Momentum or Positional

Momentum

Momentum trading is the purer style of trading.

You will be scalping a "tick" or two irrespective of whether the odds are contracting or lengthening.

Normally your trading will be focussed around ten minutes before the start of an event.

FACT: The bigger the cash volume of a market, the less volatile will that market be. The less volume in a market the more volatile that market will be.

The momentum trader concentrates on markets that are fluid and have volume (liquidity) A static market with little or no movement is anathema to momentum traders. It matters little whether the chosen market is going up or down -- as long as it is dynamic in movement.

A momentum trade usually holds a position for only a minute or less -- closing out for profit when the price moves a tick or two to his advantage. He will often repeat the process many times in the ten minutes before the close of market.

Since the volatile markets in which the momentum trader operates in move rapily, quick reaction time and speedy response are necessary characteristics of the trader.

Momentum trading is challenging and demanding. It demans discipline, concentration and attention to detail. But it can be mastered, and is the most absorbing and possibly most profitable style of trading.

Positional

As the term suggests, this form of trading sees you take a position on the possible trend of a market. The sports trader will usually have a "open" trade in a market for longer than the momentum trader.

You will decide a price at which you make your opening bet on either the Back or Lay side depending on your view of the value of the price.

Value odds are everything to the positional trader. You will determine your value by one or a combination of factors. You will have come to the conclusion by determining what the correct price should be based on study of past form; by considering how the public will bet at nearer the "off" of the event; or by studying the various prices offered by differing bookmakers on the event. ( see Oddschecker).

A simple and proven entry route into opening a positional trade would be to refer to the Oddschecker prices, morning forecast prices and Betfair odds of the days horseracing markets.

You are looking for a horses which are approximately the same price on all three sources.

Instance would be a horse which is forecast starting price of 5/1; is averaging 5/1 with the bookmakers on Oddschecker; and is showing at 5.9 -- 6.0 on Betfair.

Since Betfair odds are invariably 20% better than Bookmaker odds it is very likely that the price will drift out in the run up to the Off.

Lay the horse on Betfair and later close out for profit by Backing at higher.

Irrespective of whether you are Momentum or Positional trading, you should have an exit strategy in mind ............. a plan of action to close out the trade. Will you close at each profit tick ( more applicable to Momentum) or wait until the trend appears to peak or bottom out?

If positional trading, do you have a clear idea of what the price might probably peak at? Do you have a definite stop-loss mechanism in place or a price in mind at which you will exit if the trade goes against you?

Sportstrading