How useful are Fairbot's Bollinger Bands in determining which way the market is about to move?

Regards

Jeff

Which market ?


Paul

Hi Paul

I was thinking of horse racing specifically, although if Bollinger Bands work in predicting price movements, presumably they could be used to determine price movements in any sport that's not in-play and where price movements aren't particularly volatile.

Regards

Jeff

BBs specifically measure volatility. If there's low volatility the bands will constrict and if you

There are certainly ways to make money on Betfair but the weight of money approach that is akin to Level II is no longer an option precisely for the reasons Tony has just given. However, I do know of people making a very good profit and they use the fact that Bookies are banging so much business through Betfair as a measure of what actions to take and when. This is not a trading type approach and is quite clever in the way it works but so far it is doing well and the more that Bookies put business through Betfair the more robust their method will become. Also in my view Bollinger Bands would be of no use at all in this market.


Paul

Hi Tony

Firstly, I think with hindsights 'indicates' would have been a better word for me to use than 'predicts'. Whilst Bollinger Bands to measure volitility, surely they also show when prices have strayed out of the price range within which previous trading would suggest they should operate. Surely this would suggest that a 'bounceback' is likely to occur, as aberrations are, by definition, uncommon (I believe that the Bollinger Bands measure the standard deviation within which 95% of trades occur).

Incidentally, one system I came across recently, for trading on horse races on Betfair, advocates waiting for times when the price graph shoot upwards by 45 degrees, and then placing a back bet when the last price traded shoots above the Bollinger Band and the weight of money suggests the price is about to turn. It is uncanny how often this is exactly when prices do turn. The author advises ceasing trading 5 minutes before the start of the race, as he feels that just before the race the prices become too volatile for the system to work.

What is the indicator that predicts future price movement?

I'm surprised the arrival of the bookies has made it hard to trade. Whilst it might be hard to spoof those guys, I would have thought the extra money they put in the market would make it easier to get large bets matched.

Regards

Jeff

[quote=TheBramble;364182]BBs specifically measure volatility. If there's low volatility the bands will constrict and if you

Hi Paul

Sounds interesting. Could you explain how this approach works please?

Jeff

It is not about getting bets matched it is about the fact that to make a profit using an exchange for trading requires sustained movement in one direction. With the bookies jumping on board there is massive whipsaw which for traders is the worst possible scenario.

Sorry I am not at liberty to do this.


Paul

Gets my vote. Always. LOL.

There is a tendency to assume that moves outside the Bollie envelope are less likely and therefore they represent some kind of barrier to movement beyond or outside. You only need to look at what happens to (a) the width of the bands as volatility increases and (b) the slope of the individual channel lines as volatility changes and price moves, to understand that the bands

I agree with you in the sense that it is much more difficult now, but I wouldn't say that it was no longer an option. I still use it successfully, and granted it's nowhere near as good as it was a few years ago, it's still not a bad method if used with discipline.

Having said that, the other method you refer to sounds like it has more long-term potential bearing in mind the current circumstances regarding the bookies.