Using Moving Averages for prediction

[admirals]

I have recently been trying to predit price movements by using several WOM indicators however occassionally the price moves in completely the opposite direction causing a large loss which inevitable means that I lose all my previous profits.

I am therefore looking at using moving averages to add another level to my trigger betting but after building a spreadsheet and recording several races I am still unsure of which averages may prove to be the best for predicting and preventing these loss making price movements.

At the moment I am looking at crossovers of 5 price and 100 price moving averages combined with a shorter crossover of 5 and 20 price moving averages but this seems to cause even further losses.

Any advice or disscussion of the use of moving averages would be appreciated and helpfull

[Spike]

Personally I've tended to find that no matter how sophisticated you make them indicators are only ever so much use- with the best measures in the world the price still moves against you sometimes. Take a trial of Bet Angel if you want to find out just how useless fancy graphs are. Maybe what you need to do is look again at your stop losses. As long as you let your wins go longer than your losses you only ever need to win 50% (or even less) of your trades and let the averages do the work. Sould destroying to take this approach manually but who here does that...?

[milfor]

For stock markets the performance of chartist methods like combinations of moving averages were analyzed again and again in the last decades. The result was always disappointing: The long term performance was equal or worse than that of the simple 'buy and hold' strategy.

Of course moving averages could work better on betting exchanges but I doubt it. The problem is the same: If something simple and well known would guarantee long term profit don't you think that thousands of other users would have already discovered it with whom you would have to share the 'cake' ?

If you want a long term profits you need an edge, something that very few other users do or can do. Moving averages and WOM don't fall in this category.

[Roger]

Not quite what admirals wanted to hear no doubt, but two honest, knowledgeable responses there which show the best features of this forum. Posts on here are always interesting, and full of helpful information. I don't profess to understand them all...

Plus of course the amazing Gary's continuous response to suggestions, often done while you wait, which improves BA daily. And it was already superb!

[admirals]

Thanks for the replies still considering if its stil worth pursuing the technical indicators route of trigger betting, there seems to be masses of information and recomendations on stock market analasis using these methods and they also use only the price and volume information to go on.
Is there anybody who uses these indicators as part of a automated betting approach or is the considered opinon that they are poor for prediction of price movements in the fast moving markets of the exchanges.
I shall however try reducing my stop loss from 7 ticks to 3 ticks to reduce the losses which occur on these suddern price movements and trade for a week or so to see if matters are improved.
At least with the credit crunch work is more intermitant giving me the odd day to trade as if I was full time, maybe a distant dream.

[doris_day]

MAs are great when looked back at historically but they've always walked forward very badly.
One of the big problems you'll be up against these days in the horse racing markets, particularly in-running, is the volatility due to the poor liquidity. This means you have an even greater chance of being whipsawed. However, best of luck with your endeavours.

[xraymitch]

Thanks for the replies still considering if its stil worth pursuing the technical indicators route of trigger betting, there seems to be masses of information and recomendations on stock market analasis using these methods and they also use only the price and volume information to go on.
Is there anybody who uses these indicators as part of a automated betting approach or is the considered opinon that they are poor for prediction of price movements in the fast moving markets of the exchanges.
I shall however try reducing my stop loss from 7 ticks to 3 ticks to reduce the losses which occur on these suddern price movements and trade for a week or so to see if matters are improved.
At least with the credit crunch work is more intermitant giving me the odd day to trade as if I was full time, maybe a distant dream.

Hi Folks,

This is something I have had on the back burner for a year or so now, and whilst agreeing with Spike's and other posters comments I still feel it is worth pursuing. Admirals, have a look at this link.

http://www.jimmakos.com/en/betfair-trad ... raphs.html

Can I also echo Roger's comments about the quality of posts in this forum and the outstanding work done by Gary and Mark.

Cheers,

Ray

PS Spike, as to your comments in another thread re fake/spoof money I agree 100%, but so far I cannot satisfactorily identify the indicators required.

[doris_day]

I've had a look at the article and would say be very wary about walking any of this support and resistance stuff forward. It always can be explained after the event but a lot more difficult when used to predict future movements.

Much depends on what the big boys like Zeljko Ranogajec want to do and where they want the prices to be. It also depends on where 'true' value lies and only the trainers (and Zeljko Ranogajec) know that. Well, when I say 'trainers' I really mean some trainers because only a few clued up ones really know whats going on...

Best of luck....

[xraymitch]

I've had a look at the article and would say be very wary about walking any of this support and resistance stuff forward. It always can be explained after the event but a lot more difficult when used to predict future movements.

Hi,

Many thanks for your comments and I totally agree with the above, but I have friends who make their living trading on the Stock Exchanges who rely upon similar techniques. Hence my reason for not dismissing it totally.

Cheers,

Ray

[doris_day]

Two totally different types of markets but best of luck anyway....

[milfor]

The problem with those chart pictures is that the author naturally chooses those charts that fit his theory perfectly.

But look at the chart of the horse Baariq today at 5:30 in Newmarket. In the beginning the chart is always below 10. Although it touches the 10 several times it can't come above it. Your chartist would say 10 is a strong resistance and recommend to back the horse because it can only go down from there. A few times this advice works but suddenly the chart goes above 10 and doesn't go below 10 any more.

So be careful if someone shows you some marvellous trades he made. I am sure there are some trades that went awfully wrong he doesn't show you.

[Spike]

In addition to the above comments I'd suggest that the similarities between stock market or commodity trading and horse trading tend to be over stated. They are fundamentally different in the sense that whereas share trading can go on in-definately horse trading is done to a deadline, after which the market changes in nature entirely. This in itself is a factor that has now paralel in the stock market.

Another difference is that stock market trading is done with far more information, meaningful comparisons can be made between similar shares, the economy can be anylised and so on- none of this applies to horse trading- or if it does it's only in a very diluted way.

Sports "trading" has been widely marketed in recent years both by betfair and software providers, and they have an interest in making it look like a low risk way of making money that respectable sensible people do, IE- not like gambling. For that reason they like to make it sound more like city trading than it really is. The reality is that trading is gambling, and it's much better to face up to that reality and work with it.

There are profitable traders just as there are profitable punters. but in neither case are they the majority, and in both cases it takes considerable effort and insight to make it work.

As has been explained very well in posts above the bottom line is that you need an edge. If you haven't got that then you're sunk whether you're "trading" or just punting.

[xraymitch]

Thanks, Milfor and Spike,

Your comments are taken on board and very much appreciated.

Cheers,

Ray

[mrprobit]

I am therefore looking at using moving averages to add another level to my trigger betting but after building a spreadsheet and recording several races I am still unsure of which averages may prove to be the best for predicting and preventing these loss making price movements.


Any advice or disscussion of the use of moving averages would be appreciated and helpfull

it might be worth investigating ARIMA models (Auto Regressive Integrated Moving Average).

Not sure these would work, but they are more complex than moving avergages, a simple moving avergage would be well, erm too simple.

[jokerjoe]

And if that doesn't produce results maybe try a generalised autoregressive conditional heteroskedasticity model