Wednesday, 15 August 2007

Racing, risk and the in-play

I want to talk a little bit about risk. I'm going to go off track a bit first, but remind me and I'll get back to the point again.
So, I trade the horse racing market and during the week, sometimes the earliest I can get in front of my computer can be 8pm, which means I may only get the tail end of the racing. First a question to you knowledgable traders and punters out there, when winters comes and the racing stops earlier, what is a good market to trade? The USA racing is pretty illiquid which is really annoying, although sometimes you can get a good race, but the sums of money floating around are usually very small till around 2 minutes out. Also, the US race market may suspend earlier or later than expected. So any advice on a good alternative evening market would be much appreciated.

Last night I opened up Bet Trader Pro, which as good as Bet Angel Pro is, I seem to be using more. I found a race and had a look around, as I normally do. I saw a price that I thought would rise for a couple of minutes (it was about 12 minutes before the off) and put on a lay. I watched the price go up a tick and relaxed a bit, knowing I could release my "get-out-of-trade-now" trigger finger which was hovering over the mouse. I'm watching the prices then and nothing seemed to be happening. I looked at the countdown clock (something I really like, even though it is not always an accurate indicator, if it isn't there then I have to keep checking my watch, which is annoying) and it wasn't moving.

"What?!!", I said out loud, getting a this-guy-is-crazy look from my cat, Pete. I tried to click on my web browser but it had frozen too. My machine had died. Oh crap! I had to turn off the power (it wouldn't restart or shut down normally) and then power up again. I don't know why but when you're watching it, I'm sure windows takes longer to start up. My machine finally rebooted and then took an age to launch the firewall app and connect to the internet and finally launch the trading software. I got back into the market and I was not in a great position. The price had dropped 6 or 7 ticks and my trade was open. I could leave it open and hope it would come back but I have preached on about not doing that, so I got out, took the hit and started to try to build it back. Luckily, the price was perfect for scalping, staying between two prices with a constant influx of money at both ends, back and lay. I just kept joining the queue and gaining ticks back.

Now, here's where I took a bit of a chance. The time had nearly ran out and I was still down, but not by too much. The race suspended and went in-play. Recently, I have sometimes been waiting till in-play to green up. If I think the price has been raised artificially high by trading happening in the last 2 minutes, I may hold off greening up and watch in-play to see how the prices are moving. If they are moving down steadilly then I will let them ride for a minute, if they are fluctuating then I'll try to get out quicker but hopefully at a better price. I decided not to leave it without greening up after I left what looked like a definite winner that then got beaten in the last seconds, leaving me with nothing for my efforts. Okay, it means I will get potentially less but it means I consistantly get something. I prefer to see my bank steadily rising, day by day.

Well, that was quite long winded to get to my final point, which is about risk. I know in-play is risky and in order to get out with a small profit yesterday, I didn't just wait to green-up in-play, I also did some scalping, taking advantage of the gap between back and lay. To keep my risk low, I used a lot smaller stakes and got in and out as quickly as I could. i ended up in the green but in-play also cost me about 20% of my bank recently when I made a careless mistake a few days ago. So, is the risk worth the reward? Do many of you guys trade horse in-play? Do you use the same stakes? How do you manage risk or do you just fly by the seat of your pants?


Anonymous said...

very dangerous tactic imo richard, are you watching any live pictures when you let it go in-running ?? in my experience if your horse runs a bad race, the price can run away from you very quickly and it becomes impossible to trade out losing your whole stake. better to trade out before the race and take a small loss. stan.

Richard said...

Yeah, I agree. I had got my loss down low before the race but took a chance and an experiment. I used a low stake, realising that I would potentially be losing it, so I accepted that. I tried to get in and out quick, backing first. I also was lucky. No way I'd play around here with bigger money, it just moves so fast.

Jimmakos said...

Never close a trading position in-running if you are a scalper/trader before the off. Most usually you are risking the whole amount of money for 1-3 ticks. ;)

Considering greening (or redding :p) up in-play, the best scenario is to red up (don't know if that exists, hope you understand what I mean) because the horse may fall in the first 5 seconds or doesn't even start, saving you a bunch of money. ;)

Richard said...

That is how I've used in-play before, to try to get a better "green up" or "red up". Again, it can be a bit risky and I think you need to understand that before you go, but I have used it to reduce losses a few of times but then again it has also stung me too when I've gotten greedy. Its risky and I think if things start to turn, you've got to jump out real fast. If you've got into a position (through some good trades) where you have an effective free bet with no loss potential (i.e. you havnt greened up yet) then if you fancy going for it in-play to try to green up higher, at least your bank is safe.

Widesmile said...

In my honest painfull opinion if you scalp trade before the off then just do not get involved in the habit of saving losses in play as although sometimes it can seem easy enough and give you even more confidence in scalp trading before the off you may get into the habit of saving losses in play more than you should and trust me a moment of madness will occur or price will just go away from you too fast and you will sit there thinking why did i just do that and get burnt for sake of smallish loss.