Dipping a toe

[BoSelecta]

Hi Guys,

First of all thanks for having me on the forum, what a fantastic resource! I've been doing my homework on trading as much as I can and its great to come across an active board like this.

Having built myself up around a 1k bank doing matched betting free offers i'm about ready to dip my toe in the water with some trading in trading mode before moving onto using £200 banks.

I'm sure I'll have a few but there's one thing which i've come across to date which i ont quite understand and that's the Force open 'Reverse' setting and how this 'offers money to the market' - surely you are offering money to the market regardless? Or are you only taking money from what is offered if you do no have this setting on?

Apologies if this is a rediculous question.

Thanks,

Scott

[Euler]

When it is set to none when you click you simply back at the best available back price or lay at the best available lay price.

When reversed it will offer money to the market meaning it waits in the order queue and you have to sit and wait for it to be filled.

Best explained here: -

http://www.youtube.com/watch?v=ai0CpQ8cahg

[BoSelecta]

Brilliant thanks Peter.

I've done 4 or 5 hours reading on the forum over the last couple of days and there really is so much to take in. Excited to get started and see how the market feels; I'll be taking my free month's trial next week. My short term goal is to learn as much as possible, best case scenario would be to turn a small bank into enough to attend the Trading Master Class. We shall see.

Scott

[BoSelecta]

I hope it's okay to ask a further question here, I'm aware that I have yet to hit the markets and so hope this question isn't frustrating to anyone in that it could be answered quickly and easily as soon as I take the plunge.

Having said that; over the course of my research i have come across some nuggets and tit bits which have given me small inclinations into what my style may be and how i may or may not be able to define a small edge which takes me above and beyond the 50:50 coin toss when scalping.

One of these has been the relationship between the favourite and second favourite. As the second favoutite falls (known as steaming i gather) then the market must compensate for this - commonly we'll see the favourite drift out to relieve the market pressure. My question is this; is there any sort of delay between the 2nd steaming in and the fav drifting out? If the 2 happen completely in unison then the 2nd steaming is no more of an indication that the fav will continue to move north than simply watching the favourte begin to to move north, if you see what I mean.

I hope I've managed to get that across!

Thanks,

Scott

[James1st]

BoSelecta, You summarised that precisely. In fact that "nugget" of information re the favourite moving in one direction and the second favourite going the opposite way is a nugget of fools gold.

The 2 events do happen concurrently and as you say, making the info of little use.

(Proviso: sometimes a non favourite is backed and the odds fall so quickly that the drift on the fav can be slightly delayed but its a rare event)

[Euler]

The 2 events do happen concurrently and as you say, making the info of little use.

One great thing about trading is that one mans anathema is another's treasure. Understanding that prices can be inversely correlated shows that you are looking at the markets, which is great. How you use that information is another thing. But having two inversely correlated prices can actually create some great trading opportunities.

But obviously a lot depends on your trading style.

[Iron]

Perhaps you are both right.

I agree with James that, if Horse A starts to steam at the precise moment that Horse B starts to drift, then Horse A's movement is of no predictive value in terms of what will happen next with Horse B. However, if you have a large bank and want to push as much money as possible through the market, then trading both horses simultaneously might not be a bad idea. Also, if you trade both horses, Horse A might decide to start drifting or go sideways, in which case you can cut your trade for a slight loss, whereas Horse B might drift massively. Is that the kind of thing you had in mind Peter?

Jeff

The 2 events do happen concurrently and as you say, making the info of little use.

Having two inversely correlated prices can actually create some great trading opportunities.

[BoSelecta]

Thanks for the replies, I appreciate your time and insight. I had my first hands on experience with the markets today scalping horses before the off. I traded 13 races making a loss on 10 of them to come out £3.56 down for the day

Through my inexperience and inadequacy with the software I managed to let my 2nd race of the day go in play thereby reinforcing a valuable lesson which I was sure I'd taken on board through my research! This accounted for over half of my total losses but at -£1.96 it'll represent a valuable investment if I never let it happen again.

If anything I'd say that my initial struggles arose from:

i. When I successfully predicted the market often I wouldn't get matched in time and would therefore miss the opportunity.

ii. Unsuccessfully predicting the market brought with it the opposite effect - I was of course always matched.

iii. Successful trades netted my 1 tick profit whereas unsuccessful trades often took me to my stop costing me 3 ticks

All in all an interesting initial experience.

Scott

[Euler]

if you trade both horses, Horse A might decide to start drifting or go sideways, in which case you can cut your trade for a slight loss, whereas Horse B might drift massively. Is that the kind of thing you had in mind Peter?

Exactly

[BoSelecta]

Struggling to get my head around that one unfortunately. If we are discounting the movement of horse A as a general indication as to horse B's likely movement in the immediate future then I don't see how we can then interpret the same movement of horse A as a sign that the concurrent movement of horse B will be a significant shift in a given direction.

Or is it a case of simply getting on both movements and reacting dinamically from there; hoping to ride a significant movement on one while cutting any losses on the other.

Having said all of this I'm yet to get myself into a position where I can evaluate the stream of information from more than one ladder so the point, for me at this stage, is somewhat moot!

I spent the day today trading 17 meetings, concentrating almost solely o the favourite and using almost exclusively the WOM to establish my entry and exit points. Once I get my head around the WOM I'll start incorporating other indicators.

Day 2 results: 17 meetings traded - 6 for a profit, 9 for a loss with a net P/L of -£0.93.

An improvement on yesterday at the least.

Scott

[Iron]

Hi Scott

It's easy to tie oneself in knots when trying to predict the market's next move. I know a trader who makes a living from predicting market direction (and has an 80% strike rate), but whilst that's a useful skill, in my view it's unnecessary.

Rather than predicting the market's direction of travel, why not simply toss a coin to decide the direction of your trade, and then use the principle of cutting losses and letting profits run? You might be surprised at your results. And remember that you'll almost break even by trading at random, so you don't need to improve much on that.

Good luck

Jeff

[BoSelecta]

Thanks Jeff - sounds like an interesting strategy. Strangely enough I've found that, when coupled with an inexperience with the market, the BA tools have the exact opposite effect. The tool automatically culls your profits by placing the required back/lay at 1 tick profit while placing a stop loss which runs losses to 3 ticks.

The much lauded 'anything above 50%' strike rate comes under some duress when you infact need a 75% strike rate just to break even if you let things pan out. Of course this is a lesson I learnt quickly and my relative improvment from yesterday came through managing to scrath or take 1 tick losses on numerous occasions rather than letting losses run through to my stop.

Food for thought.

Scott

[BoSelecta]

Thanks Jeff - sounds like an interesting strategy. Strangely enough I've found that, when coupled with an inexperience with the market, the BA tools have the exact opposite effect. The tool can automatically limit profits by placing the required back/lay at 1 tick above entry while placing a stop loss which runs to 3 ticks.

The much lauded 'anything above 50%' strike rate comes under some duress when you infact need a 75% strike rate just to break even if you let things pan out. Of course this is a lesson I learnt quickly and my relative improvment from yesterday came through managing to scrath or take 1 tick losses on numerous occasions rather than letting losses run through to my stop.

Food for thought.

Scott

[mugsgame]

This is more complex than you are assuming. But there are ways you can simplify it. read this passage. i wrote it for another thread and people tell me it is a good explanation:

Try to be more selective about which races to trade.I know of many who go from race to race like a loony. You can make a few quid race after race and on the last race lose the whole days earnings and some. Look at trading less races that have a good "shape". If you have the patience (which is the most important and most overlooked aspect of trading IMHO) you can watch 20 races and then trade 1 and win a days wages.
A suggestion for those struggling is maybe find a race where the market thinks it is a 2 horse race. I'll set up a fictitious race.
The prices are 2.02, 2.76, 40, 44, 50+ the rest (another 6 runners).
You will find 2 or 3 races a day like this. You can pretty much forget the rags, although you need to keep and eye out in case 1 moves in significantly. So concentrate at the 2 at the head of the market. There are 2 scenarios here.
1) 1 or more outsiders move in and not a lot happens at the head of the market except a small drift.
2) 1 of the favs moves in which means..............yes that's right! The other moves out. The trick is waiting until that happens then jumping on the gravy train to untold wealth.

Try to get a grasp of how a market works, that is fundamentally the most important thing you need to learn. An efficient market is at 100%, the way this is calculated is by dividing 100/the odds. So a runner trading at 2.0 would be 100/2 =50% of the book. (remember the book adds up to 100) that means the rest of the field will add up to 50%.
If 1 runner is 50% of the book and the other is 36% (100/2,76) that means that 86% of the book is concentrated on 2 runners. They dominate the market and another runner would have to move a huge amount to impact these 2 prices. Which leaves us to concentrate on 2. What you are looking for next is a sign that something is going to happen, like i said it always will. So what are the signs?

Look at the range of prices that the runner has been trading at, if you look at the ladder you will be able to see this. The critical points are the bottom and top (resistance points) When it gets there something will happen, if it "breaks through" then it will almost certainly go much further. If it doesn't then it will "bounce". It rarely just sits at the end of the trading range dormant. What usually influences this is the other horses. Remember what happens to 1 has to effect all the others, the one most likely to be effected is the next shortest price runner (2nd fav in this case)
A good trade would be if the fav has reached the bottom of it's range, which means punters are reluctant to take a lower price that this, and the 2nd fav if near the top end of it's trading range, which means punters are reluctant to LAY a bigger price. If the fav were to hit the bottom and "bounce" the 2nd fav would stream in, this will gather momentum, don't be greedy and don't use a stop loss. It is not unusual for the prices to jump around. It is the medium term trend (swing) you are trying to capture.

With practice, patience and enough matched you can make a living trading 1or 2 races a day.
This is simplistic and there are things that can go wrong. Watch the market and try to understand what the market is doing. See how the movement of 1 runner effects the others and in what proportion. This is KEY. Some use the excellent graphs BA has. For me all I use if the BF market graph within BA with a 10 second refresh, the ladder tab with both horses on, and TELETEXT live shows. Don't over think it, don't over complicate it. It really isn't rocket science, and that's the main issue for most I fear. Take a step back, use low stakes to practice. Trading horses at odds on a 10 tick wrong decision will cost you a fiver (to give it some perspective). Before you make every trade you need to set a point that you will exit, don't set this too tight. A 2 or 3 tick's is no good. But you need an escape route. Letting it go and hoping it will come back or even worse letting it go in play is trading suicide and amateur. Don't do it!

If you spend enough time watching the markets and understanding what's happening you will crack it eventually.

I have talked a fair bit about perspective, and here is something to think about. Good traders will earn more that a doctor does (which is frankly disgusts me), that doctor spent maybe 6 or 7 years learning his trade. It doesn't take that long to learn to trade, but you need to put the hours in for sure. The other thing is that doctor didn't get to operate on a patient after a few days did he? He learnt the procedure and maybe practiced it in the classroom lots and lots of times, until he became so good at it when he did finally have a patient on the operating table in front of him, he had the skill and confidence to do the business.
There are no half measures here. To a certain extent, if you can trade with £50 you can trade with £100 or £1000 (as long as the market is liquid enough) The level of skill is exactly the same, the reason you entered and exited the market should be the same. Once you can effectively trade on 2 runner markets like this and your confidence and experience grows, then more complex markets can be tackled.

The main problem with this is if you have a limited time to trade on your day off from work, sitting there all afternoon and not making any trades is tough, and the discipline that requires is rare to find. But what is better, sitting there and not losing half the wages you have worked so hard for or feeling a bit frustrated but living to fight another day. My priory is not to LOSE and PROTECT my bank at all costs. The rest comes I promise.

Summary:
1) Keep it simple
2) Be patient
3) Have realistic expectations
4) Be patient
5) Understand the market
6) Have a reason to enter the trade and a reason to exit it
7) Have an escape route planned, and stick to it
8) Be patient
and finally........ Be patient

Does this make sense to anyone?

Disclaimer:
I don't have all the answers, the way I trade suites me and my attitude to risk. It works for me but it may not work for you. Take out the bits that make sense and discard the rest. Eventually you will form you own style. There is no "holy grail" and there is no easy road to Betfair nirvana. I wish you all well.

[Groovyelms]

Excellent thread with some very good pointers..
thanks to all the posters
Groovy