Types of charts difficult to interpret

[stueytrader]

There are types of charts and movements that I have great difficulty in understanding. I wonder if others have their own similar bugbears types of movement?

One specific type I find very hard to understand are the hard drift/hard steam in price type - i.e. the most extreme forms of reversal that are possible.

I think this one from a recent race is a fairly good example:

Are there good explanations for this type of movement pre-race?

[ShaunWhite]

Few reasons. Firstly the unmatched volume on some of these is pitifully small and when there's 1000s of Betfair users battling for a couple of hundred quid things get twitchy.

Also on the longer priced runners the movement isn't as radical as the charts make it appear. In your example the price has moved between approx 15 and 25 so that's only a move between a 6.6% chance and a 4% chance. If anyone can predict the likelihood of a horse winning within a couple of % then good luck to them.

Bots might also be a cause, if a strategy is trading every horse in the field, and every race on the planet, then the return on an individual runner is almost meaningless and in order to satisfy a wider objective it's sometimes necessary to pretty much sacrifice your small positions on the outsiders. People will often highlight what they think are 'fat fingers' or what they perceive as errors but sometimes what they're seeing are the anomalies whuch are a biproduct of a much wider strategy.

Cross matching might sometimes amplify these too. There's a bunch of reasons and in any given situation the cause might be one of them or be compounded by several factors coming into the equation.

[Kai]

You don't have to understand it to trade it.

[stueytrader]

I can see some of those points above (including not needing to understand, lol).

However, I'm sort of the person who always wants to understand - especially for trading.

This is another similar one - but even more consistent both ways...

[Atho55]

Scrunching all the data over the timeline does not make it possible to equate what is happening when to the untrained eye. Having the chart populate in line with a fixed period before the event conclusion would let you see what is happening as it happens....IMHO

Like this..

Chart.jpg

[stueytrader]

Yes, the overall pattern pre-off does tell a wider tale for sure.

However, as traders we do often operate solely within those 'crunched up' periods of time, so they are still crucial.

[ShaunWhite]

Yes, the overall pattern pre-off does tell a wider tale for sure.

However, as traders we do often operate solely within those 'crunched up' periods of time, so they are still crucial.

I think Atho meant that the x-axis is nonlinear. What takes 4hrs to slowly drift might then drop in 5mins and they appear to have happened over the same time period.

The bottom line behind most market moves is simple punter sentiment and that's compounded by the way all prices must add up to 100%ish. It only takes someone on the telly talking up a couple of horses to make people think their chances have improved by 10 or 20% and that %age has to be lost somewhere else. That whole move might end up on the one that's playing up in the parade ring. But by the time they've all got to the start, everyone's calmed down and early impressions prevail again.

Markets aren't about looking at numbers going up and down in isolation they're a window on the world. In your examples, what was going on on-course or what was being said? That's probably the reason for the move.

[Kai]

However, I'm sort of the person who always wants to understand - especially for trading.

You are assuming that the price always needs a good reason to move, but what if there's sometimes nothing really to understand?

One specific type I find very hard to understand are the hard drift/hard steam in price type - i.e. the most extreme forms of reversal that are possible.

Shouldn't those types be the first ones where a reversal actually makes sense? When something gets overbacked or overlayed (for lack of a better term) this can trigger a full blown reversal if there is time, because usually there is a point where value switches sides, it's only logical.

Maybe look at it this way, if you see something halving or doubling in price, would you rather join the trend at that point or look to oppose it?

The way I understand preoff (speculatory) markets overall from personal experience is they ideally want to test both ends of the trading range. The market noise may not always make sense because it's random, but the bigger picture and the long term trends ideally should.

[stueytrader]

The way I understand preoff (speculatory) markets overall from personal experience is they ideally want to test both ends of the trading range.

Yes, I agree to a large extent. What I don't quite see however is the consistent reversal in the markets. Maybe jumping around a little, up and down, but the consistent and heavy reversals are the mystery to me. If we think 20s is too big (after a drift for example) I can see it flickering into 18s, but a hard drive back into 12 in comparison? That's the pattern that somewhat confounds me. It's especially after the market essentially hates a selection, as the pre-market move conditions, ie the drift in the first place (why?).

Essentially, I agree with what you guys have suggested about events/rebounds happening, but it's the very hard moves that slightly puzzle me still. A bit of volatility/testing of prices doesn't quite get there as the explanations.

[Kai]

If we think 20s is too big (after a drift for example) I can see it flickering into 18s, but a hard drive back into 12 in comparison?

I get what you're saying, but I've learned not to underestimate genuine momentum, anything can happen when it takes hold of the market, thin markets especially crumble under it, which you can maybe see firsthand if you try bullying a smaller market.

I actually quite like how overly aggressive moves can snap right back, before probably continuing the trend eventually if it's genuine, that way the greediest amongst us get punished by design, otherwise trading speculative markets would be ridiculously easy.

If I were the one controlling the whole market I would ideally want to squeeze every last tick out of a trend, before jumping on the other side and doing the same in the other direction.

[Anbell]

Are there good explanations for this type of movement pre-race?

As others have noted it is difficult to tell because there's no time framer but IMHO the middle bit is most likely a fat finger episode (or a slow moving bot) on the back side leading to a very wide spread of 14::30.

So you have the fat finger bet on the back side, then someone takes the 30 on the other side, then someone places another bet on the back side at 14 (probably thinking they we getting 29)

As for the rest, who knows?

[stueytrader]

If we think 20s is too big (after a drift for example) I can see it flickering into 18s, but a hard drive back into 12 in comparison?

I get what you're saying, but I've learned not to underestimate genuine momentum, anything can happen when it takes hold of the market, thin markets especially crumble under it, which you can maybe see firsthand if you try bullying a smaller market.

I actually quite like how overly aggressive moves can snap right back, before probably continuing the trend eventually if it's genuine, that way the greediest amongst us get punished by design, otherwise trading speculative markets would be ridiculously easy.

One thing for sure, if there's this kind of move and you are attempting to scalp in the wrong direction it can be a disaster - though flipside of course is scalping with the current move in each direction could be great (though likely best just to leave as a swing then).

[stueytrader]

Are there good explanations for this type of movement pre-race?

As others have noted it is difficult to tell because there's no time framer but IMHO the middle bit is most likely a fat finger episode (or a slow moving bot) on the back side leading to a very wide spread of 14::30.

So you have the fat finger bet on the back side, then someone takes the 30 on the other side, then someone places another bet on the back side at 14 (probably thinking they we getting 29)

As for the rest, who knows?

I did think there was some fat finger in the first example yes. Though that wouldn't explain the later shortening on the graph which was basically same.

[Kai]

I did think there was some fat finger in the first example yes.

Not for me, a fat-finger error (by my definition of it) would temporarily take the price well outside the traded range. In your example the price just snapped back to where most money was matched anyway.

[Korattt]

must admit I used to be prone into trying to get involved in every market, now I only pick the ones I’m able to read & quite happy doing it, now I look at a market & see if there is a situation I’m confident with then I’m in.. if not I’m not, in every market I look to identify x & z and then why.