WOM – It can be dangerous if you are just starting!

If you have ever thought about getting involved in trading on horse racing, then you have almost certainly heard of WOM. For those of you who haven’t done any sports trading then WOM stands for Weight Of Money.

When Betfair launched and sports trading became an easy way to make money, then using WOM was king. In fact, for a while, you didn’t even need to use software to do it. You could quite simply monitor the WOM on Betfair’s web interface and make a killing.

So what exactly is WOM?

WOM is the difference between the amount of money waiting to be backed and layed on a particular horse in the Betfair market. To calculate it, you take the amount of money waiting to be backed on the horse and divide it by the total amount of money waiting to be matched on the horse. This will give you a figure between 0 and 1.

If the number is 1 then all the money is on the back side and if it is 0 then all the money is on the lay side.

This allows you to determine which way the market is *likely* to move. I have asterisked the word likely, because it is not a guaranteed movement.

A good idea of which way the market is likely to move is…

0 – 0.33 = the price will move down

0.33 – 0.66 = the price direction is uncertain

0.66 – 1 = the price will move up

Once upon a time this is all you needed to determine the market movements. Ultimately all markets are governed by this weight of money and when the competition on Betfair was low, it meant that nobody needed to employ other tactics.

All trading software offers WOM indicators now, and there are still some guides which teach you how to trade just using this technique. Unfortunately, it is no longer that easy. The market has become far more complicated!

Just one example of how the market is more complex, is that you have market manipulators who push large amounts of money into the markets in order to move them so they can get the odds they want on a horse, once they have been matched at the odds they want, they remove the money that was used to push the market. The effect is that it looks like the market is moving in one direction, but this is a false indication because it has been manipulated and will swing back as soon as the manipulator has removed their money.

I would go as far to say that it is no longer possible to trade horse racing on Betfair using just the WOM technique. You need far more indicators and knowledge in order to spot market manipulators and other such events that are going to temporarily distort the markets.

So, if you haven’t ever traded on horse racing before, then this is not to say it isn’t possible. But it is no longer as easy as a lot of guides will have you think. If you decide that this is the route you want to take, then be prepared to spend a lot of time infront of your computer learning how to read the market through financial graphs provided by various pieces of software. You will be rewarded, but like everything, in order to be good you need to spend the time!