Sunday, 29 June 2008

Trading Example

Last week, I said I wanted to talk though an example of how I trade a race. I haven’t had the opportunity to discuss it yet but I’ve had a couple of comments concerning yesterday’s race, so I’ll do a quick post describing how I traded Ashdown Express in the 3.40 at Windsor on Saturday.

A few quick points:

I don’t use any software such as Bet Angel or Bet Trader. I only use the standard Betfair interface.
I don’t use any graphs or weight of money indicators when I am trading.
I don’t use any standard staking plan. I change my stakes on a race by race basis and depending on how confident I am about the horse I am trading.
I only trade horses which I think can win each race.
I always back first and then lay.
I never green up (or red up).
I never cut losses short.

OK, any horse-racing trader reading this blog is probably shaking their head in disbelieve at the moment as I appear to break every golden rule of trading. I think the biggest thing is probably the fact I don’t use any software or any indication of trends such as weight of money or graph techniques.

So, what do I use when trading a race?

I only use 3 things. I use the normal Betfair interface, the Racing Post and the Oddschecker site.

I never trade a race without having a quick look at the RP card and a quick look at some of the form. I do mean a quick look though (i.e. 5 mins max in most cases).

I hadn’t looked at any races before I started trading on Saturday. I was chatting to Andrew on MSN and I asked if he had any potential fancies coming up and he mentioned Ashdown Express in the 3.40. It was currently 3.20pm, so I had 20 minutes to trade it if I wanted to.

I had a quick look at its form and the form of the favourites in the race. I decided that Ashdown would be an OK horse to trade as I could give it a chance.

I quickly checked the horse’s odds on Oddschecker. It was 10/1 with every bookmaker. I then looked at Betfair and brought up its graph to see what it had been trading at. The horse had barely moved from 12.5 all day, which is pretty standard for a 10/1 shot.

On Betfair, the horse was looking quite weak with lots of money available to back at 12.5 and 12, so it was likely to drift. I sat and watched for 5 minutes…..

It drifted to 13.5 and was still available at 10/1 with all bookmakers. I snapped up £50 at 13.5 when it became available. The horse then drifted to 11/1 with the bookmakers and looked very weak at 13.5 on Betfair. I thought about scratching the trade but I stuck with it. It then shortened to 10/1 again and went to 11.5 on Betfair, but I decided to stick with my initial bet.

I then quickly noticed the horse had drifted to 12/1 on Oddschecker with a couple of bookmakers and all hell broke loose on Betfair! Huge amounts appeared at 12.5 and 13 and off it went on a drift.

I backed £50 at 16, £100 at 16.5. I then noticed that it had been cut to 9/1 on oddschecker and I knew it was the wrong price on Betfair. I asked for another £200 at 16.5 and got £75 matched before £2k entered the market ahead of me at 16.

I then said to Andrew on MSN that I had struck the jackpot here as the £2k bet worked its way down snapping up all prices from about 16 to 11 before being fully matched at 10.5. I then knew I had to exit the bet quickly, so I put a lay at 11 for £300 and none of it got matched. I then jumped ahead of the market by about 4 ticks to get fully matched and the horse settled at about 13.5, so I got out at a decent price at 13.

I then weighed up the situation and decided I wanted to have £50 green on the field and the rest on my horse to win, so I laid off another £25 to give me the position in the picture shown in my previous post.

I decided to not lay off in running as I was happy with my £50 guaranteed profit and I would have been even better off if my horse had won!

Obviously, that was pretty much the perfect race for me and it’s never usually as straightforward as this to make money…...

6 comments:

TickSize said...

Thanks for giving us an insight into your methodology something that is rarely shared free of charge. Yes, the purists may shake their heads but the ultimate justification for you approach is do you make profit. You clearly do so your method works for you.

TickSize

Steve said...

Hi Graeme.

I’ve said this previously but the blog is a great read.

Thanks for describing how you traded that horse. I’m not sure if you mean to but you are ripping up the trading manual on this blog and writing a new trading manual.

I’ve been trading the markets for a while now and I’ve read a fair few books describing how to trade Betfair markets. I’m not sure where you learnt to trade in this manner but it is very interesting. It seems fairly random to me. I use BA Pro and use graphs and WoM indicators and look for 2 tick movements. From what you appear to say, you decide on which price to back the horse at and then randomly lay off at a lower price? It seems a bit of guesswork to me and I’m not sure if it is sustainable in the longer term.

I’m not sure how you know which price to back at, how much to stake, when to back again, when to lay, how much to lay and so on.

Thanks for sharing your method but I don’t think I could use the same sort of method without making a pig’s ear of it.

Steve

Graeme Dand said...

Hi Ticksize.

Good luck for when you start out on your new adventure. I'll keep an eye out to see how you get on.

I was looking forward to getting a few comments from the purists as I'm keen to hear views about how I trade.

I agree with you though that the profit is what matters.

Graeme

Graeme Dand said...

Hi Steve.

Thanks for blog comment. I enjoy writing the blog, so it's nice you enjoy it!

I don't agree with your comment 100% mate if I'm being honest. I agree I'm not trading like a manual says but I see that as to my advantage.

I too have read a fair few books on trading and I agree that what I'm doing is not a common approach. However, I don't think it is random in the slightest and I think my results have shown this.

Also, I don't randomly choose where to lay off as you suggest. I decide on which price I think the horse will shorten to and decide how I should exit the trade.

Lastly, I'm not advocating this trading method to anyone. I don't use this blog to preach about my trading methods and it's not my intention. I only wrote about my method as I knew there was some interest in it.

Thanks for the comment though as it's much appreciated and I look forward to any future thoughts you may have about my style.

Graeme

Matt said...

Another great post, one day I will publish how I go about trading too, but not yet!

It's quite brave to make a post like this, especially one that bucks the trend, appears to not make sense to the majority and generally tears the text book up. But perhaps that's doing this a great injustice..

Have you read 'reminiscenses of a stock operator' Graeme ?

What you do here reminds me so much of that book and how he used ot go about business. It also brings back memories of how we used to trade on betfair, before all these fancy applications we now have and new interfaces..

There's a lot to be said for 'feel' in this game. And this is not just plucking things from thin air, it's prodding the market, feeling it out for soft spots, watching your indicators carefully and then sensing the change in supply and demand. I love what you are doing here, i think it perhaps is sustainable, but you really don't need to think too much about it, maintain a focus on minimising losses and making the most of 'winners' and i think this is perfectly viable.

The relationship between oddschecker and betfair i remember watching a few years ago.. it's not always the same, and the market is a bit unpredictable, but like i say, i love the way you prod around and soften things up here. the market is so full of traders, you will likely cause the price movement you are looking for at times.

disclaimer: I'm certainly not a horse race trading expert! but i did used to do something similar, and 'feel' for the market can never be underestimated.

Matt
Punt.com

Graeme Dand said...

Matt,

I could have done with your comments 3 months ago mate as I was really struggling with trying to trade horse-racing and I came remarkably close to packing the whole thing in!

When I started out, I had read a few books about Betfair trading (not any of the books you recommend) and I attempted to trade using BA Pro and scalping the markets in the traditional manner. I really struggled to understand the price movements though and I was getting too involved in using my opinion of what every horse should be priced at and I was getting terribly frustrated that I couldn’t make any money basically!

I then stopped using BA Pro, stopped analysing trends and just started to ‘feel’ my way around the markets. Thus far, I haven’t looked back and I’ve slowly improved over time.

I can understand why some people may think that my strategy is not scalable or sustainable in the long-term but I think they are wildly off the mark.

At the moment, I’m earning a very high ROI % due to the fact that I’m able to turn a £10 green on the field into 2 or 3 times that by backing a horse and laying off in running. Hence, a £100 riskfree bet on a 10 shot may only be worth £10 to traders using the green up button but for me, a £100 riskfree bet is usually worth £30+ since I’m calculating it will trade lower in running.

Obviously, traders prefer a £100 riskfree bet on the shortest priced horse possible whereas I prefer a £100 riskfree bet on the horse most likely to win the race. That’s basically my ‘edge’ over every other trader I think and that’s why I’m confident that I can make this scalable and sustainable in the long term!

Time will tell….

Graeme