appears that he may have fabricated some of his results in order to support some of his theories. This doesn’t mean that his theories are incorrect, but we should at least question them. We should also question theories which are directly, or indirectly, dependent on Freud’s.
There is also the theory that man arrives at answers using a mixture of emotion and logic and that different people use different mixes and even the same people use different mixes at different times. If this is the case, then it is futile to attempt to analyse man’s actions using logic since some actions may not be based on logic alone.
It is also said that the most complex entity in the Universe is the human mind. Is Man so arrogant as to believe that he is capable of making sense of it?
I accept, although I can’t prove it, that the reason why some people win and some lose may be due to their psychological makeup. The people that I’m aware of that have lost large may well, for all I know, have common psychological failings that were responsible for their losses. That is pure conjecture on my part and is difficult to prove. What isn’t conjecture and is easy to prove is that none of those people tested their systems before they began using them and it wouldn’t be difficult to construct arguments to support the theory that it was a lack of testing that, ultimately, was responsible for their losses.
There are people who would argue that testing is either mostly, or a complete, waste of time since a system’s past success is no guarantee of its future. On this basis, such people would argue that testing is pointless. IMHO, testing is not pointless.
Even though systems have rules, most of the ones that I am aware of are random. Some, however, do have a bias that can be exploited. Without testing, how can it be determined which way a system is biased and, without that knowledge, how can it be determined whether to use it as a backing, laying or trading system?
From a system’s average odds, it’s possible to estimate its strike rate. From its strike rate, it’s possible to estimate its longest losing run and, from that, it’s possible to create an appropriate staking plan for the system. However, without testing, it’s impossible to determine the average odds of the system and therefore impossible to create an appropriate staking plan. Further, if the system does have a bias, then the theoretical and actual strike rates will differ as will the theoretical and actual longest losing runs. Again, this makes it impossible to create an appropriate staking plan.
The above are, IMHO, reason enough to test a system. However, they are not the main reason.
Through testing, experience of the system’s behaviour can be acquired. Experience of its highs, its normal pattern of behaviour and, more importantly, its lows can be gained. Experiencing the lows is important because it can be used once the system goes live. For example, when a system goes through a bad patch, it is normal to ask: ‘Will the system recover or will it continue to perform badly?’. The experience gained from testing can be drawn upon at such times and used to determine an appropriate course of action eg. continue to run the system, suspend the system or abandon it. If no testing has been conducted, past experience cannot be drawn upon and inappropriate action may be taken which results in catastrophic losses.
A good friend of mine ran a backing system that he hadn’t tested although he did claim that it was based on solid logic. For a while, the system performed well and made him a large amount of money. I once asked him why he thought the system was so successful. He said ‘It wins. Who cares why.’ The system became so successful that he considered handing in his notice to become a full time gambler. One day, it suddenly stopped winning. Unfortunately, he didn’t have any past experience of the system to draw on, made some bad decisions as a result, and lost large. Eventually, his bank and credit card company withdrew his credit facilities. He still claims that had they not, he would have recovered his losses. After he was forced to stop running the system, he gave me the rules. My testing revealed that the system didn’t have a backing bias but it did have quite a good laying one. Why did he initially win? During that period, he only made intermittent use of it because he was busy at work.
Basically, he was just lucky. Unfortunately, when his luck ran out, he had no testing experience to fall back on.
IMHO, testing a system over a period of time creates confidence and provides a basis for making good decisions when a system goes through a bad time.
Given that exchanges are zero sum, there has to be winners and losers and which camp someone ends up in could be purely down to luck.
It could also be that the psychological makeup of winners and losers differs and whether someone is a winner or a loser may be determined by their psychological makeup.
The problem with the theory that someone’s psychological makeup determines their ability to win is that it is difficult to prove and Freud didn’t help this cause either when it transpired that he may not have conducted some of the research that he claimed. It also appears that he may have fabricated some of his results in order to support some of his theories. This doesn’t mean that his theories are incorrect, but we should at least question them. We should also question theories which are directly, or indirectly, dependent on Freud’s.
There is also the theory that man arrives at answers using a mixture of emotion and logic and that different people use different mixes and even the same people use different mixes at different times. If this is the case, then it is futile to attempt to analyse man’s actions using logic since some actions may not be based on logic alone.
It is also said that the most complex entity in the Universe is the human mind. Is Man so arrogant as to believe that he is capable of making sense of it?
I accept, although I can’t prove it, that the reason why some people win and some lose may be due to their psychological makeup. The people that I’m aware of that have lost large may well, for all I know, have common psychological failings that were responsible for their losses. That is pure conjecture on my part and is difficult to prove. What isn’t conjecture and is easy to prove is that none of those people tested their systems before they began using them and it wouldn’t be difficult to construct arguments to support the theory that it was a lack of testing that, ultimately, was responsible for their losses.
There are people who would argue that testing is either mostly, or a complete, waste of time since a system’s past success is no guarantee of its future. On this basis, such people would argue that testing is pointless. IMHO, testing is not pointless.
Even though systems have rules, most of the ones that I am aware of are random. Some, however, do have a bias that can be exploited. Without testing, how can it be determined which way a system is biased and, without that knowledge, how can it be determined whether to use it as a backing, laying or trading system?
From a system’s average odds, it’s possible to estimate its strike rate. From its strike rate, it’s possible to estimate its longest losing run and, from that, it’s possible to create an appropriate staking plan for the system. However, without testing, it’s impossible to determine the average odds of the system and therefore impossible to create an appropriate staking plan. Further, if the system does have a bias, then the theoretical and actual strike rates will differ as will the theoretical and actual longest losing runs. Again, this makes it impossible to create an appropriate staking plan.
The above are, IMHO, reason enough to test a system. However, they are not the main reason.
Through testing, experience of the system’s behaviour can be acquired. Experience of its highs, its normal pattern of behaviour and, more importantly, its lows can be gained. Experiencing the lows is important because it can be used once the system goes live. For example, when a system goes through a bad patch, it is normal to ask: ‘Will the system recover or will it continue to perform badly?’. The experience gained from testing can be drawn upon at such times and used to determine an appropriate course of action eg. continue to run the system, suspend the system or abandon it. If no testing has been conducted, past experience cannot be drawn upon and inappropriate action may be taken which results in catastrophic losses.
A good friend of mine ran a backing system that he hadn’t tested although he did claim that it was based on solid logic. For a while, the system performed well and made him a large amount of money. I once asked him why he thought the system was so successful. He said ‘It wins. Who cares why.’ The system became so successful that he considered handing in his notice to become a full time gambler. One day, it suddenly stopped winning. Unfortunately, he didn’t have any past experience of the system to draw on, made some bad decisions as a result, and lost large. Eventually, his bank and credit card company withdrew his credit facilities. He still claims that had they not, he would have recovered his losses. After he was forced to stop running the system, he gave me the rules. My testing revealed that the system didn’t have a backing bias but it did have quite a good laying one. Why did he initially win? During that period, he only made intermittent use of it because he was busy at work.
Basically, he was just lucky. Unfortunately, when his luck ran out, he had no testing experience to fall back on.
IMHO, testing a system over a period of time creates confidence and provides a basis for making good decisions when a system goes through a bad time.
I'd disagree on your first point, it's perfectly possible to scalp given the right conditions as showed in another thread, but it would be suicide to do that in some races. Though even scalping has an element of directional bias, but it doesn't require a direction to profit from it.James1st wrote:The only way it is possible to extract profits from pre race trading is by "following a trend". Whether you invest in following the trend or follow it and invest in its reversal, the fact is that the "trend" is the key element that produces the profit. If the odds didn't move then you would be left with scalping between 2 huge sums on the lay and back side.
Proof of the pudding is that in 95% of races there is a valuable difference between the opening odds (10 minutes out) and the closing odds (at the off); this is a trend and oppose it at your cost.
Some of the semantics in the discussion are around time. The longer you are in the market the more likely it is to inherit a directional bias.
If you look at the very short term there isn't a bias, but over the long term there is (to an extent). According to my research it's difficult to spot a directional bias in less than ten seconds. But over longer time periods you get more and more confirming signals.
Once a trend is underway it's, generally, impossible for it to continue forever so that explains why reversals work.
I've managed to come up with an equation that shows you how to trade a market. Of course it's perfect once the market has passed but you can obviously use it to tease out the best characteristics and predict how a market is likely to trade and what to do about it. As you alter one parameter it affects another so that is where your trading style comes into it. More than one way to skin a cat as they say.
Stats can fool people as well. You often hear people saying the market is a zero sum game, which it can be depending on how you look at it. But if you look at the broads stats the average move is ZERO. Yes ZERO. So justification for a zero sum comment?
But that hides what the market is all about. You are trading volatility, not direction really. A steam of 20 ticks and a drift of 20 equals zero in a statisticians eyes, but in a traders eyes that looks like a good chance of a profit.
Forget about 3 unless your name is JollyGreen.Tonto wrote: We now have three options:
1. Trade out for a small loss.
2. Remain in the trade and hope that the odds begin increasing again so that we can trade out for a profit. This may come to fruition or we may end up with a larger loss because the odds continue to fall.
3. Remain in the trade because we believe that horse won’t win.
If we are solely a trader and know little about horses, then we only have options 1 and 2 available. However, if we also understand horses and form etc, then, we have a third option available which we wouldn’t have if we knew little about horses.
I wondered if any of you good people wish to comment on the above?
Jeff
From my limited experience, people either back, lay or trade. My argument is that understanding all 3 is what we need to strive for. That way, whatever situation we find ourselves in, we have a solution.Ferru123 wrote:Forget about 3 unless your name is JollyGreen.Tonto wrote: We now have three options:
1. Trade out for a small loss.
2. Remain in the trade and hope that the odds begin increasing again so that we can trade out for a profit. This may come to fruition or we may end up with a larger loss because the odds continue to fall.
3. Remain in the trade because we believe that horse won’t win.
If we are solely a trader and know little about horses, then we only have options 1 and 2 available. However, if we also understand horses and form etc, then, we have a third option available which we wouldn’t have if we knew little about horses.
I wondered if any of you good people wish to comment on the above?
Jeff
If you assume that a drifter is worth a lay, you're on dangerous ground unless you have excellent reasons to believe that its true price is higher than the available price. Often, horses drift and drift and go on to win comfortably.
Unless you're a value specialist, I'd forget about outright backing and laying, as all that will happen is that you'll bet at efficient prices and Betfair's commission will erode your betting bank.
Jeff
Unless you're a value specialist, I'd forget about outright backing and laying, as all that will happen is that you'll bet at efficient prices and Betfair's commission will erode your betting bank.
Jeff
Tonto wrote: From my limited experience, people either back, lay or trade. My argument is that understanding all 3 is what we need to strive for. That way, whatever situation we find ourselves in, we have a solution.
Tonto wrote:From my limited experience, people either back, lay or trade. My argument is that understanding all 3 is what we need to strive for. That way, whatever situation we find ourselves in, we have a solution.Ferru123 wrote:Forget about 3 unless your name is JollyGreen.Tonto wrote: We now have three options:
1. Trade out for a small loss.
2. Remain in the trade and hope that the odds begin increasing again so that we can trade out for a profit. This may come to fruition or we may end up with a larger loss because the odds continue to fall.
3. Remain in the trade because we believe that horse won’t win.
If we are solely a trader and know little about horses, then we only have options 1 and 2 available. However, if we also understand horses and form etc, then, we have a third option available which we wouldn’t have if we knew little about horses.
I wondered if any of you good people wish to comment on the above?
Jeff
Gambling stakes are much lower than trading stakes, hence 3 is incompatible with 1 & 2.
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NeilSpence
- Posts: 78
- Joined: Sun Nov 17, 2013 11:58 am
by Ferru123 » Sun Nov 02, 2014 11:11 am
If you assume that a drifter is worth a lay, you're on dangerous ground unless you have excellent reasons to believe that its true price is higher than the available price. Often, horses drift and drift and go on to win comfortably.
Sorry, can't do the quote thingy.
Ferru123, This statement may be true but at whatever the price the horse is drifting to the market must still be efficient so at 10/1, the implied odds of it winning is still the same relative, so if you randomly lay 10 drifters at 10/1 than 1 in 10 should come back to win. A break even point(disregarding commission). If you can race read to a degree and dont blindly lay everything at that price then value must be there somewhere, mustn't it. It sounds as though for one reason or another you are ruling out all 3 options.
Surely a race reader can find a false drifter and leave that one and lay the others?
If you assume that a drifter is worth a lay, you're on dangerous ground unless you have excellent reasons to believe that its true price is higher than the available price. Often, horses drift and drift and go on to win comfortably.
Sorry, can't do the quote thingy.
Ferru123, This statement may be true but at whatever the price the horse is drifting to the market must still be efficient so at 10/1, the implied odds of it winning is still the same relative, so if you randomly lay 10 drifters at 10/1 than 1 in 10 should come back to win. A break even point(disregarding commission). If you can race read to a degree and dont blindly lay everything at that price then value must be there somewhere, mustn't it. It sounds as though for one reason or another you are ruling out all 3 options.
Surely a race reader can find a false drifter and leave that one and lay the others?
Yes, and commission will mean that you eventually lose your bank.NeilSpence wrote: whatever the price the horse is drifting to the market must still be efficient so at 10/1, the implied odds of it winning is still the same relative, so if you randomly lay 10 drifters at 10/1 than 1 in 10 should come back to win. A break even point(disregarding commission).
If you think you can outsmart a hyper-efficient market with a bit of home spun analysis like 'This horse isn't the top RPR rated horse, the trainer isn't doing great, and it doesn't have a fantastic track record at this distance', then you're in for a rude awakening.NeilSpence wrote: If you can race read to a degree and dont blindly lay everything at that price then value must be there somewhere, mustn't it.
You're assuming that the people on the other side of the trade are too thick or too lazy to have found out those things and taken them into account. That's a bit presumtuous...
I honestly have no idea where you got that impression from.NeilSpence wrote:It sounds as though for one reason or another you are ruling out all 3 options.
If they are good enough, yes. I'd lay a JG tip. However, I wouldn't bet on a tip from any of these guys: http://www.bestbet-online.com/papers.htmNeilSpence wrote:Surely a race reader can find a false drifter and leave that one and lay the others?
Jeff
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NeilSpence
- Posts: 78
- Joined: Sun Nov 17, 2013 11:58 am
My point is that you say they drift and drift and win all the time, which is true but your next statement suggests even that drifting is still within the accuracy of the hyper efficient market.
""If you think you can outsmart a hyper-efficient market with a bit of home spun analysis like 'This horse isn't the top RPR rated horse, the trainer isn't doing great, and it doesn't have a fantastic track record at this distance', then you're in for a rude awakening.
You're assuming that the people on the other side of the trade are too thick or too lazy to have found out those things and taken them into account. That's a bit presumtuous...""
I am the worst race reader in the world. I am looking for an automated system. Either the drifters come back and win "all the time" or the market is hyper efficient, it can't be both. All automated systems try to find that exploited weakness, and I am merely asking if that could be somewhere around a higher drifting price, Is the market extremeley efficent around 10-15/1 or is there some leeway there? Do more come back and win once drifting or do the correct amount come back to win when drifting? I am also only talking about in play so more relating how the race is unfolding, not relative to a SP of around the same odds.
""If you think you can outsmart a hyper-efficient market with a bit of home spun analysis like 'This horse isn't the top RPR rated horse, the trainer isn't doing great, and it doesn't have a fantastic track record at this distance', then you're in for a rude awakening.
You're assuming that the people on the other side of the trade are too thick or too lazy to have found out those things and taken them into account. That's a bit presumtuous...
""I am the worst race reader in the world. I am looking for an automated system. Either the drifters come back and win "all the time" or the market is hyper efficient, it can't be both. All automated systems try to find that exploited weakness, and I am merely asking if that could be somewhere around a higher drifting price, Is the market extremeley efficent around 10-15/1 or is there some leeway there? Do more come back and win once drifting or do the correct amount come back to win when drifting? I am also only talking about in play so more relating how the race is unfolding, not relative to a SP of around the same odds.
Why not? Some drifters will run like donkeys, others will run like the wind, but the overall starting price is extremely accurate.NeilSpence wrote: Either the drifters come back and win "all the time" or the market is hyper efficient, it can't be both.
If backing drifters yields an overall profit, it may be a matter of time before the cat gets out of the bag, which may remove the edge and possibly even create a laying edge. And vice versa.
Peter once published a chart on his blog which showed the p&l for (I think) laying the draw in football. For thousands of bets, you'd have made a profit. You'd have thought you'd discovered the Holy Grail; the sample size would have convinced you your success couldn't possibly have been due to random chance. Then suddenly, it would have all fallen apart.
Jeff