When behaviour is erratic, the prices deviate from where they “should” be.
By being patient and picking off the high’s and low’s, erratic movements can offer a quick return.
Everyone’s in a rush to make some cash, it’s just human behaviour.
If you’ve watched betting exchanges, you’ll know markets can be erratic. Especially short-term.
This brings a perfect opportunity to capitalise. Because when behaviour is erratic, the prices deviate from where they “should” be. It makes it easier to pull profit from the markets in short.
Volatile Situations
Horse racing markets are often popular to trade because of the short-term noise. Also, because of the high volume of races a year, turnover and regular price movements.
Football markets tend to be a little more stable, although the chance to use far larger stakes becomes easier.
However, it works both ways. For every chance to make money, there’s one to lose. By being patient and picking off the high’s and low’s, erratic movements can offer a quick return.
Erratic price movements often occur within weakly bet markets where there is limited information on offer. The smaller the market size the more volatile movements can be also.
For example:
- A horse race with just 3 runners and very little “form” will be more volatile than;
- A horse race with 10 runners in at a popular event like Royal Ascot.
Applying the same methods to profit from price movements is likely to provide extremely different results. The first example is more likely that the price will deviate from where it “should” be, giving exchange traders an added opportunity for a quick strike.
Regardless of method, both will offer more potential opportunity than a simple bet. If you haven’t seen it already, check out this post about Modern Betting: See this Blog Post about Modern Betting
By being aware of the different situations alone, you’re in a more stable position to profit.
Approaching each opportunity the same often results in a vicious loop of impatience, losing results and then eventually that horrible “gambling mentality” – particularly amongst beginners.
As the famous investor Warren Buffet once said:
the market is a device for transferring money from the impatient to the patient
Always pick and choose where you bet carefully, and then be patient.
Keeping Disciplined
Discipline comes a lot easier when you understand what’s going on.
Being disciplined in the face of erratic markets can be quite a task for some, but by understanding the overall situation. If it’s going to be a volatile one, you need to be ready!
Here are a few pointers to spot potentially volatile markets:
- Activity: if you’re looking for a long or short term trade, you’ll need movement or turnover.
- Punters: Markets can still be active without punters, although they’re harder to trade with more volatility.
- Information: A market with less background history is often more erratic, understandably.
Hopefully this will help when picking opportunities to trade the price movements. Once you’ve related this information to a few you’ll start to see opportune points to get involved, and when to avoid un-necessary losses.
Tread carefully when trading volatile markets. They can bring some huge opportunities, but lack of discipline and information will always lead to pain.
If you’ve just started out this may all seem a little over-whelming at first, but it doesn’t need to be. Check out the Academia Community Forum. Many of the users are happy to help others find their way.
