Spotting spoof money

[ruthlessimon]

I know that sounds simplistic but read on. So we can see the money coming for the favourite and it's slowly gathering momentum. They fancy this one and the money is coming. Suddenly, there is large amount queued and this strikes fear into some people. I take a simple view "if the market is supporting this horse, why would a savvy person go against the move?" The chances are they wouldn't!!

Nice to see ya again JG

Talking of simplicity, couldn't this be simplified to just time & price (i.e. avoiding spoof entirely - for say a newbie trader), who could then learn to incorporate volume in the future?

Below are two ideas, put forward by two traders, & I just wondered, 1. Which strategy would you recommend 2. Where would you see the problems in the following ideas? 3. If you recommended a strategy, what steps would you take to improve the strategy further (after all volume is completely omitted)

Strategy 1. A trader is looking to only trade markets priced at 2.xx. The trader finds that over a large sample size, the average race end is xx:xx. Said trader then takes the price of the fav at xx:xx, & sets two boundaries (these will be the trader's future entries) 2.xx + x ticks, & 2.xx - x ticks (let's assume x is 8 ticks - a decent "sustained" move in one direction). If one of those boundaries gets hit, he enters in that direction & holds to 00:00.

Strategy 2. A trader is only looking to trade markets price at 2.xx. The trader finds that over a large sample size, the average race end is xx:xx. The trader backs at xx:xx & holds to 00:00.

[JollyGreen]

I know that sounds simplistic but read on. So we can see the money coming for the favourite and it's slowly gathering momentum. They fancy this one and the money is coming. Suddenly, there is large amount queued and this strikes fear into some people. I take a simple view "if the market is supporting this horse, why would a savvy person go against the move?" The chances are they wouldn't!!

Nice to see ya again JG

Talking of simplicity, couldn't this be simplified to just time & price (i.e. avoiding spoof entirely - for say a newbie trader), who could then learn to incorporate volume in the future?

Below are two ideas, put forward by two traders, & I just wondered, 1. Which strategy would you recommend 2. Where would you see the problems in the following ideas? 3. If you recommended a strategy, what steps would you take to improve the strategy further (after all volume is completely omitted)

Strategy 1. A trader is looking to only trade markets priced at 2.xx. The trader finds that over a large sample size, the average race end is xx:xx. Said trader then takes the price of the fav at xx:xx, & sets two boundaries (these will be the trader's future entries) 2.xx + x ticks, & 2.xx - x ticks (let's assume x is 8 ticks - a decent "sustained" move in one direction). If one of those boundaries gets hit, he enters in that direction & holds to 00:00.

Strategy 2. A trader is only looking to trade markets price at 2.xx. The trader finds that over a large sample size, the average race end is xx:xx. The trader backs at xx:xx & holds to 00:00.

Is this automation you are considering? You have totally lost me on the strategies...sorry

[ruthlessimon]

Is this automation you are considering? You have totally lost me on the strategies...sorry

Not entirely, more as a way of removing the "what if".

I just think any trader who struggles to read volume, especially newbies (as you suggest i.e. hesitant with spoof). Should cut volume entirely from the ladders - & focus on just time & price. For example, the researcher in your example would never have been hesitant - because he's unable to see the volume.

You have totally lost me on the strategies...sorry

The two strategies mentioned, are two ways the researcher could have used only time & price to roughly match your entry - independently (without volume). Had the researcher been myself, I would've asked you those 3 questions

Sorry if it was confusing - it might still be

[spreadbetting]

If I see money still coming then why offer a bigger price? Why not wait for the price to drop and then offer my money? Yes, it could reverse but that means I have either not read the market correctly or someone has placed a massive lay bet before me and the price has shot out. As a savvy player I am not just going to throw my money into the market, there will be plenty more chances.

Very interesting thread.

It took me quite a while to realise that if you're too keen to get your money on for fear of missing out, sure you get your money on every time, but you get a worse deal every time. If you're prepared to wait and look for a few more ticks, it's either a better deal or no deal.

It's easy to imagine a trader who always get's his money on and breaks even. Being more selective and going for the better price or nothing could make enough difference to turn his trading into profit.

I don't think JG was talking about entering a trade, Derek, more the fact that there's little point taking a price, or being generous, when the market is coming towards you.

When you open a trade it's always going to be a judgement call whether to take, or offer, odds and so much of that depends on what you expect to make from the move. If you think the market is going to move 8 ticks there's little point you offering odds and risking losing the trade for the sake of an extra tick especially when you've already decided the momentum is in the opposite direction. If you're just playing the noise to take a tick or two it's a different matter

[ruthlessimon]

The spoof amount had already convinced him it would push the market one way

That's testable though (in a basic quantitative sense). I'm guessing the WOM was a huge factor for the researcher in that scenario. Let's assume the WOM was 90% - I would've asked the researcher, "what's the probability of a drift/steam when then markets hits a 90% WOM? is it profitable to back/lay when the market hits 90% WOM? Does this differ after a substantial move? Does this differ by volume (i.e. £5000 90% WOM vs £500 90% WOM etc etc"

If the researcher didn't know the answers to those questions, how can it be fair to blame the "what if" (psychological noose)? Those few questions could quickly find out how well he understands the "backbone" of his edge.

Surely Peter & yourself know those figures inside out?

[Naffman]

You're confusing everyone Simon

[ruthlessimon]

You're confusing everyone Simon

I'm Jeff's reincarnation

[spreadbetting]

I'm gonna have to buy some 80's financial dictionary just to try and translate some of it

[ShaunWhite]

I'm gonna have to buy some 80's financial dictionary just to try and translate some of it

https://www.investopedia.com/dictionary/

[ruthlessimon]

Maybe I've inadvertently shown why mainstream education is inherently difficult. If I went on the BA course, I'd be a nightmare for the tutor & students

[Derek27]

If I see money still coming then why offer a bigger price? Why not wait for the price to drop and then offer my money? Yes, it could reverse but that means I have either not read the market correctly or someone has placed a massive lay bet before me and the price has shot out. As a savvy player I am not just going to throw my money into the market, there will be plenty more chances.

Very interesting thread.

It took me quite a while to realise that if you're too keen to get your money on for fear of missing out, sure you get your money on every time, but you get a worse deal every time. If you're prepared to wait and look for a few more ticks, it's either a better deal or no deal.

It's easy to imagine a trader who always get's his money on and breaks even. Being more selective and going for the better price or nothing could make enough difference to turn his trading into profit.

I don't think JG was talking about entering a trade, Derek, more the fact that there's little point taking a price, or being generous, when the market is coming towards you.

When you open a trade it's always going to be a judgement call whether to take, or offer, odds and so much of that depends on what you expect to make from the move. If you think the market is going to move 8 ticks there's little point you offering odds and risking losing the trade for the sake of an extra tick especially when you've already decided the momentum is in the opposite direction. If you're just playing the noise to take a tick or two it's a different matter

I realise that but the principle is the same for layers and traders. If I was a layer and it seemed prudent to pause for a better lay price, it would be the same if I was opening a trade with a lay bet.

Of course it makes sense to 'take' if you feel the price will bounce away - I do that frequently with US ans AUS racing. But there have been many times lately where I've offered my money a good few ticks behind the spoofer and waited the the spoofer to withdraw, whereas when I was less experienced, in the same situation my money would be straight in front of the spoofer.

[Derek27]

I know that sounds simplistic but read on. So we can see the money coming for the favourite and it's slowly gathering momentum. They fancy this one and the money is coming. Suddenly, there is large amount queued and this strikes fear into some people. I take a simple view "if the market is supporting this horse, why would a savvy person go against the move?" The chances are they wouldn't!!

Nice to see ya again JG

Talking of simplicity, couldn't this be simplified to just time & price (i.e. avoiding spoof entirely - for say a newbie trader), who could then learn to incorporate volume in the future?

Below are two ideas, put forward by two traders, & I just wondered, 1. Which strategy would you recommend 2. Where would you see the problems in the following ideas? 3. If you recommended a strategy, what steps would you take to improve the strategy further (after all volume is completely omitted)

Strategy 1. A trader is looking to only trade markets priced at 2.xx. The trader finds that over a large sample size, the average race end is xx:xx. Said trader then takes the price of the fav at xx:xx, & sets two boundaries (these will be the trader's future entries) 2.xx + x ticks, & 2.xx - x ticks (let's assume x is 8 ticks - a decent "sustained" move in one direction). If one of those boundaries gets hit, he enters in that direction & holds to 00:00.

Strategy 2. A trader is only looking to trade markets price at 2.xx. The trader finds that over a large sample size, the average race end is xx:xx. The trader backs at xx:xx & holds to 00:00.

I can't speak for the jolly green giant (what a way to get kids to eat their vegetables!) but I'm sure there must be a lot of traders like me that are more focused on the here-and-now to determine price movements, rather than statistics, although it is an interesting approach.

(It took me a while to realise that xx:xx is mm:ss).

[ruthlessimon]

I'm sure there must be a lot of traders like me that are more focused on the here-and-now to determine price movements, rather than statistics, although it is an interesting approach.

Absolutely, & I completely agree.

However, my issue comes when a trader starts struggling with the discretionary "here & now" (to which I would label the researcher mentioned by Dave). They're quickly labeled as psychological failures ("what if" traders) - & I have huge problems with that. Especially - if the trader saying that has incredible amounts of statistical knowledge. It's such a massive confounding variable IMHO.

For example Korattt. He's been trying to trade discretionary for 4 yrs - I say, let's try to quantify some of those "truths" you've believed for the last 4 yrs. Does the MO chart slider really provide a support level? Let's be completely impartial & let excel be the judge. That could open his eyes, that could build a life skill, that could get him pro.

If Peter hasn't done any quantitative analysis on spoof money (i.e. WOM), I'll eat my hat!

[ShaunWhite]

He's been trying to trade discretionary for 4 yrs - I say, let's try to quantify some of those "truths" you've believed for the last 4 yrs. Let's be completely impartial & let excel be the judge.

This is where I have questions about your approach, doesn't the idea of quantifying 'truth' sail dangerously close to the magic indicator myth?

Rather than indicating profitable situations, might they just identify less risky situations? The places where you're less likely to need fancy footwork. Remember these guys can squeeze money out of almost any situation and really make hay on the easy stuff. Not 'easy' because it's always +10ticks, it's easy because it behaves more predictably both up and down, so you can stake bigger. Staking is something excel simulations struggle with, how do you simulate the ebb and flow as you take profit, reduce liability, scale in and scale out. It's a dance not an atm transaction.

Then there's the discretionary angle, the context, missing clashing races because they're weak, knowing a course can be spikey if it starts the day that way, what happened in the last minute, it's endless.

Surely they're no more than that, otherwise they'd be magic bullets? I won't deny thay're a good reference point, but they can be learned from experience as well as data I'm sure. I remember losing £50 more than I remember a big red number in cell ZZ48 when I ran strategy X.

In fact going back to topic, the large WoMs are a danger signal to the inexperienced but are an opportunity for the experienced. Is it spoof money? Is it real money? Things can go either way, far and fast! The outcome might be 60/40 and a paper profit, but some make hay while others get burnt.....because they don't have the experience to assess the very very fuzzy logic and act rapidly enough to exploit it.

Sorry that all sounds like an attack on your work, it's not meant to be. I'm just trying to find out how essential or useful it is to know, statistically, these key setups.

btw i'm going to avoid using the phrase 'the truth'. My in-laws are JWs and 'the truth' is what they bang on about. Being a hardcore atheist, that phrase makes the hair on the back of my neck bristle

[Derek27]

I once witnessed a £150K back order placed at around 2.90 in a Cheltenham hurdle race (not the festival) and it was hit with approx £250K. That left £100K on the lay side and the price rocketed out. You could see the original backer desperately throwing money in to back the horse but there not enough money there and the race started. The horse was never sighted!!

I'm surprised the layer didn't drip-feed some of the money back to the backer; a few grand at 3.5, a few more at 4.5, he might even have taken him up to 20's and still kept £200K.