i've been in a $260 5x5 mixed auction league for 6 years.
by cap, do you mean just for the draft? or do players hold thier prices all season and you can never go over 260 (meaning you might have to cut players or make trades to pick up FAs)?
i'll assume its just for the draft, but just checking.
anywho, have you played any kind of fantasy baseball before? and do you know the guys youre drafting with? both of these are important questions.
some might suggest drafting heavy hitting, but if you truly are a newbie, i wouldnt. id suggest you try for a more balanced team.
the ability to scout cheap pitchers is definitely improved upon with experience. last year i spent $220 on hitting and $40 on pitching but i would never have tried that 5 years ago.
my first word of advice, unless youve seen the results of a previous draft in this league...no matter who the first player brought up for auction is.... dont bid him up or purchase him. (unless its one of the top 5 players for under $25) unless the guys are being brought up in the same order as theyd be drafted in an s-draft, id sit back as long as possible to make sure i had a feel for the drafting prices. (plus, this goes along with the strategy of bringing money out early)
early in the draft i would bring out as many stars at scarce positions that you know you don't want to make other teams spend money.
later on, bring up any of the "hot" or "sleeper" picks you dont believe in to make people pay for them, just in case you are wrong.
make sure to bring up 1 or 2 players you DO want in the middle of the draft just to keep them honest.
if the auction draft is in-person, its all about the poker face. u have to figure out which guys they want and which guys theyre bidding up. and make sure they cant read you as easily.
some people will tell you to not have any guy u MUST have. or that you should not pay for position scarcity. both of these are false and only started when people were paying 50 for the 3rd best catcher. dont be afraid to spend a few extra bucks on someone you think will break out. and you will almost have to spend a few extra bucks on any 2b,ss, 3b, c. (to the extent that most catchers are worth NOTHING and u have to pay a few bucks for even the bottom of the barrel). just dont overdo it. the key phrase is A FEW BUCKS MORE.
there are certain strange things about every draft. in my league, we have somehow managed to completely devalue closers. this started in 2000, continued in 2001. someone paid 27 for rivera early in 2002, then the rest of the closers went under 12. the poor sap who got stuck with rivera at 27 had 15-20 dollars left then the rest of us to build a team.
also make sure u keep your own full list of teams so you know which teams filled which positions and how much money they have remaining. this can help to judge who people are looking to take, and how much they are willing to spend.
as for how much you spend on hitting and how much on pitching. it matters how many teams are in the league and how the other people like to draft and which you think you are a better scout of.
my league is only 10 teams. so not only would most say their is quality pitching, but also quality ofs and 1b all around too. there has been a definite trend towards the prices of starters going way up as people want to make sure they have a stud staff.
the other thing i love to do, that a lot of people on this board still dont seem to like is draft 5 category hitters. if a guy can go 20-20 i want him on my team. this hurts you in trading (cant trade steals for homers if all your steals guys are homers guys too ) but helps you to suceed straight out of the draft.
sorry that this post was so disorganized, but good luck anyway