Creating a system

[dzemo]

Hi guys,

i have some questions if someone is ready to help me with designing a trading system for pre-race horse racing trading (usually 10 minutes before off).

I am researching trading on betfair for about 3 years now, and at start i was just trying to trade with feeling, but soon i realized that this is not going to work for me. Then i began to search for tutorials and methods on internet, but as you know there is very difficult to find strategys that are profitable.

Soon i realized, that trading horses pre-race is somehow like trading stocks, so i started to search for some materials on trading stocks. I find that psychology is very important at trading, maybe the most important factor, so i read a lot of books from Mark Douglas, Van Tharp and others.

I think that now i am ready to trade like a professionals, because i know that i must design a system, that has a higher probability of wins than losses, and all other stuff about entry, exits, stops, and that i have to EXECUTE EVERY TRADE WHEN I GET A SIGNAL .

Now my questions are :

How to design such a system ? Where to start ? What to look for ?

I recorded 90 example videos of ladders and graphs from geek, but i can't find any rules from which i could design my system with higher probability of win over loss. I try with support and resistance levels, breakouts, WOM trading, moving averages, but if something work for 3 races, it won't work for other 6 or 7 races. I can't find any similarity from race to race.


So please can someone help me how to start ? Or is there any useful book on how to design system for horse racing trading. I read a lot of books on how to design a system for stocks trading, but it looks like this methods cannot be applyed to betfair trading (horse racing). It seems that horse racing markets are too random to design a system.

So guys, please, any advice from you would be very helpful to me.

Thank you for your answers and sorry for my english, i am from Slovenia.

Cheers !

[bazbaz]

Hi Dzemo

"If something work for 3 races, it won't work for other 6 or 7 races. I can't find any similarity from race to race"

That's the way the markets are, I really doubt you'll find something that works for every race..... certainly I've never heard of anyone who has found something.

Most people who can make money consistently from the pre race markets can do so because they've got a lot of experience of all types of markets and after some time can spot recurring themes / things happening that allows them to adapt to the current conditions and make money from them. I've never heard of a pro using one system for all races..... I've heard of some with certain strategies that they will use in certain (but not all situations) but really I can say in my own experience (6 years pro) is that the most important thing is to get as much experience as you can trading with the ladder till you get to the point where you can trade manually and can adapt to the situation that you find yourself in. The more experience you have the better your instincts become (if you are suited to the game). A lot of people spend a lot of time looking for blanket 'systems' and most seem to come away disappointed. Even if you did find a system that worked there is always the chance that someone else would discover the same thing and your edge would be eroded, so maybe the best thing is to try harder to learn how to trade manually and really get a good feel for the markets..... you're bound to pick up all sorts of knowledge along the way while you practice anyway which may lead to small strategies that you can use in some instances. Most people who get good at trading do so after many months of practice day in day out.

Hope this helps!

PS your english is fine, better than many english people's english on here

[dzemo]

Thank you very much for your answe bazbaz !

Maybe this is the first thing to consider when designing a system.

I have to determine a type of market. But how can i do this ?

Do i base my decision by looking on a betfair price chart and look what was happening one hour before start of the race until now ?

Or is there any other logic to determine the type of market ?

Thank you very much.

Cheers.

[linusp]

Just trade the 3 where it works.

[dzemo]

Yes i can trade only in markets, where it works.

But how to determine, why it works ? How can i determine type of market, where it works ?

I can't just look at betfair chart 10 minutes pre race and say OH, THIS MARKET IS UPTRENDING or THIS MARKET HAS STRONG SUPPORT AND RESISTANCE AND IS BOUNCING.

Anyway, 10 minutes before race there is only maybe 80.000 $ of traded money, and then in the last 10 minutes there come another 400.000 $ of traded money.

So i can determine that market makers come in market in last 10 minutes so doing my decision about type of market cannot be based only on prices that were traded from opening of market to 10 minutes before the race start ?

Thanks for answers !

[linusp]

That is why you need to put hours behind the screen, you then begin to get a better understanding as to when your signals are correct and most importantly when they are wrong!

[dzemo]

Thanks for answer.

But how to start ? What to look for ?

I realized that drawing supports and resistance levels is not so useful, WOM don't have any significant impact on price movement, because it can change in half of second from 90% to 50%.

So what is the most important ? Is it enough if i just look at the ladder and see what others are doing from 10 minutes before race to 5 minutes before race and on that basis i decide what strategy will i use ? Or how to determine what type of market is it ?

It is better to make my decisions based on price charts ? Or it is better to focus on ladder and try to figure out how big players are moving market and hope that they will repeat that several times before race start ?

Thank you for answers !

[bazbaz]

Watch and play with the ladder using minimum stakes, you'll learn far far more by doing, even without needing to risk big money.

You don't really have to determine 'type of market' so much. IMO trading is more an art than a science. You can get a general feel for how volatile / smooth a market is by looking at whats happened in the past, but the big players only arrive late when there is real liquidity, and it is the way they behave (which can vary from day to day, race to race etc) which determines things a lot - you can never totally predict how a market is going to feel, but if you get enough experience and skill by practicing then you'll find yourself in a position where you can adapt to whatever situation you find the markets to be in.

Dont think too much about time limits either. There is no magical starting point at 10 or 5 mins..... some days there are 15 minute gaps between races, other days there are only 5 minute gaps, which means that real money will arrive at different time. Aside from short term bullying, it is real punter money that determines how a price will go.

[Morgans Choice]

Hi D,

everything B says, in his posts, is bang on. The trouble, for someone like yourself, is that the quantity of information is bewildering, I can still remember the "Hmm, where shall I start?" feeling myself and the advice good as it is, offers no concrete starting point.

The more I trade, the more I believe that you can use any factor you wish to build a strategy around, it is simply a matter of seeing what happens when you employ a given technique. There I'm being vague too, so to get around this let me tell you what I chose to do when trends, resistance, support, weight of money didn't seem to work, for me.

I chose what I considered to be a logical factor; it was this (I started with pre-race horse markets). I reasoned that markets with odds on shots were likely to have longer price drifters and that the "best" horse would shorten in price. I played around with laying the long shots, from about 10 mins out, expecting a drift. Interestingly it frequently didn't happen, in fact the opposite did on many occasions. The point is that it gave me a starting point and some good information around which to develop a strategy.

I hope that this helps,

cheers, MC

PS Sorry about the false start

[dzemo]

Thank you bazbaz for your answer. I really see that if i want to be a good trader, i need to practice. But let me ask you some questions.

What is way of thinking of a good trader. Let's go through a process and then please tell me if this way of thinking is good or it is completely wrong.

1. I open a race, there is about 10 minutes to start of the race.
2. i look through market and see, that there are 10 horses in the race, and that there is one strong favourite.
3. Then i look at chart and i see, that price for this favourite is slowly falling down until now.

On basis of point 1,2 and 3 i determine a type of market and now i know that it is market with strong favourite, and hice price is dropping slowly down.

4. Now i start to look at ladder to see what will happen. I see that there is pressure on the back side, which pushes prices from let's say 2.8 to 2.5, but then pressure dissapears and price go back to 2.8. This happens 2 times and now price come to 2.4 at about 5 minutes before start.

5. I back at 2.4 because the pressure from back side becomes stronger and because this is a favourite, and his price is dropping almost all the time.


Is this the way of thinking ? Or are there completely other things and i dont need to look on chart, on money pressure and other stuffs.

Do i just have to look what price is doing and get a feeling when layers or backers are exhausted and basing on this predict that market will go lower or higher?

Thanks very much.

[dzemo]

Thank you M on your answer !

So you say that it is better to think about horse racing logically and then make some conclusions, like that a strong favourite's price have to short because he is likely to win.

Then you test your strategy and see if it works. If it not, you know that price of strong favourite don't short so often, so you know that it is more likely that price will go higher. Next you try to add one more "filter" and you test your new strategy again and you see if results are improved .

But what are this main factors that i have to concentrate on ?

Are this good examples :

1.Strong favourite' s price will shorten
2. If there are 3 close favourites, one's price will shorten
3.If race is short, from 5f to 7f, then price of the also favourite will also shorten

Are this examples good ? Can one of those be a main factor in designing a strategy ?

Or is there completely different logic ?

Thank you very much !

[bazbaz]

Different successful traders see things very differently, so there is no right or wrong way to look at things, the only right way is to find a way that works for you over time.

From your example, Id just say it all depends if the money that you see is real money trying to get matched or isn't. If its real then it'll likely push in that direction, then once it has exhausted itself it will likely go back the other way a bit, as traders who originally backed will then need to lay, and other traders will be looking to lay at the bottom. However if there is then more back money coming then the price may go in further. The 'pressure' has to be real, if not then it could just be fun and games from other traders. This is where market reading and experience come in, and is why I suggest to spend a lot of time practicing on the ladder with minimum stakes. There's no exact right or wrong way to do things..... maybe it would be useful to realise that even people like myself having done this for years will often constantly be changing their minds about what might happen in a market, both next and in the long term, and we're always having to adapt our positions, ducking and diving, to make sure first of all that we dont lose money, and secondly that we make some.

A lot of newbies are sold the idea that trading is like ballet.... you look at a couple of indicators and then back the horse, wait 5 minutes and then lay it...... but certainly in my experience it's not like that, its far more messy. I can start many trades in a race and then just scratch them because it is not going the way I hoped, before finally hitting on something that works.

I think at the momeny you are doing what a lot of people try to do - look at trading from the outside in, rather than the inside out. If you spend enough time at the coalface working away then trust me, if you are suited to trading (certainly not everyone is, but you may well be) then the experience you get will answer your questions for you in a way that nobody else could

[dzemo]

Thank you bazbaz for your answer.

I like the way you are thinking about the market.

Recognizing real money will be a big step in determining to enter a market or not.

But how do you recognize real money ?

I believe there is no tool to do this.

Correct me if i am wrong, but the best way to see if it is real money is, that you get out of trade immediately when you see that money was "fake".

Let say for example :

Horse is trading at 4.0. Then on the back side of ladder comes a bigger amount of money at 4.1, 4.2 and 4.3. Market starts to move to 3.9 and then to 3.8. So i entered a trade with back at 3.7 and put a STOP LOSS AT 3.8. Now if the money was real, market will continue to fall down, but if the money was fake, my stop loss will be trigerred.

With stop loss i can cheapilly find out, if money was fake or not.


Or is there any other way to find out if money was real or not ?

Thank you very much !

[bazbaz]

For me real money is money that appears to be truly trying to get matched. You can never be totally sure, its always a guessing game in which you have to be ready to quickly change your mind. Again, experience helps massively here. You'll also get used to the 'unreal' money, how it operates (always changing subtly with new strategies) to move things around, and can learn to trade off of that. But there are no simple rules to follow, because the markets are so dynamic, it's like learning to surf - you have to just jump in and get a feel for the waves and try to get used to it and go with it over time.

In all honesty I wouldn't use a stoploss. I don't know of any pro trader that uses one in the pre race markets, you have to be able to trade manually and determine your own time of redding up. Certainly in other markets they can be useful, such as financial markets or In Running Horse racing, but for many reasons I wouldnt use them in the pre race markets, not least because many bots try to trick stop losses into firing, causing you an instant loss. There is a lot written elsewhere in the forum about why not to use one.

[dzemo]

Thank you bazbaz for your answer.

Can i ask how do you look at markets ? What are you telling to yourself when you are watching market ?

Do you look at ladder and tell to yourself something like this :

OH, i see that market is slowly moving up....and now i see a pressure on back side...uu and now i see that there is a lot of money dissapearing on the lay side of market...looks like that was spoof money and now market has a potential to start moving down..i will try to back horse and make some ticks.....


..or is there any other way to think about what can market do in next few seconds ?


Bazbaz, is there any book, which could help me better understand the betfair horse racing and similar markets, and that in this book are not chapters about technical analysis, WOM, and systems ?

Thank you very much bazbaz, your answers really push me to think different about markets.

Cheers