I found this maybe of use to someone wishing to learn trading.
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
Here are a few more points i read up when learning also.
Pre-race trading
What this means is the following: the first section will deal with trading strategies which relate specifically to the markets prior to the horses having left their start line – whereas the second section will deal with trading techniques that are more suited to when the horses are actually running.
Yes, I know, that’s a pretty obvious distinction to make.
However, the markets operate in fundamentally different ways:
In pre-race trading, the market behaves much more like a real-life stock exchange, albeit in a very time-condensed form; the main approach to trading these markets is called technical analysis. Don’t worry; we’ll discuss this concept in more detail later.
However, for in-play trading, when the horses have left the stocks and are running against each other, the price movements are determined, mainly, by the positions of the horses in relation to one-another. Here, a concept known as fundamental analysis can be useful to us; but again, we’ll discuss this at greater length further on.
Trust us: this all sounds a lot more complicated than it really is when you get used to it.
And to answer a common question, no, it doesn’t matter whether you use
Betfair or Smarkets!
Pre-Race Trading
Support & Resistance Points
We’ll begin our overview of pre-race trading strategies with something known as support and resistance trading.
Resistance trading is one of those techniques that has come to us straight from the financial markets of Wall Street and the London Stock Exchange.
To state it briefly, a resistance point is a price value, or odds value, at which the market will not move beyond. And conversely, a support point is a price value below which the market will not drop.
So what are the implications of this? Well, when we seek to trade a race, we can determine these support and resistance points from our trading software, and they can in turn inform us of how best to make a trade.
Example:
We notice that for the past few minutes a particular horse’s price has been “bouncing” between two points: a high (resistance) price of 5.9, and a low (support) price of 5.1.
By assuming that these two prices are indeed resistance and support points, we can make a profitable trade by backing the high price when it nears 5.9 – say, at 5.8 – and then laying when it approaches its support price, say at 5.2.
It’s important to remember that these points don’t always have to be static: there may be a trend-line of resistance points and support points, but the principle in that case remains the same – back high, lay low.
Breakouts
All quite simple, I hear you say. Well, not necessarily.
The support and resistance points can sometimes be breached – a “breakout” event – setting new support and resistance points in the process.
Breakout prices are not a rare occurrence; they happen quite a lot, and can actually offer a trading opportunity in-and-of themselves.
In a later article we will discuss the psychology of trading, and how it directly affects the prices in a market through things such as the “anchor effect”.
But for now, suffice to say, when you trade resistance and support points always be aware that breakout prices can be just around the corner.
Crossover Points
One of the most important quirks of the online betting exchanges comes in the form of something known as the “key prices”.
As you were reading the previous section on resistance points, did you stop to think why certain odds would be resistant to breaches?
Psychology? Yes – and as we mentioned before we’ll get into that at a later time…but there’s something more going on; something very fundamental, something crucial to your future success as a trader.
Differential Increments
OK, we’ll cease with the cryptic tone.
What we’re looking at here are the differences in the increments at which the odds prices change on the market depending on the specific price interval.
Let’s start by looking at the ‘key prices’.
The key prices on the market are: 2, 3, 4, 6, 10, 20, 30, 50 & 100.
Why?
This is because the price increments change in the following way:
Between prices 1.01 and 2.0, odds movements occur in increments of 0.01
Between prices 2.0 and 3.0, odds movements occur in increments of 0.02
Between prices 3.0 and 4.0, odds movements occur in increments of 0.05
Between prices 4.0 and 6.0, odds movements occur in increments of 0.10
Between prices 6.0 and 10.0, odds movements occur in increments of 0.20
Between prices 10.0 and 20.0, odds movements occur in increments of 0.50
Between prices 20.0 and 30.0, odds movements occur in increments of 1.00
Between prices 30.0 and 50.0, odds movements occur in increments of 2.00
So, again, what are the implications of this?
It isn’t always so obvious, but if you consider each price change, or increment, as a “tick”, you begin to get the idea.
Example:
You place a lay bet of £100 at 2.0. Two things can happen:
- a upward tick of one increment to 2.02, and you make £2
- a downward tick of one increment to 1.99, and you lose £1
As you can see, by laying at this crossover price, you have made the return vs. loss of one tick in either direction go in your favour.
In multiple random selections you will, over time, win more money than you lose.
The opposite of this is true if you had
backed at 2.0: You automatically compromise yourself because an upward tick would mean you lose £2, whereas a downward tick would mean you only win £1.
Because of this inequality of return in the tick changes at these crossover points, it makes more sense to lay at these prices rather than to back.
So, back to those resistance and support points; it’s now clear that these key prices can act to prevent prices breaking out, because it takes a very large number of backers to breach a price where there are many layers.
A good trader should always be aware of these key prices, and trade accordingly.
Also, if a price does break through one of these crossover points, you should expect the resistance and support points to change too. You’ll have to assess you position, and depending on how you’re exposed, either close the trade or let it run for a profit.
Weight of Money
When we trade on the
sports betting markets, we are essentially buying and selling odds.
And the most fundamental aspect of any kind of trading – whether it is sports betting, the stock exchange, real estate or retail trading – is the idea that the price of the good being bought and sold will fluctuate.
But where does this volatility in price come from?
What is driving it?
Specifically, why do the odds for a particular horse change in time? Well, one answer to this is due to the
weight of money.
Weight of money, or weight of movement, relates to the amount of demand that the market has for either the backing or the laying of a horse: If many people want to back a horse, its price shortens, or comes down. If many people want to lay a horse, its price drifts, or goes up.
The beauty of online betting exchanges is that we, the traders, can see exactly how much money is in the market for a certain selection, and how that money is changing in real-time. This allows us to predict the price change given the weight of money in either the back or lay direction.
Example:
On Betfair, we can see exactly how much money is on the lay-side of the current price, and how much is on the back-side.
If there is a significant difference of money between the back and the lay sides of the price, we can use that information to predict the price trend, and either back or lay that price to close out when the price moves in our predicted direction.
But beware!
As with other trading strategies, the weight of money approach isn’t without its pitfalls.
Online betting markets have become more efficient, and if the weight of money analysis was all you needed to be successful, then, well, we’d all be successful. But unfortunately that’s not the case.
The problem with weight of money calculations is that the market can, in essence, be
manipulated.
A trader with a very large bank of money can create the illusion that a horse is heavily favoured, but in reality they are just spooking the market, drawing in backers or layers, only for them to pull their orders out of the market at the opportune time.
That said, weight of money can be a very good indicator of market trends in heavily traded events.
The Cheltenham Festival and Grand National are unlikely to be fazed by a single trader, and in these instances weight of money can be a good friend.