Big orders messing up the markets

The Challenge: to increase my trading bank by 5% per month.

The story so far...

Starting bank: €1,000 (beginning of May 2010)
Target for end August: €1,215.51
Today’s opening bank: €1,481.25
Today’s closing bank: €1,526.99
Today's profit/loss: €45.74
Today's turnover: €13,132.59


***

Even though I should be delighted with a 45 quid profit, tonight's trading was far from comfortable.

There was some strange happenings tonight and someone with a huge bank was trying to manipulate the markets. I got stung a few times and it really pisses me off.

I'm not quite sure what his strategy is or how he's trying to make money but I hope he gets his fingers burned and stops messing about. Basically, markets with a small few quid (a few hundred on each side) were being manipulated.

For example, he'd leave a back order for say 50K in a lightly traded market and I'm assuming it was to move the price down. When the price would move, he'd lay and take out thousands in one go. The market would settle again then he'd back and take out another few thousand. Not really sure what the heck he's doing (or if he knows himself) but I'm assuming that it's one guy from looking at the orders going in and out. I've heard of this on some other blogs this week but hadn't really seen it happen myself until tonight.

I got taken out a couple of times and tonight's profit and loss is very inconsistent. It spoiled a cracker of a trade in the place market where the place price had gone out of kilter with the win price. I knew the win price was partly due to the each-way backers on course so was happy to lay the place and I made the guts of 90 quid which felt amazing when I completed the trade. Most of it got wiped out however when that idiot took out half the market in one race later on.

Thankfully, I got out of jail with a fantastic trade on Edinburgh Knight which I'd backed around 7.8. I was going to get out for a tick or two profit but the price kept going and I eventually layed out at 5.6 netting me 61 quid.

At that stage, I felt very lucky to be ahead so I decided to call it a day.

Two days are never the same in this game. Even though I made roughly the same profit as yesterday, tonight was much more difficult and I didn't like the feel in the markets.

Yesterday was as smooth as anything and I even managed a clean sweep but today was up and down like a yo-yo. Not good for the nerves.

My first clean sweep!

The Challenge: to increase my trading bank by 5% per month.

The story so far...

Starting bank: €1,000 (beginning of May 2010)
Target for end August: €1,215.51
Today’s opening bank: €1,432.13
Today’s closing bank: €1,481.25
Today's profit/loss: €49.12
Today's turnover: €10,265.97


A big day for me today - not only was the profit very reasonable at €49.12 (my third highest daily total to date), I didn't have any losing races.

I didn't go mad with my stakes, keeping it mainly to 50s and 100s - but I still turned over more than 10K between backs and lays. I didn't feel too pressured because of the small-ish stakes which definitely helped.

I decided to just trade the two daytime meetings and I'll leave the evening alone as I'm getting a little tired.

I was mainly scalping (just getting a tick or two) and generally went for some resistance points trading. I'm pretty pleased with the clean sweep as I had been away from trading for the weekend as best man at my brothers wedding. Normally I'm a bit nervous after a break of a few days but everything just went smoothly. Generally, the bad days are memorable but today is a reminder that there are also times when things just go your way.

The wedding was great by the way, and all the grooms-men were dressed in kilts which was good.


Not sure how much trading I'll get to do this week but this puts me well ahead of the monthly target thankfully.

I haven't had a chance to trade in the past couple of days with work and I'm going to my brother's wedding tomorrow so I'll have to put this on hold until next week.

Couldn't settle into it.

The Challenge: to increase my trading bank by 5% per month.

The story so far...

Starting bank: €1,000 (beginning of May 2010)
Target for end August: €1,215.51
Today’s opening bank: €1,461.85
Today’s closing bank: €1,432.13
Today's profit/loss: -€29.72
Today's turnover: €7,451.12

***

Just couldn't get in the zone tonight and lost nearly 30 quid. Not quite sure why but perhaps my confidence was lowered when I got off to a bad start. Got some races right but I just couldn't get into the swing of things so I thought it best to quit before it got worse.

It happens now and then and I like to take a walk and clear the head - tomorrow's another day.

Irish racing offers opportunities

The Challenge: to increase my trading bank by 5% per month.

The story so far...

Starting bank: €1,000 (beginning of May 2010)
Target for end August: €1,215.51
Today’s opening bank: €1,433.51
Today’s closing bank: €1,461.85
Today's profit: €28.34
Today's turnover: €14,063.98

***

I only traded the evening stuff so I'm pretty pleased with today's profit of over 28 quid in 12 races.

I spoke before about the Irish races and how little money there is in the market until five minutes before the off. This can be a pain when you are waiting to get matched but it also offers opportunities too. For example, you can get in ahead of the queue and leave lay orders on a number of horses at a lot of the crucial prices.

What's a crucial price? There are a number of them on Betfair. Take, for example, a horse you lay at 2.0.

The next step up from that is 2.02, while the next step down is 1.99. This gives the layers a crucial advantage here because the increments go up in twos above evens while they go down in ones below it.

So if you lay at 2.0 and the price rises it goes, 2.02, 2.04, 2.06 etc. If it goes down, it goes 1.99, 1.98, 1.97 etc.

So the potential loss if the trade goes wrong is not as great as the potential gain should the trade go right. That's why I always like to be a layer first at prices like 2.0.

There are a number of key price points on Betfair where the increment changes but you'll normally find a big queue to lay at those prices. That's where the low liquidity on Irish racing can help as you can get in early near the top.

Caught out with no stop loss

The Challenge: to increase my trading bank by 5% per month.

The story so far...

Starting bank: €1,000 (beginning of May 2010)
Target for end August: €1,215.51
Today’s opening bank: €1,412.66
Today’s closing bank: €1,433.51
Today's profit: €20.85
Today's turnover: €13, 817.41


****

I haven't had the chance to trade in a while with work so I was happy to make twenty quid today. I only had three losing races from 20 which was OK although one of them was significant at €17.80.

The loss of €17.80 was a mistake - I had opened a new page on Betting Assistant and forgot to set my stop loss of 5 ticks. It's a little annoying as the loss would have been a fiver if I'd had a stop loss in place but I guess it's a reminder to stick to my checklist when opening a trade.

But overall, I'm reasonably happy with today.

Stung in the last race

The Challenge: to increase my trading bank by 5% per month.

The story so far...

Starting bank: €1,000 (beginning of May 2010)
Target for end August: €1,215.51
Today’s opening bank: €1,408.93
Today’s closing bank: €1,412.66
Today's profit: €3.73
Today's turnover: €15,709.38


****



Feel a little deflated after only making a profit of €3.73 for this evening's trading as I was around forty quid ahead until the last race. In fact, I had a green book for that race of about a fiver too but then a horse was withdrawn and all bets suspended. The market reformed and I thought it would be a good idea to get in early ahead of the queue and take some positions. Bad idea!

I took some positions on both back and lay sides but all of a sudden, whoosh - the price came down really quickly and took quite a bit of my money with it. I had to get out for a loss of nearly 38 quid. While I'm disappointed to lose money so late in the day, I've learned another lesson - don't go near a market that is just re-forming.

'Homework' day proved fruitful

The Challenge: to increase my trading bank by 5% per month.

The story so far...

Starting bank: €1,000 (beginning of May 2010)
Target for end August: €1,215.51
Today’s opening bank: €1,381.22
Today’s closing bank: €1,408.93
Today's profit: €27.71
Today's turnover: €15,709.38

****

As mentioned earlier, I spent the day specialising in 'resistance points' trading and it proved worthwhile with a profit of €27.71. I didn't get as many trades in as usual as you can see by the turnover of 15K, but it was fairly stress free all the same.

Once or twice I was tempted to jump in and do some other trades but I resisted and I'm glad I done so. I feel I learned some more about resistance points today and as you can see by the profit and loss, the profits were generally going up as the day went on. I might think about doing another day of this again to see if I can keep getting better.

One handy feature from Betting Assistant which offers you greater leverage on your money is the 'tick offset' option. Let's say you leave a back order for 3.0 and put the tick offset to 1.

When your bet gets matched at 3.0, the software recognises this and fires in a lay automatically for you at 1 tick under the back price (in this case it would lay at 2.98 as you set the offset to 1). The reason this gives you some leverage is that the lay bet only goes in as soon as the back get bets matched. So you can leave a lot of orders on the back side but don't have to worry about having the lay money to cover as you would with traditional scalping. The one downside is that it can take about 1 second to place the counter order which may put you in a queue.

I'm going to spend a day purely swing trading one of these days but I think I'll stick with the 'resistance point' scalping next time to learn more.

All in all, a satisfactory day.

Specialising

Every so often, I like to concentrate on one type of trading only for the day. It helps refresh my skills in that particular area. Most days, you are scanning the markets for various types of trade (resistance points, scalps, swings, moving average) etc and it can get pretty frantic. It's hard to keep track of how well you are doing on each style of trade so I think a day of specialising is useful.

Today, I'm going to trade the previous resistance points. Read about trading resistance points here.

If I spot a different type of trade (eg. a swing trade) I'm going to resist and sit it out as I just want to spend a day specialising. If there are no good opportunities in the race, I'll sit it out. Not sure if it's going to be a quiet day but as I say, I think it's useful now and then to take a step back from the madness and focus on one particular strategy.

I'm going to set a stop loss of 4 ticks and won't move it under any circumstances.

The daytime racing is set out nicely as it's 15 mins apart and all of it is on the one station. Not sure if I'll get to do much evening stuff but I'll certainly cover Wolves and Southwell.

One of those days...

The Challenge: to increase my trading bank by 5% per month.

The story so far...

Starting bank: €1,000 (beginning of May 2010)
Target for end August: €1,215.51
Today’s opening bank: €1,448.26
Today’s closing bank: €1,381.22
Today's profit: -€67.04
Today's turnover: €51,323.97


***

Well, I guess I was due a losing day and it came. Not sure what went wrong really as the day started well and I was fifty quid in front at one stage. I hit a couple of bad races and lost ten or twenty quid here and there. I guess it shook my confidence a little and I often find it hard to recover after a number of losing races. Clawed some money back but one particularly bad trade seen me turn my book red for around €70.

At that point, I was starting to get a little angry with the market which is never good and as aggressive trading never works out. I went for a little walk and decided to call it a day as I didn't want to get into a situation where I was chasing. Finished up around 4pm for a loss of €67. It's not the end of the world I guess, just one of those days. Hoping to put in another few hours tomorrow. I've had a good run of it recently so I shouldn't complain but it's always a bummer to close the day on a loss.

A pretty good day - 7 Aug 2010

The Challenge: to increase my trading bank by 5% per month.

The story so far...

Starting bank: €1,000 (beginning of May 2010)
Target for end August: €1,215.51
Today’s opening bank: €1,341.44
Today’s closing bank: €1,448.26
Today's profit: €106.80
Today's turnover: €48,929.86

***

An absolutely cracking evening with a profit of over €100. A lot of things went right for me and I felt in that zone when you can read the markets very well. One trade did go against me and I turned the book red for a loss of €34.

Obviously, I feel pretty good after today but once again, I chased a bad trade which is something I’ve been trying to stop doing. It worked again but had it gone wrong, I would have been staring at a red book of €90. It’s not always as easy as it looks to take a loss – especially if you see a new trend and are confident of getting out for a profit by opening a new trade (chasing) but it’s something I’m working on and need to resolve before I take a big hit. All in all though, I’m pretty darn pleased as I only traded 13 races in the evening time.

I included the Irish racing too and done well there. People complain that there’s no liquidity there but that presents opportunities too. I find that if you go in early (12-10 mins before the off), you can take your positions right at the top of the queue and leave various orders away from the current price. When the money starts arriving 3-4 mins before the off, you are ahead in the queue at various points which can be extremely beneficial.

Hoping to do some trading during the daytime tomorrow and have promised myself that I won’t chase any bad trades.

6th August 2010

Starting bank: €1,000 (beginning of May 2010)
Target for end August: €1,215.51
Today’s opening bank: €1,271.89
Today’s closing bank: €1,341.44
Today's profit: €69.55
Today's turnover: €53,628.71

A cracking day for the balance with a profit of €69.55, in fact, that's the best day so far in this particular challenge.

While I should be pleased (and I am for the most part), I do have a niggling sense of guilt about two things. Firstly, I let one race go in-running. I really need to stop doing this as it can spell disaster.

The other thing I done which I shouldn't was chase a losing trade with a bigger stake. I got away with it but if it had of went wrong, I would have been looking at a severe red book on that race. I'm trying to stay disciplined and going forward, I know I shouldn't open another trade unless my old one is complete - for better or worse.

Overall though, I can't say I'm not pleased as it pushes me well ahead of target once again. I got an email during the week suggesting that my targets may be too low but I know that I won't be around the computer during the day much when the winter comes in so I don't want to re-assess just yet. It's days like this that build the bank and allow me some space when I don't have time to trade.

Making time to trade - 5th August 2010

It can be tricky finding time to trade when you’ve a job, family and social life to look after and sometimes it’s easier to leave the computer switched off after a long hard day. However, the summer evening racing will be coming to an end soon so I need to try my best to get even an hour or so when I can. When the winter comes in, I’ll only have the opportunity to trade on my days off but that has to fit in with my family life too so opportunities become more limited.

That’s one of the reasons I didn’t set very high targets for this project as I know I won’t have loads of time to sit at the computer trading during the week. Part-time will have to do. That’s no to say, however, that decent money can’t be made part-time over the months and years.

This month, I’m going to try my best to trade at least two of the evening races per day, even if I’ve had a long day at work or wherever. That’s ten races per week (Monday to Friday) which nearly adds up to one full regular day of trading. I’ll still have the weekends too where I can put in a full day to make up even more hours. Nabbing an hour or two here and there is not ideal as you don’t get much consistency – but it’s better than nothing I guess and the more experience I get, the better.

Back to today...

I traded for about an hour and quit at seven as I want to get some work done on Saturday’s Irish Independent article. I like to start studying the form on Wednesday or Thursday before I finalise my article on Friday so that’s why I didn’t do the later racing.

The hour went well in that I made a profit of €14.45 – but I’m not entirely happy after some anxious moments and I’m going to have to think more about whether I should spread the loss when a trade goes bad or not.

Barking (6.35 Folk) was a good example where a trade went against me. If you look at the first screenshot, you will see that Barking would have cost me over €166 if it had won. Diamond Charlie actually won so it was fine but that’s not the point. Don't get me wrong - I didn't simply lay and let the bet stand. I backed it too but I left the book red on Barking only.

My trade on Barking went quite wrong and I had the option of getting out for a red book of thirty quid no matter what won– or else get out for a loss of €166 (but only if Barking won). I chose the latter.





The first approach (enduring a red book) will mean you make small losses a lot more - which can be a bit frustrating. Had I chose this option, I would have shown a loss today. The second approach will see you stay green for the most part but when you do lose, it’s a big deal. Overall, it probably levels out over time but I must admit I was sweating a little when Barking went as low as 1.77 in-running.

Anyway, here’s the stats:

Starting bank: €1,000 (beginning of May 2010)
Target for end August: €1,215.51
Today’s opening bank: €1,257.44
Today’s closing bank: €1,271.89
Today's profit: €14.45
Today's turnover: €5,065.00

4th Aug 2010 - Big bets a signal for action?

Starting bank: €1,000 (beginning of May 2010)
Target for end August: €1,215.51
Today’s opening bank: €1,245.90
Today’s closing bank: €1,257.44
Today's profit: €11.54
Today's turnover: €2,411.14

I got in late (8.30pm) but I was keen to trade the last couple of races following a long break so I fired up the laptop and earned €11.54. I’m very pleased with this amount as I’ve been away for a while and I’m always cautious after a break.

One possible opportunity I’m going to look at further arose again this evening and I took advantage. There was an Irish race where there was just a few hundred on each side but someone put in a very big lay and took out quite a bit of money (around 3 ticks worth). While it makes sense that a big lay should help push out the price, I think people over-react when they see a big bet go in and they try get on the bandwagon.

Sure enough, the price kept drifting for about five ticks, but then levelled out and stalled for a moment. This moment seems to be a good point to back; as the market says “Hang on, let’s not get carried away - the horse has become a value price again”

If found that you can get a good one or two ticks (back then lay) as the price often drops back down just a little.

I’m going to try it out with small stakes each time I see it and make a note of my progress.

A worry for Irish traders?

Well, I’m back from Edinburgh which was a brilliant break for my brother's stag, including an archery session! (see pic).

It's back to reality now but I’m looking forward to trading again this week. But for how long will trading remain tax free in Ireland?

I was discussing this on some forums and it seems that An Taoiseach Brian Cowen is set to add a betting tax (which will include off-short operators) in December's budget – the figure discussed is in the region of five percent. What this will mean for Betfair is unclear but if you’ve to pay 5% on each back and lay (rather than on the trade itself) that will make the spread very big, considering Betfair take up to 5% commission too.

I remember the days when we were paying nearly 10pc tax on bets in the bookies and it was near impossible to make betting pay. I know the sport needs to be funded but some sort of net tax on winnings would be preferable to me as a trader as it could become very difficult to beat the spread if they take 5% immediately after you back or lay.

If they only taxed bets on Irish racing, that would be fine as I trade mainly on UK stuff but I doubt it. Also, the UK Government are also looking at ways to raise revenue from the sport so I wonder just how long they will leave the exchanges alone for.

I’ll watch this one with interest and I just hope that there aren’t too many changes.