Bearing in mind market principles learnt in Forex trading can help to improve trading in the Betfair markets.
For those that trade Forex you’ll probably know most of this, but if you don’t it could help a lot…
During my relentless search for ways to make profit in the markets I looked towards Forex trading, why? Because there was next to nothing in the way of Betfair education. Surely they can’t be that much different either, right?
Actually I learn’t they are, but there’s plenty that does apply to the Betfair markets as-well. It opened my eyes somewhat.
The 3 Pillars
In the image above Market Analysis is represented by the stool bearing three legs. The idea being if you was to take away one of the legs or even worse, two, your analysis is likely to go crashing to the ground. It’s the reason it’s often hard to identify a good trade based solely on one indicator, but more on a collection. Obviously if it’s a very strong indication it may only be one that is needed although for piece of mind and better trades its best to be aware of all three.
So, the three legs….
The theory is that a person can look at historical price movements and determine the current trading conditions and potential price movement.
The main reason for using technical analysis is that; theoretically, all the current information is reflected in the current prices.
It’s a bit like that old saying that says ‘history repeats itself’. On Betfair that doesn’t necessarily mean all in one event or race and holds true to a degree but this kind of analysis can’t tell us when somebody is about to log in and place a large bet for example.
Technical analysis (usually with graphs) is the thought of looking for similar patterns that have formed in the past in the view they will form and act the same way once more.
Fundamental analysis is a way of looking for price movements based on outside influences that are likely to influence the ‘crowd’ – for example TV coverage. A great example of this short-term may be a horse rearing up on entry to the stalls! what happens? the price drifts rapidly as traders scramble for a free ride. Just watch next time it happens! The more the horse plays up, the better.
This one I like to refer to as the ‘domino effect’ and you’ll all of seen it in the markets already! When a price starts to move if the sentiment is strong, the move may be aggressive. You’ll see it going in ‘waves’ almost – it’s a pretty important one for Betfair trading, particularly if a huge bet is dropped in the market! (see below).
With Betfair being a betting exchange the latter two interest me most. Not everyone is looking to trade or cash-out their position after-all!
Hopefully that gives you something to think about!
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