General discussion : Trading for Newbies - Part 1 Starting out.

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JollyGreen
Posts: 2011
Joined: Sat Mar 21, 2009 10:06 am

Wed Aug 28, 2013 3:53 pm

Trading – the journey begins! Advice for new traders.

I get asked on a daily basis “what is the one thing you can show me that will work and make money?” My answer is always the same, “Get a job, it never fails”

That may sound flippant or even harsh but sadly it is also very true.

I will start by explaining how I got into trading for those who perhaps are new to the forum and have not read my posts. I started trading in late 2001, I cannot remember the exact date but it was around 6 months after Betfair started up. As some of you know, I had a misspent youth frequenting dark and smoky betting shops with my Grandfather. He was a certified A Grade, 100 percent, mug punter which worked to my advantage. When I saw him losing money and basically addicted to betting I knew it was not a path I wanted to follow.

I was approached by someone who shall remain anonymous. He wanted to use my race profiling skills to create a piece of software that would ensure a win no matter what the result. I thought the guy was a loony as I would need a bookmaker’s license to achieve that. Then Flutter came along shortly followed by Betfair and suddenly it all made sense.

I started with a simple strategy; I would use my race profiling to determine which horses were likely to attract money and which horses were not. It worked well so then I started looking at other ways to profit. I started to profile running styles and trade that way. Then it all came crashing down. I found I could not get my money into the market quickly enough to achieve a match. It used to hurt when you made the right call but then couldn’t get the order matched in time. I had to think again and that meant 1-click software for submitting my orders. I found three back then and you do not get any points for realising I chose Bet Angel as my preferred software. That was it, I was now on my way to trading. At that time it was purely form based with the odd reactionary trade where I spotted a drifter or a steamer. I started emailing Bet Angel with questions and ideas; looking back, some were stupid but I didn’t know that at the time. I always say to people there is no such thing as a stupid question, if you do not know the answer then how can it be stupid?

So 12 years later here I am still having fun in the markets. I cannot emphasise the fun part enough, if you don’t enjoy trading then you are probably doomed from the start. That is just my honest opinion borne out of years working in industry and then in trading, if you enjoy something then you stand a greater chance of excelling than if you are doing something out of necessity i.e. making money. I know some people will say “well making money is fun” but trust me you should enjoy the trading first and the money second. The money will come and keep coming if you are enjoying it and doing the correct things. If it is stressful then you will struggle.

So I will finish this section with the number one requirement. ENJOY IT!

Tradertrician
Posts: 27
Joined: Mon May 20, 2013 7:15 am
Location: Suffolk
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Wed Aug 28, 2013 8:59 pm

What a fantastic post JG and the kind of stuff a newbie like me loves reading. I find it so interesting and inspiring to hear stories of the early days of traders experiences.

I have been studying trading since last November and it absolutely fascinates me. My relationship even bit the dust back in Feb because of the time I was spending on researching trading but I knew deep down I wanted to teach myself how to do this no matter how long it takes and I really needed to be single to be able to do that properly and in the end my girlfriend walked out but I knew it was for the best and let her go.

I have had a crap year (and that's saying something from a man who has 2 failed marriages behind him) with 3 other awful things happening in my life since Feb, the last being at the end of June and each time it has knocked my will to want to do this but each time I keep coming back with more will than ever. Every time I felt I was starting to get somewhere, life would chuck a spanner in the works resulting in knocking my drive to learn back down.

But, my passion is football and ever since May I have been waiting for the footy season to start so I could really get stuck back in again and my will to learn is stronger than ever.

Think my biggest problem is focusing on the ideas I have, I'm jumping from one to another and will rarely be still working on an idea for more than 1 day before I convince myself it won't work and move on to another. Peter's blog post titled 'Procrastination is the enemy of success' is me all over and was a great read.

The funny thing is I'm now finding myself going over ideas I had and dismissed back in the early part of this year and because I now understand how the markets work much much more, they now appear to be much more promising and I know deep down I just need to concentrate on each one over a period of time and refine how to carry out each trade.

I have never enjoyed the feeling of gambling, in fact I hate it and I believe this has helped me to be very disciplined with the trading I have done so far, I placed £100 in to my Betfair account last November, I have never had to add any more and still have around £100 in there today (obviously using small stakes), I never get the urge to chase a loss and I can go days without having a trade, instead preferring to spend time either reading up or back testing ideas.

I feel I'm still a very very long way away from being able to carry out a trade with 100% confidence in my abilities to handle what the market may throw at me but

I absolutely bloody love doing this and JG is bang on, enjoying it is the key, without doubt its what keeps me believing and keeps me going stronger than ever.

Thanks JG for sharing your beginnings. If anyone else wants to share theirs I would love to read them :)

Paul

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JollyGreen
Posts: 2011
Joined: Sat Mar 21, 2009 10:06 am

Thu Aug 29, 2013 10:40 am

Hi Paul

Thank you for your kind and positive words. My aim is to write a series of these posts to help new traders. I will cover mindset, general equipment setup and then market thoughts including some myth busting.

I will not be giving some magic moves; there aren't any! I will however give my take on the market in such a way it will make new traders think about their approach.

JG

Iron
Posts: 6793
Joined: Fri Dec 11, 2009 10:51 pm

Thu Aug 29, 2013 11:57 am

That will be very useful.

I hope that your series of posts are made into stickies.

I look forward to the next installment. :)

Jeff
JollyGreen wrote:I will however give my take on the market in such a way it will make new traders think about their approach.

JG

gazuty
Posts: 1039
Joined: Sun Jun 26, 2011 11:03 am

Thu Aug 29, 2013 12:15 pm

Just so glad you are well again and up to writing.

nizzy99
Posts: 7
Joined: Sun Aug 25, 2013 9:49 pm

Thu Sep 05, 2013 1:43 pm

I like this having just started trading betfair ill have a read through some of your other posts.

I have been trading the stock market for some 6years now and while I still continue to do that I thought this would be good fun as well.

Hambleden
Posts: 32
Joined: Mon Jul 07, 2014 10:12 am

Mon Jul 07, 2014 12:20 pm

Hi! Am trialling BA and need some help. The user guide tells me that if WOM figure is red the horse should drift. I had a horse at 86% red..but when i looked at it's price/vol over time chart- it showed it to be shortening slightly..so the two are opposites. I'm totally confused..can someone explain this? Thanks.

Iron
Posts: 6793
Joined: Fri Dec 11, 2009 10:51 pm

Mon Jul 07, 2014 6:10 pm

Hi Hambleden

The relationship between weight of money (WOM) and price action is debatable. Some people swear by WOM, whereas other traders regard it as being about as useful as tea leaves in predicting what will happen next! :lol:

Whatever your view of WOM though, nothing is certain in the market - anything can happen at any time.

BTW, you don't need to know what the price is going to do next (or even what it's probably going to do next) to make money.

Enjoy your trading journey. :)

Jeff
Hambleden wrote:Hi! Am trialling BA and need some help. The user guide tells me that if WOM figure is red the horse should drift. I had a horse at 86% red..but when i looked at it's price/vol over time chart- it showed it to be shortening slightly..so the two are opposites. I'm totally confused..can someone explain this? Thanks.

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JollyGreen
Posts: 2011
Joined: Sat Mar 21, 2009 10:06 am

Mon Jul 07, 2014 8:45 pm

I will just say this, WOM is never wrong, it is only interpretation that is wrong.

There are three mechanisms that move the price of a horse and they are all driven by one thing, money. It is either lack of it or more of it.

1. No interest in a horse, price will drift slowly. This is simple market forces, if you want action you must improve your offer and someone always will if you do not.

2. Actively opposing a horse as layers see a weakness. This horse could be sweating, playing up, pulling en route to the start etc. He could have stamina doubts, going concerns etc. This will see the layers dominate and when they see the price move it reinforces their view and the drift continues.

3. Actively supporting a horse which means the price contracts. Perhaps it is the favourite and everything mentioned in point 2 is solid or as solid as you can reasonably expect. Perhaps the closest contender looks poor or has doubts which means the fav takes the money.

You can use spreadsheets to analyse the data and prove this to be incorrect because if you want to find some data then you will. It is down to simple money exchange but many always want to make it more complex than it really is. I think some people hang on to the belief it is very complex so when it goes Pete Tong they pull out the "it's very complex" card.

One caveat. There are some markets where WOM is unreliable, these are generally lower quality events where there is either a lack of genuine money or it is very slow and prolonged in its arrival to the market. You then get "trader tennis" as they hit the price backward and forward. Now I am not going to write on here how I spot these markets but to be honest I think most of us can sift them out. When they occur I simply sit back and watch, if the tennis traders run of money or cease then often an opportunity can occur. If no trend appears then I move onto the next market.

Watch the markets and you will soon spot the trader tennis versions! Once you learn to avoid these it will dramatically improve your ability to read the others with more reliability.

Iron
Posts: 6793
Joined: Fri Dec 11, 2009 10:51 pm

Mon Jul 07, 2014 10:47 pm

Hi JG

I agree with what you write about drifters and steamers, but I'm not clear how that relates to WOM.

At the risk of asking a silly question, how are you defining WOM? Are you using the common definition of money waiting to be backed in the three columns nearest the spread vs money waiting to be laid, expressed in proportional terms?

Jeff

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