A quick post

I've not posted for a few days again and I've not traded either. Life is currently pretty hectic! My day job is going to be crazy busy till Christmas, but I'm going to post whenever I get the chance. My plan is to get some trades in on the weekend. Get back to the horses again. Yay!

My flirt with football wasn't particularly great and I never really got much of an edge. I will keep looking into it, but until I know what I'm doing with football, I'll not be throwing cash at it.

How to trade on Betfair vid

I've mentioned it before, but after Adam from racing traders posted a comment on the blog yesterday, I thought I'd check it out again!
It basically shows a 5 hour trading session by Adam Todd, condensed down into 38 minutes. There are 8 chapters which show the best and worst trades he made that day, accompanied by his commentary which cracked me up several times. Have a look.

Edges

I got a comment yesterday that got me thinking. I had talked about a football match I had traded on and how it had been a bit hectic and the commenter (sorry, you didn't leave a name) pointed out how I had no edge with my football trade. He was spot on and it was a reawakening. I had just been playing around, thinking I knew best, with nothing to base it on. I had been lucky and making a few profits there but if I carried on that way I was due a fall, so many thanks there.

So I have been thinking about the idea of an edge and how you need to have a plan or method or some rules to work to in order to avoid taking a big hit. On horse racing, I feel pretty happy, in that I have a few different methods I use, depending on the state of the market, i.e. the time till the off, the volatility, trending, etc. Sometimes I will just try and scalp ticks, using the price momentum as a guide, which can work quite well (although, as I mentioned in a previous post, I have been caught out a couple of times, usually when trying to take one trade too many. Hopefully, lesson learnt). On the football side of things, I need to do more research. I feel I'm going to have to also just try some ideas out, with small stakes, as paper trading really doesn't give you a good indication of when/if your back/lay will be matched, which is important.

Your edge then is what potential advantage you have over the other punters out there. That could be a knowledge of how the market moves in relation to certain events (e.g. WOM) or it could be based on an analysis of the fundamentals (form, determining price value) or the psychology of the "crowd" (e.g. over/under response to news of events) and also the discipline/rules you trade with (stop losses, when to get in, when to get out). Having no edge=drifting on the tides of chance.

Any comments, as always, are welcome (even if they are pointing out what I have done wrong!).

Testing My Strategy

Whilst trading on the horses the other day, I managed to get caught out a couple of times by a change in price move. I was trading using the ladder interface in Bet Trader pro, but my laptop had been playing up and I couldn't see the graphs very well (and I don't find them very clear anyway), so I think I missed seeing the momentum change (or perhaps there was no signal of a change, although I was trading using the momentum of the prices matching). As I am revising my eBook about trading software and bots, I have decided to add in some graphing examples and started building them. My primary goal is to be able to see the equivalent of bollinger bands (price envelopes - kind of like in Bet Angel Pro) and also some kind of momentum indicators. I've been talking about graphing applications for a while but now is the first time I've got to really get on with it. I'll include any code in the eBook and will make the executable available, if anyone wants to play with it (it won't be a battle hardened application like Bet Trader Pro or Bet Angel Pro mind!) but might be useful to run alongside. I just want to know if I am missing any signals or whether my strategy is flawed. I'm hoping that there are signals that I'm not seeing yet otherwise it's back to the drawing board.

Night Horses

Hooray! Some late horse racing tonight, so I actually got to trade on horses. There were two races that I saw on the coupon running after 8pm. I was mainly scalping on them both. The first one, I started about 15 minutes to the off, as money was flowing in. I basically waited till there were two opposing chunks of money on the back and lay sides and estimated the rate at which they were being matched and still being topped up, then I added my money to the side that looked to be matched first but not by a long time. I made several trades before the price direction changed and I had to scratch trade. I partially greened up at the end. I guess greed was still getting the better of me, but at least I hedged. I did this on both races. A good job really, as I won one and lost one, but came out in profit.

Money down the toilet (but only £2)

I got back from work late today, as I had a lot on, which meant that I missed all the horse racing and the majority of the football. On football, I like to be there from the beginning, but no chance here, I only had the closing minutes, so I didn't bother. I wish I had had a go now, as I got a bit annoyed that there was nothing for me to trade on and had a root through the Grey hounds (nothing) and the US Horse Racing market, where I put a back on for a couple of quid. I used low stakes, just in case the market closed on me before the clock had ticked down, like it did before. Yep, before my lay was matched (illiquid market) and still with 3 minutes left on the clock, the market suspended. Another couple of quid down the toilet. A bit silly, but I just wanted to put a trade on, I didn't really care if I didn't close it. Perhaps I'm working too hard!

Tonights results

Well, there the last races of the day were later today, so I got to trade on a couple. I would have got onto more but my wife has become addicted to Facebook and I couldn't get her off the computer! I didn't do bad, but I didn't do great either. The first race, I ended up taking a small loss and the second a small profit, so I pretty much stayed where I started. On the second one I had built up a few quid from repeated trades, just taking a tick here and there, but the price was pretty high and so the green up amount was low. I thought, as it was the favourite, it might lower in-play. Nah, it went out the running pretty quick and I struggled to get anything. A lesson against being greedy. Lots of people have said, not to go in-play, even if it is to green up and that is a good example why. Still, if I hadn't been greedy I would have got a better price in-play, if I had got out sooner. Though hind sight is a wonderful thing with 20/20 vision!

There was no in-play football on in time for me to get in at the start, which is part of my plan. So, not a lot happening again. I need to make up for it this weekend.

Football is different

My last few posts seemed to have mainly been links to useful web sites. Well, not wanting to disappoint(!), here is another one. I found it useful for finding out quickly when football matches are kicking off and what the scores are. It updates itself every few minutes and although not something to rely on, I found it helpful. Go to http://www.livescore.com/

I did a few trades on the match between Blackburn and MyPa. I started off pretty well, but ended just a couple of quid up, was lucky not to lose anything, as I didn't think it through beforehand. I was in the under/over 2.5 goal markets. I learnt a fair bit with this game. I've been trying to treat football markets similarly to how I have been treating horse racing, because that's been all I've known, but they are worlds apart. The horse racing markets all get lively around 10 minutes before the off until a couple of minutes before, when they go a bit crazy. The football markets are not that lively before the off and then you are in the world of in-play betting. In-play on the horses seemed to jump all over the place and was not a very safe place to be. The football in-play teases you with obvious trends to scalp but there is always the risk of a goal happening and making the price jump like crazy. You can go in technically, i.e. just using the numbers, scalping a chunk of ticks at a time, as the price follows a steadily developing trend, but the market gives and it takes away. You could be lucky and get a nice group of trades done and be able to green up, then again, a goal could be scored and you have an open trade and be looking at a loss. I've come to the conclusion that to play football in-play, you need to look at the fundamentals first, i.e. to get an idea of how the game may pan out and have a plan of what you will do from the start.

Having a plan

Did you ever play table tennis, or ping pong as we called it, when you were little? Can you remember the feeling of pure satisfaction when the ball would float up to just the right spot and you smashed it back, bouncing it off your unprepared opponents head? It felt pretty good.

Now, the ping pong table is about 9ft long and good players can get that ball moving at around 100 miles per hour. To hit that little ball, taking spin, bounce and a whole load of other variables into account seems like an impossible task. How to do you calculate the trajectory, taking air resistance into account, adjusting for spin, assuming a return velocity of 80 miles per hour plus or minus 20? The answer is you don't. You don't have time to calculate, to cogitate and plan at the time, you just act and react.

Now, what makes a good player and what makes a bad player? Well, the good player has learnt to play the game, either by playing lots of different people, taking the lessons when they lost and any coaching that they could get. The first time they played, the ball probably bounced off their heads a few times or they just missed the table completely. With some determination, a willingness to make mistakes and learn from them and lots of practice they managed to learn to play the game. If you asked any of them to describe their best ever game, chances are it would be a time when they just "got into the zone", they didn't think about it, they just played. Can you remember a time, when you were "in the zone"? May be during a sporting event or at work or something, where you just acted without thinking about it and everything just flowed?

When you're "in the zone" your conscious mind steps out the way and your non-conscious mind does what it does best, react. When we are trading a fast moving market, e.g. a horse race getting close to the off, if we want to get in quickly on a trend we don't have time to think every move through, we have to act. This means trusting our experience, that is, trusting our non-conscious mind, or gut feel. This can be hard and by second guessing ourselves and overly thinking, we can stay out of the zone and miss the majority of a price move or not get out in time. So, how do we get into the zone? Well, first you need to have done the ground work and took the knocks, learning how to trade and follow the market. Next you need to be able to let go and trust what you've learnt. The final and most important step is that you have to go in with a plan. You don't have time to plan during the session, as things can happen too fast, all your planning needs to be done up-front first, so you can just act. You need to know your rules. When do you get into a trade, when do you get out, what do you do if the market moves against you and when. The more specific the better, the faster you can act and the less you have to think and pull yourself out of the zone.

Fundamentalism?

In the land of stock and share trading, someone who uses a company's results, sales figures, P/e ratio, etc is said to use the fundamentals to make their decision, whereas someone who just uses the price and volume charts for short term trades is said to be a technical trader. I think the same split can be seen in Bet exchange trading, e.g. someone who scalps the horse racing, 10 minutes before the off, without care or concern who is racing, who trained who etc but just the prices and volumes, as they move, shift and do their merry dance is a technical trader. Whereas, someone taking a longer duration position, may study the race form and decide that horse X is a steamer and so put on an early back, then come back later and close the trade with a (hopefully) short priced lay.

What would interest me is finding out how many people trade technically and how many use the fundamentals or both and on what markets. My gut feel, after speaking with a few people, is that horse racing before the off has a number of technical traders but the other markets predominantly require some fundamentals, e.g. starting off with an idea of who will win/score first goal/lead the field and then possibly scalp the prices in-play or just hold back and close the trade at a certain point. I'd be interested to hear what you guys do.

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?

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.

First Post

Hi,

My names Richard. I've got a number of diverse interests and one of those is trading on the bet exchanges. Just to give an idea of what I mean by diverse, I have worked in IT for a number of years (For those in the know or who like IT acronyms: SQL Server, .NET, AS, SSIS, XML, etc), I am an avid screenwriter and involved in putting together a short film (http://diaryofashortfilm.blogspot.com) and am also a hypnotist and NLP master practitioner.
So, basically, I am a bit strange!

The hardest part of my life is trying to find time to do anything! I am in the process of getting married (2 weeks to go) and my finance and I have two kids (Rebecca who is 8 and little Harry who is 2).

The purpose of this blog is to document my progress Bet Exchange trading, starting with a tiny bank of £100 and aiming for a chunky £100K (nice if you've got it). I plan to discuss any ideas, strategies and learnings and feedback on any developments I make in terms of software etc. I'm aiming to put together my own bit of trading software using the Betfair API, so if anyones interested, I can share details of that.

Oh yeah, I intend to focus solely on Horse racing as the market for my trading. I'm not particularly interested in horse racing per se, but it seems to be an idea to focus on a specific market and there are a lot of races every day.