Friday, 8 June 2007

Thursday nights trading adventure

Ok, so not much of an adventure, but a few learnings.

I was playing a few of the post 8pm UK races and looking to get a few trades in. My current problem is that I am too anxious to trade, rather than being a bit more patient and only tackling the races that have more determinable trends. On the plus side, it means I am getting experience and getting more of a feel for how the market is moving.

I currently look for an obvious trend that has some volatility in it, i.e. a general direction but some wobbles and look at the speed the money is being chomped up in the back and lay sides and how large the chunks are that are next in line. I'll use this as an indication that either the trend is strong (money chomping up fast and bigger sums lined up on one side than the other pushing the price along and amounts on the other side being eaten up), until it slows down or hits a big (e.g. £2000 as opposed to £100 or less, or the equivalent depending on how much is in the row) chunk of money. When it sits at a chunk of cash and is not really eating into it, tend to notice some other amounts wedging in there and pushing it back in the queue. I also look at how people are vying to be matched and at what point matching happens and how fast, to get a feel for the hunger of the crowd at that price. As the price shifts over time, this changes, especially nearer to the off.

My current gotcha seems to be at certain points in time, e.g. 10 minutes before the off, and after 3 minutes before the off. These seem to be points when weird things can happen, e.g. a big chunk of cash will appear, where you're not expecting it and spin the market around. Sure, this is fine if you are the right side of the market move but can cause a bt of a panic otherwise.

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