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!).

7.37

After spending most of today in bed feeling ill, I managed to crawl out of bed around 2pm, after my girlfriend and the kids had gone to a birthday party. I fired up my laptop and opened up Bet Angel Basic (which I use for graphs and for the status of unmatched bets) and bet fair direct, which I use for watching the numbers and making backs/lays. I plan to get a more pro software set up, or at least trial some of the offerings out there and will post up my results.

So, with the other days losses in mind, I went in with the following strategy:

1) If a trade turns against me, get out fast

2) Make my first trade as 4 units, e.g. £20 = £5x4, then do a spread of the counter trades, e.g. if I lay at 3.0 with £20 then I might back 3.1=£10, 3.2=£5, 3.3=£5. Not sure if this is ideal, but I'm experimenting

3) Watch the market carefully, notice the rhythm as it oscillates around the various points and make sure the momentum is the correct way. If not, then get out.

This worked for me today. I carried on today with my reduced back and used either a £20 or £10 stake for my first part of a trade (mainly £10 if there was not too much of a trend, but £20 if it was more obvious).

I ended up with £7.37 in profit. Not an amazing amount, but using a bank of £56.01, it's more than a 13% profit. So I can't really complain at this point.