Being contrary

Have a look at the following chart from the 14:15 at Lingfield on Saturday. This is a very big steamer. Of course in hindsight you would say, 'If I backed it at X and laid it at Y I would have made £Z'. Most people would look at this chart and back it high and lay it low. After all backing at 3 and laying at 2 would net you a 100% profit on your stake and fully greened up 50%.

Steamer at Lingfield

I often look at these moves and do the opposite. It's easy to get sucked into such a move and follow it. You can see that it has come in a long way, the market likes it, but also it has accounted for a disproportionate amount of volume, £239k out of £284k for the total market! But of course it can't go all the way into 1.01, that would be impossible. So at some point people have to stop backing it and the price will rebound. That's exactly what happened today. Catching this move also benefits you in another way. When the price rebounds, it tends to do so with a lot of vigour as most people in the market can't help but follow the trend. When the trend breaks, everybody heads for the door and there lies your opportunity.

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