Howdy all! I trust you’re all queued up for your ‘vaccine’! Best of luck with that!
I am so pleased to see we have no recorded cases of flu this year, according to Public Health England. Of course that ‘must’ be because of the immense success the lockdowns and social distancing measures have had at stopping the spread of Covid. Except, they haven’t have they, and it has spread widely despite the magic measures. But somehow these fairly ineffective measures have annihilated flu to zero (not ONE recorded case!) since Covid turned up in the social consciousness! It’s obviously completely impossible that flu symptoms are being ‘mistaken’ for Covid symptoms, isn’t it?! Some say otherwise. Let’s not even investigate, we can trust the talking heads implicitly I am sure, as they never lie to us do they?!
But onto much more important matters…. Betfair trading! In particular the horse racing markets and the pre-race ladders.
A reader of my Pre Race trading guide recently asked a few questions about his trades and general approach to the ladders, he’s now using Bet Angel. He sent a few screenshots too so I decided to make a featured post about it as there’s quite a few comments I can make which I think will benefit many of you. The first image is entitled: “MegaDrift”!
The first thing you should notice about this picture is the minus sign next to the red clock at the top “-00:00:47”. This means it was taken 47 seconds after the published post time. This is why he has exited his trade (good man!) and didn’t benefit from the final part of the drift.
First things first, that is fine! We can’t take every tick from a market, and those who try soon learn why we can’t! You get burned, and so you should you greedy bugger! In seriousness though, it is possible to take a bit more, as explained in the ebook, but only as your experience develops significantly. As you can see he has the live feed open to the bottom left. (Also, if you have read my In Play Racing guide, you may be getting a rush of blood seeing the green and yellow striped colours of one of the jockeys! But that’s not relevant here, this is pre-race, discipline Tim!!)
The live feed, as many of you will know, shows the live activity, although as you should also know, “live” is never truly live, due to TV feed delays of usually around 5-10 seconds. It’s this delay that makes holding on after the post time even more risky for the uninitated. And the markets have a very efficient and somewhat brutal way of ‘initiating’ the uninitiated as hopefully only a few of you have discovered! (If you have read my ebook then you have no excuse and will get no sympathy from me!)
Many races go off quite late after the pubilshed time especially when stalls are not in use as is the case here. The runners take a few trots up and down, form up into a little bundle, then slowly approach the tape line for the starter to let them go if he is satisfied with the formation. This varies too, as sometimes they will get sent back around for another approach, and without the live feed you would have no way to know. With the live feed you can sometimes avail yourself of a minute or two more trading. Again, I can’t stress enough how careful you need to be, and how this is not to be attempted without significant experience of how this “formation” takes place.
As a general rule, exiting all trades before the post time is the only way to approach pre race trading when learning. As time progresses, when you’re used to the feed delays (which vary), the formation procedure, your software, your internet connection, your own abilities in particular, you will find you don’t have to dump a really good trade if you can see the horses are at least 30 seconds from starting the race, to account for the picture delays. So if you can see the starter’s position on the course, and you can see the horses are half a mile away in the distance because one horse is being a pain and not joining the group nicely, then you can to some extent set your own clock based on the pictures rather than the clock shown in Bet Angel. But again, if you get it wrong, prepare for a painful experience! Let’s look at the ladders…
This is lovely example of what some call a ‘2 versus 1 setup’. This is where 2 runners are either steaming or drifting, causing the “1” (favourite) to respond in the opposite direction, usually very convincingly like this. It’s important to understand why we are only interested in those 3 ladders (1, 2 and 3). Look at the prices. The 5th runner/ladder is priced at 250, it surely is missing a leg! The 4th is at 38 so that one might just have a leg that’s beginning to fall off! In other words, these are rank outsiders, they barely have any impact on the betting of the ‘real horses’ in the race. Thus we can disregard them almost entirely, in fact I would cautiously say entirely here, especially when comparing their prices to the other 3 runners.
What we can see is the ladder on the left (Gallyhill) is actually now the second favourite, with the 2nd ladder now being the favourite. If he closed these ladders and re-opened them, the 2nd ladder would be on the left, and the 1st ladder would be the second one along. This is because Bet Angel (and all other software) automatically puts the favourite’s ladder on the left when you first open them, so we know that since he opened this market, the horse which was the favourite when he opened it has since become the second favourite, and the 2nd favourite is now the favourite to win the race.
This is obviously visible on the charts he uses too, and even the ladders show the history nicely enough to see this thanks to the volume bars on the side. Let’s stick to the order given on this image with ladders 1, 2 and 3 in the order shown.
The long term chart of Gallyhill (Ladder 1), aka the Betfair chart (top left) is showing that this runner was odds-on (below 2.0) for a good while, but that period was effectively irrelevant. You could say ‘the pundits got it wrong’ perhaps! Looking at that Betfair chart look what happened when it broke above 2.0. It broke through and then bounced around above 2.0 (evens), and you can actually see the visible support provided by that line at 2.00 until it sailed off into the blue yonder!
But there’s one far more important thing to notice on that Betfair chart. You can see the ‘early prices’ bouncing along around 1.75, and underneath you can see the vertical volume bars. Look at that huge spike in volume which ‘just so happens’ to coincide with the runner starting to drift towards evens. This shows that the “real money”, a topic heavily covered in the ebook, had a very different opinion of this horse. Look at the next huge spike of money, the tallest one on the chart by far, which caused the price to make its biggest (think ‘hardest’) move of the entire day, to break a massively significant price (2.0). To break through that price, real power is needed, and as we know, power in the markets comes only from money, lots of it. This sort of image gives us a huge amount we can learn from in our trading, hence the reason for this post!
There is one noticeably tall volume bar at the far right of the chart, and it looks like someone was grabbing “a bargain” by backing the horse around 3, which caused it to bounce back down. And that was the end of the steam. The ladder shows this later action in more detail and we can see from the pink bars that the price touched 3.05 and has since turned around and is coming back in. Interesting stuff!
The man who sent the image to me clearly had a nice winning trade, especially with £2 stakes selected. Well done there! Yes, it could have been a bigger green, but the grass is always greener, so you should be quite happy with your efforts there!
Looking at ladders 2 and 3, and their charts underneath in particular, it paints a very nice ‘2 versus 1’ picture. Two ladders are steaming, the second and third favourites (then). The other two runners are irrelevant. What’s the favourite’s price going to do? In fact, what is the favourite obliged to do?! To balance the market, it simply must drift. As you can see, there’s much to learn here, but above all it shows the enormous importance of volume. Prices don’t move without volume, well, actually they do, but not in a reliable or predictable way. This is why I go into such detail in the ebook about why you can’t spot a move and just follow it because it’s moving, you must back up the idea with volume, a move only ‘counts’ to us as Betfair traders if it is happening due to volume, i.e. real money and plenty of it.
Again as explained in the ebook, the second favourite has more “power” (and thus influence) than the third, the third more than the fourth, and so on. So the most important ladder (assuming we are considering trading the favourite’s ladder) is ladder 2 here. It’s coming in, it’s ‘strong’, to use the ebook terminology. Ladder 3 is also very important due to its competitive price, it’s almost as powerful as ladder 2 here. Both 2 and 3 are strong and shortening in price, and ladder 4 is also ‘strong’ despite slightly less important. Ladder 5 is a donkey, thus the favourite has virtually no choice here, it has to drift.
Another strongly emphasised point in the ebook is how we must never take a trade with only one ‘reason’. If only one of these 3 ladders were strong, the favourite might drift but we would never trade it, simply becaue if that one and only reason dissolved into thin air (as regularly happens!) then we are left with a ‘whipsaw reversal’ on our favourite, and that’s when we pay out twice as many ticks as we were planning on banking as profit. The golden rule is two reasons minimum (more is always good!), just to give a buffer of safety for our trade.
But his trade didn’t stop there…
Very nicely done again! Even a quick glance at the 4 ladder charts (bottom), shows a very clear picture of one horse trending out, and the next three trending in. Three horses pressuring our favourite, causing not just a strong drift, but a reliable one to trade. If any one of those three other runners suddenly got a big chunk of lay money and reversed upwards, the other two would give us time to reconsider our trade and whether we should exit.
If two of those other runners turned round, we would definitely be getting out, but the third one would help soften the blow and make it less instantaneous, again protecting us for a few seconds while we exit our trade. If all three suddenly turned around all at the same time (which never really happens), a fast trader might get out without handing back many/any ticks on the favourite, but many wouldn’t (especially beginners). Hopefully this explains why ‘reasons’ need to be plural. One reason is never enough, because if it is whipped out from under you like a greased rug, your trade can reverse on you just as fast.
The only other thing I would point out here is, if time wasn’t a factor (and it was in this case, this trade should be closing now whatever happens due to the off time), I would be carefully watching Ladder 3. It looks to have hit support at 4.4 and may have finished coming in. In fact the support and resistance is interesting for both ladders 2 and 3 here.
This is ladder 2.
Note the support as it came down, and how it pushed on through. 3.65 met with strong support, but it overcame it and broke below. Then just below that it was supported again, and broke through again.
Repeating support, especially when it is becoming more frequent with shorter drops before stalling each time, can be an early warning of a steam slowing down, of strength starting to wane. I suspect not in this case, based on how strongly that final bar pushed down again, but worth mentioning.
Remember, if this was to stop shortening at this point, we would lose one of the strongest reasons for our trade on the favourite, one less ‘force’ pushing our drift, and this is why I mentioned I would be watching 2 and 3 closely with some caution, especially after such a nice green lay trade on the favourite already banked!
This is no time for greed, it’s time for caution, horses don’t tend to steam or drift forever and we should now be looking for reasons why things are about to change. Protecting our bank is priority number one in trading, closely followed by number two: protecting our green!
As it happens this race was off and running shortly after this picture was taken so it’s all academic anyway. But that hopefully gives a good response to these pictures and helps a few people understand both how I view the ladders, and why my Pre-Race Trader’s Bible is a seemingly ridiculous 464 pages long!
This stuff is the ‘fine detail’ which I wanted to give people when I first set out to produce the book, providing the nitty gritty but critical stuff you just can’t shortcut or bypass if you want to truly master these pre-off horse racing markets.
Before I finish, I should also mention that this trader also asked me about his approach to staking. Can you see those little £2 orders higher up the ladder?
This is a staking method I allude to in the ebook. He is on small stakes which vary, but let’s say his money management rules dictate a stake of £10, instead of actually clicking that whole £10 in with each click of his mouse, he uses just £2 per click and clicks five times to open or close his trades. Doing this, it means his individual mouse clicks only order £2 at a time, so he can “drip exit” which is what he’s doing here.
There are many advantages to this, especially for beginners, as you can move your BE (break even) point away from you sooner after entering your trade. For people who really struggle to handle losses (this guy does!) it can offer a major psychological benefit to combat the problem, quelling those negative emotions and making the trade feel more comfortable, more quickly.
It also allows him to ‘hold his nerve’ (not an ideal phrase but it works) longer into a move. In other words, it prevents “panic exit” which is a common problem for learning traders as they will often exit a position too soon if the price moves back against them a few ticks soon after entry. By drip exiting, the ‘red zone’ is pushed further away down/up the ladder away from the current prices. This means the market would have to move more ticks against them to cause a loss. This is a highly recommended staking approach for beginners.
However it’s not just for beginners, as once you start using bigger stakes you find a whole new reason to use this drip-fed method of ordering both entries and exits. The reason is because it reduces the chances of ‘spooking’ a market with a big fat ball of cash all at one price which can prematurely end a trend or even cause a reversal in some cases. This is obviously not what we want.
If you were trading that ladder above (look at the average size of the money queues at each price point), and you saw someone wade in and dump their fat wad of £2000 into the ladder at one price, you can imagine how you would feel.
I know how it would make you feel, because it makes me feel exactly the same! If nothing else, it causes any (and every) sensible trader to take notice and watch to see what happens next, will it get matched, or will it create an obstacle to price movements?
That hesitation on its own is enough to create small (or large) waves in a market as, if I am doing that, then so are many other people. The flow of money can stutter causing a stall or even a reversal of a current trend.
So instead, you would drop orders in which ‘fit’ the ladder in question. This of course varies widely. An evening Kempton ladder might need orders around £100-200 to ‘fit in’, whereas the Grand National’s ladder would let you drop thousands into one price without spooking anyone, as the queues of money at each price could easily swallow your money without growing so big that they stand out to other traders.
Well I hope that lengthy post was of some use to someone, and not just my Chiropractor! 🙂
Oops, I nearly forgot – I have set up another coupon to alleviate this Covid (economic destruction) madness! It’s a hefty 30% discount off all products for a whole 30 days, so if you’re interested in any of my ebooks then now is a good time to do so. At checkout use the code “recessions-kill-too” (without quotes). Coupon ends midnight 25th March.
Happy trading folks! Oh and, as is fashionable nowadays, ‘Stay Safe’ won’t you!
(From government tyranny I mean!)