Sunday 12 November 2006

Trading Against Media Disinformation

In 1963, A.W. Cohen (a legendary market analyst) began to collect different market newsletters with the aim of systematically trading against their recommendations. This remains a critical part of trading on both financial and football markets although such analysis should be utilised alongside other forms of market assessment.
When key operators and media outlets (such as The Racing Post, Sporting Life, The Guardian and Sky Television) are determinedly persuading us of the value in betting on Team A, Team B is often the better option (on the Asian Handicap markets in particular). There are two prime reasons for the success of this trading attitude. Firstly, certain individuals within the media are deliberately providing disinformation for the benefit of the bookmakers. And, secondly, concerted disinformation enables a preferential price for insiders to take a contrary view on the market.
In the former case, it is worth monitoring key individuals over a period of time and the ones who are providing disinformation (whether deliberately or not) will become obvious. In addition, when one is able to see the "experts", judge their body language and go with your intuition. We are primed as a species to experience a gut feeling about the morals and ethics of other human beings. A good trigger question to ask yourself is "would I buy a used car from this man?"
The best example of the latter type of manipulation was provided by the trading of some of the key Asian Market Makers a few years ago. These traders would strategically place large bets on Team A around Europe with the result that the market would move significantly to reduce the price on Team A. Then truly colossal positions would be taken on Team B at preferential prices. Team B would then win and the European bookies were left sulking. It should be noted that the Europeans exercise much more control of the markets these days.

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