Tuesday, 26 April 2011
Weight of Money (WOM)
WOM was one of the first indicators I learned to use when I started trading 5 years ago. I recall watching Adam Todd’s scalping videos using the early Bet-Trader. I’m pretty sure he was the first to introduce the ladder interface and that combined with WOM and momentum trading made for a solid foundation to build on.
As the Exchange evolves so do the characteristics of the indicators we use and WOM especially has become much more difficult to interpret. It can be used to trap, hold, manipulate and the recent introduction of cross matching brings even more distortion to how WOM is perceived.
Below are two examples from today where WOM is clearly evident. It’s pretty rare to see volumes of this size being matched especially on races like this with low turnover. Bearing that in mind my advice is to ignore its presence.... sometimes easier said than done!