Easy Trader Pro Weight of the Money: British horse races

Easy Trader presents

Weight of the Money May

2006 update
______
How to trade profitably on the British
horse races

Brought to you by
http://www.easytraderpro.com/

Easy Trader Pro Weight of the Money: British horse races

A. INTRODUCTION
Dear reader,
Its been one hell of a journey.
Since writing the first Weight of the Money manual
earlier this year, I have felt there was a vital part of
the Easy Trader system missing.
The original WOM guide was focused specifically on
low liquidity events such as the greyhounds and
American horse races. This was in marked contrast
to all the other trading guides out there, which were
concerned with trading on the British horse races.
So, why the difference? Well, the problem was that
all of the other guides just didnt work for me. I had
spent months trying to get weight of the money
working in the British horse race markets and I
had gotten nowhere.
My lack of success forced me off to new pastures,
and that lead to the WOM system, and those
undiscovered markets about six months ago.
That said, I recently began to look at the British
markets as a possible trading opportunity for the
weight of the money.
I wanted to return to the home of trading and
provide myself (and Easy Traders everywhere) with
a profitable methodology for the British horses.

Easy Trader Pro Weight of the Money: British horse races

Using the original Easy Trader core manual, I was

of course still taking long term positions, but I
wanted to crack the short term trading side of
things.
Luckily, my interest was piqued just as we entered
the spring and this can mean only thing: evening
races, which presents many new opportunities for
us Easy Traders a point I will return to later.
You should also remember that patience and
persistence are key assets for any trader. Whenever
I tell this to someone, they roll their eyes as if I am
giving a sermon.
The thing is, I dont just mean patience over the
coming weeks and months I mean patience
waiting for the right trade to come up on a minute
by minute basis.
You must be selective with your trades, or you risk
becoming complacent and that means a break
even balance or worse.
Now that my standard disclaimer is over, lets get
into the guide itself.
Wishing you a profitable trading summer
Easy Trader Pro team
http://www.easytraderpro.com

Easy Trader Pro Weight of the Money: British horse races

B. The weight of the money where we left

off
By now, you will have heard about the weight of the
money indicator a million and one times. You know
how it should all work in theory, but you also know
that it can be pretty difficult to execute in practice.
If you want an in depth guide on the WOM, you
should refer to the WOM guide which is included in
the Easy Trader package.
I will discuss it very briefly here before we move
onto the specifics of the British horse racing
markets.
The WOM basically refers to the dynamic driving all
markets (whether on betting exchanges or financial)
the push and pull of supply and demand.
If a lot of punters want to back a particular horse,
the price (i.e. the average odds on offer) will
generally fall, and if a lot of punters want to lay a
horse, the price will generally rise.
Why? If a lot of punters want to back a horse, they
will get in the way of one another, so that they
cannot get their bets matched. This causes an
avalanche, as they continuously lower their prices in
an attempt to jump to the front of the queue.
The dynamic is of course reversed when there are
more punters who want to lay a horse than back it.
In such a circumstance, the price will rise as they

Easy Trader Pro Weight of the Money: British horse races

tumble over each other trying to find a backer who

will accept their bets.
This is an idealised version of true events, and the
WOM dynamic is in practice (at least in todays cut
throat markets) a little more complicated than that
but the WOM is always there, causing price shifts
whether you can visibly see I and profit from it or
not.

Easy Trader Pro Weight of the Money: British horse races

C. WOM Trading on the evening races

During the spring and summer months, evening
races begin for the British horse races. You should
know by now that I am not a big fan of extremely
liquid markets, and this is what drew my attention
to the evening races.
Glancing at the markets from around 5pm to 8-9pm,
you will see much lower amounts on offer compared
to earlier in the day.
If you have ever bought a trading guide (other than
Easy Trader of course) you will probably notice that
the amounts you see on the screenshots for the
British horses are quite low much lower than they
appear to be when you open up the markets yourself.
Why is this? Well, the guides were written a few
years back, when liquidity on the British races was
far lower. The basic WOM dynamic was much easier
to follow back then, hence the many guides all
saying the same thing.
Well the good thing is that we can take it back to
the old school when the summer rolls around
and profit from the lower liquidity in the same way
that traders had it easy (or at least easier) in 2003.
Lets take a look at an evening race 2 minutes before
the race (when liquidity should be at its highest):

Easy Trader Pro Weight of the Money: British horse races

As you should see, the amounts matched are

relatively low, and you will see them decrease
throughout the evening (the last few races can be
very profitable).
For some reason the evening markets can also be
very accessible (even more so than the slightly lower
liquidity would suggest).
There are a number of possible reasons why this
could be the case, but the first must be that the big
punters (the market manipulators and shrewdest
of the shrewd) tend to trade during the days, and
dont have the stomach for a seven hour marathon
session.
This would back up my analysis that while the
liquidity is slightly lower, the accessibility to the
average trader is much greater.

Easy Trader Pro Weight of the Money: British horse races

Essentially, we can predict movements with more

accuracy when trading on the evening races.
Lets have an example of a price movement (the
kind we will be trading on), taken from todays
evening races:

Turn to your attention to the favourite, Catch The

Cat. You should see an imbalance between the two
columns specifically, there is more money on the
back column than the lay column.
This means that there are more punters trying to
back the selection than lay it and that the price
seems likely to rise.
You should also notice that there are two large
amounts, first in the queue on the back column: I
will come back to this later on.
Flashing forward fifteen seconds, lets take another
look:

Easy Trader Pro Weight of the Money: British horse races

Sure enough, the price has risen from 3.85 to 4.2.

Why did I wait fifteen seconds before taking the
shot? Because that is how long it took for the price
to move out before the WOM balance readjusted
itself. You should see that the amounts above look
much less intimidating than those we would see on
the afternoon races.
In the above circumstance, I would have liked to
have laid first at 3.85 and backed at 4.2, probably
for a trading stake of 200, resulting in a profit of
70 if the horse was to win (although I would very
probably hedge up in such a situation). Of course,
things are never that simple, and I do not take every
trade I see and neither should you.
Even with the accessibility of the evening races,
there are several filters you should use to increase
your hit rate. These are relevant to all markets for
WOM trading, but especially so for the evening
markets.

Easy Trader Pro Weight of the Money: British horse races

1. Two big amounts

There is a massive difference between two large
amounts appearing in a column, as opposed to one
large amount. One amount could be a possible
market manipulator.
Even if the money is genuine, the punter may pull
his bet, leaving us stranded. With two bets, the price
is unlikely to swing against us (at least not quickly).
When traders talk about the Weight of the Money,
they should not simply look at the amount of money
on offer, they should pay close attention to the
number of bets that money is spread across.
Here is a perfect example, taken from the same race
as our first example a few minutes later:

Note that there is not just an imbalance again (more

money on the back side), but larger amounts in

Easy Trader Pro Weight of the Money: British horse races

every single column (between double and three

times the size of each amount in the back column
relative to the lay column).
If there is one thing you take from this special
report, make it this: we only want to trade when the
imbalance is spread across several columns
(preferably the middle two columns as these are the
first to get matched).
This is a very important point to ensure you trade
with a high strike rate.

Fast forward five seconds and the price has swung

out as expected, although two large amounts now
appear in the lay column.
Should we trade again? Do we want to close our
trade and reopen it in the opposite direction (i.e.
back and then lay, expecting the price to go down
owing to the large amounts in the right hand
column)? No.

Easy Trader Pro Weight of the Money: British horse races

The reason we dont is that we still have large

amounts on the two far left columns in other
words we are breaking our two or more rule if we
decide to open a trade a second time (this is really a
rhetorical question, I would not even consider
opening a trade when the imbalance is this hazy).
2. Already moving
The second filter we can apply to our trading is this:
we only trade when the price is already moving.
However, in untrained hands, this principle can be
as dangerous as it is helpful, the reason being that
we can buy high and be forced to sell low. In
other words, if we arent careful, we can see a falling
price and look to back halfway through the trend,
then catch it just as it bounces back. Not good.
Truthfully, the chances of us doing this are cut
down drastically by the two or more rule, and it
doesnt happen too often.
Even if it does happen, we have our stop loss to help
us (refer to the WOM guide for my thoughts on stop
losses and offsets). Nonetheless, be aware of the
danger when trying to ride trends.
The reason that I like to apply this rule, despite the
dangers, is that it cuts out the chance of us trading
off the back of dead money.
Dead money is my term for large amounts that
enter the market and cause an imbalance in the

Easy Trader Pro Weight of the Money: British horse races

WOM, but dont move. In other words, the punter

just throws his bet in at 3.5 but doesnt try and
chase the price when it moves against us.
This is no good to us, as we want to see money
movements, not just money (another refinement to
the term WOM imbalance, think WOM
imbalance plus movement).
All money is not created equal, and if you see a
punter chasing a price aggressively, it is another
indicator we can add to our toolkit. If you see two
punters both chasing a price up, then jump on quick!
3. Good races versus bad races
Certain races are more accessible than others it
could be due to the course and the jockeys racing
(and the liquidity they attract), it could be due to the
fact that the market manipulators are on their
lunch but in truth, I cant spot the good from the
bad before I get in front of my computer and start
trading.
Very often you will find good spells and bad spells
in your racing day, and this leads me onto my next
point: if you find a good race, be more willing to
trade on it than you otherwise would. Be
conservative when you are on a losing streak, and a
little more aggressive when you are doing well.
If you get burned a few times on a race, give yourself
twenty minutes off not just to clear your head, but

Easy Trader Pro Weight of the Money: British horse races

also to avoid the factors that are making this race

less accessible than the others.
4. Later in the evening
The most accessible races tend to be later in the
evening, and broadly a race at 8.40 in the evening
will be more profitable to trade on than at 6.40
(profitably because many of the very good traders
and market manipulators are making enough to
treat their profession with some discipline, and a
hint of nine-to-five time management).
The difference is noticeable, but not monstrous in
scope, but it is another factor that can tip the
balance a little further in our favour.
One final point about trading on the evening races:
remember, we are not expecting a price shift from
4.0 to 5.0 the reliable movements tend to small,
2-3 ticks, so we will need a relatively large bank to
profit - 300 is a good amount to start with
(although you should of course look to trade with a
larger bank as time passes).
Refer to the WOM guide for my view on taking your
time building up your skill level, and dont start
with a big bank and just throw it out there.
If you dont have 300 to start trading with on the
British horse races, dont panic.

Easy Trader Pro Weight of the Money: British horse races

Start trading with what you can afford believe me,

when you start seeing profit you will find a way to
get the extra cash into your Betfair account. But, do
be aware that you need to make one or two tick
profits on these events (three ticks at most).
The danger is that you will start with a 50 bank,
spend two hours trading and only make 5 pretty
awful, right?
But multiply that 50 by 500 and your 5
becomes 50 which means 25 per hour. Multiply
that by four hours trading time, and you see why
trading can be very profitable if you understand
its nature which is very small amounts consistently.
Very important point, so please dont skip it.

I also suggest you review the WOM guide one more

time. The principles in there should be reviewed,
along with those in this manual, before you hit the
markets.
5. Trading on the afternoon races
You can of course use these principles for trading on
the British horse racing markets during the
afternoon. However, those markets can be much
more difficult to read.

Easy Trader Pro Weight of the Money: British horse races

This means that we need to be very selective, and

make very few trades (we only trade when there is a
clear imbalance across all the columns).
In turn this means that we will need a large bank to
trade with, ideally 500 and above. Again, dont
worry if you dont have that kind of disposable cash.
Start trading with what you can afford, and always
keep in mind what kind of cash you would make if
you did trade with a much larger bank. When you
start winning, you will find a way to expand your
bank.
6. The main reason that traders fail to make WOM
work for them
I have already repeated this point several times over,
but I will do so again: you must remember that the
name of the game is selectivity. In other words, you
must be patient with your trades, and make them
few and far between. This is very true for the
evening races, but even more so for the afternoon
races.
This leaves us with two choices: either trade with a
large bank (thus making the one or two tick trades
worthwhile), or make very little! As I say, be
prepared for the fact that you may have to start with
a small bank and supplement it with time.
Just remember that selectivity and patience,
coupled with following the rules within this guide,
will lead to a very good income over time.