Hello all,
Please could someone give me some advice on the relevance of the previous traded range on bet Angel in pre race trading?
I know that might sound simple, but I just mean, could you give an example of a scenario where it would help your decision making?
How important is it to you and you decision making?
Thank you for any advice
Cookyweb
Previous Traded Range
Previously traded ranges are an example of how we use old information to help give us an idea of which direction the price may go in the future.
As markets are dynamic, the situation can change at any time, so using previous information can only ever give you some extra confidence as to which way the price might head.
Ultimately it's that extra confidence (or lack of) which affects the decision-making process. More confidence (higher chance of price heading one way or the other) = less risk, and vice versa.
Previously traded ranges are just another factor which can help you identify roughly what the Risk/Reward is on a trade before you take it.
Remember that game where you drop a ball down and it bounces into a slot at the bottom -- Plinko?
The game seems random on the face of things but there's a few variables which can affect the outcome such as:
- the ball we use
- minor differences in peg placement
- wind
- etc.
Let's say we played it a few times and the balls tended to end up on the right side of the board, at that point you could say that the next ball may have a higher chance of landing in 3/4/5 rather than 1/2/3 in the board above. We don't know for sure, but the more times we play the game, the more confident we can be in our decisions. In a similar way, we can look at previously traded ranges in a pre-race horse racing market to gain confidence in what we think the price may do. If a price has just been wavering between 6.0 and 7.0 (but never above or below) for the latest 80% of its entire price history, the next time it gets to 6.0/7.0 you can lay/back with more confidence than if it made up only 20% of its latest price history.
Perhaps we counted how many times 6.0/7.0 was touched + price reversed, and it was over 20 times, you can be highly confident (if the situation remains the same) entering at those prices for the 21st iteration.
Dynamic markets / change in situation:
In the Plinko example, if the wind shifted significantly, the previous results are no longer relevant to the current situation.
In a pre-race horse racing market, this could be a new participant arriving with deep pockets and smashing through an established range, or a horse now showing signs of distress when previously it was calm.
Other Notes:
- The more established a range is, the more deliberate the move may be when that range is finally broken.
- If a range is broken, that area which was previously a place of support, may now become resistance. e.g. price bounces off 7.0 and goes through 6.0, touching 5.4 before bouncing, touching 5.9/6.0, not being able to break 6.0, and then proceeding to waver in the new range of 5.4 - 6.0
- As the previous race finishes and the focus shifts to the next race, a spike in liquidity can often make light work of any established ranges which were formed when liquidity was lower
- It can be more efficient to take some profit at one end of an established traded range if there's a history of it bouncing at X price, and to close out positions just outside of an established range (giving the trade a chance to come back whilst avoiding those more deliberate moves if the range gets broken)
Info is a bit all over the place in this post but should still be useful to you. Search up youtube for 'forex support resistance' + have a little explore of the content on there if you want to learn more. The majority of the principles are applicable to pre-race HR markets.
GL
As markets are dynamic, the situation can change at any time, so using previous information can only ever give you some extra confidence as to which way the price might head.
Ultimately it's that extra confidence (or lack of) which affects the decision-making process. More confidence (higher chance of price heading one way or the other) = less risk, and vice versa.
Previously traded ranges are just another factor which can help you identify roughly what the Risk/Reward is on a trade before you take it.
Remember that game where you drop a ball down and it bounces into a slot at the bottom -- Plinko?
The game seems random on the face of things but there's a few variables which can affect the outcome such as:
- the ball we use
- minor differences in peg placement
- wind
- etc.
Let's say we played it a few times and the balls tended to end up on the right side of the board, at that point you could say that the next ball may have a higher chance of landing in 3/4/5 rather than 1/2/3 in the board above. We don't know for sure, but the more times we play the game, the more confident we can be in our decisions. In a similar way, we can look at previously traded ranges in a pre-race horse racing market to gain confidence in what we think the price may do. If a price has just been wavering between 6.0 and 7.0 (but never above or below) for the latest 80% of its entire price history, the next time it gets to 6.0/7.0 you can lay/back with more confidence than if it made up only 20% of its latest price history.
Perhaps we counted how many times 6.0/7.0 was touched + price reversed, and it was over 20 times, you can be highly confident (if the situation remains the same) entering at those prices for the 21st iteration.
Dynamic markets / change in situation:
In the Plinko example, if the wind shifted significantly, the previous results are no longer relevant to the current situation.
In a pre-race horse racing market, this could be a new participant arriving with deep pockets and smashing through an established range, or a horse now showing signs of distress when previously it was calm.
Other Notes:
- The more established a range is, the more deliberate the move may be when that range is finally broken.
- If a range is broken, that area which was previously a place of support, may now become resistance. e.g. price bounces off 7.0 and goes through 6.0, touching 5.4 before bouncing, touching 5.9/6.0, not being able to break 6.0, and then proceeding to waver in the new range of 5.4 - 6.0
- As the previous race finishes and the focus shifts to the next race, a spike in liquidity can often make light work of any established ranges which were formed when liquidity was lower
- It can be more efficient to take some profit at one end of an established traded range if there's a history of it bouncing at X price, and to close out positions just outside of an established range (giving the trade a chance to come back whilst avoiding those more deliberate moves if the range gets broken)
Info is a bit all over the place in this post but should still be useful to you. Search up youtube for 'forex support resistance' + have a little explore of the content on there if you want to learn more. The majority of the principles are applicable to pre-race HR markets.
GL
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Last edited by eightbo on Wed Jun 06, 2018 3:56 am, edited 1 time in total.
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spreadbetting
- Posts: 3140
- Joined: Sun Jan 31, 2010 8:06 pm
Yep me too, thought it was a well explained post it'd be a pity if it gets a limited audience and fades away, you should cut and paste it to the thread viewtopic.php?f=5&t=16553. It might give it a kick start or at least be something useful to read rather than deciding how much of an edge psychology may or may not be.
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arbitrage16
- Posts: 533
- Joined: Tue Feb 14, 2017 7:27 pm
This is precisely what I was anticipating when I began that thread, great stuff.
@eightbo I posted a thread about entry points on steamers, would welcome your thoughts
viewtopic.php?f=5&t=16600
@eightbo I posted a thread about entry points on steamers, would welcome your thoughts
viewtopic.php?f=5&t=16600
great analogy, I see the trades ranges as ‘information’, does that past information confirm with new information (60 second traded range), I read somewhere that there’s one trader that sees traded ranges as blood, where the blood runs, where it clogs.. dries up etc & if there’s a burst of activity it may signify a severed artery.