Rather Optimistic Income (ROI)

Mark Iverson responded to my 'Great Work' post, I had a feeling he might, here:

Thanks for the mention Cassini - had a feeling you might respond to my post :-)

I can see your viewpoint and a normal career is one that appeals to most due to the 'safety' it provides, but after my mother died of cancer when I was 25 and after my son was diagnosed with his heart conditions it gave me a wake up call.

For me sports trading full time is a 5 year plan (4 years left) and after that who knows? If anything comes along to disrupt that in the meantime (enhanced premium charges, law changes etc) then I'm making plans as I go to provide myself with some breathing room.

Have you read the book I mention in my post, 'Rich Dad, Poor Dad'? It discusses the fear behind the 'no food on the table' outlook better than I could do justice and is well worth a look in my opinion.

I did read the book Rich Dad, Poor Dad a few years ago, although unlike Mark, and not just to be difficult, I didn’t actually think it was that good. I believe it was also reported to contain many errors and bad advice, but I did like their definition of financial independence which was that it “is when your monthly income from assets exceeds your monthly expenses” and tracking this percentage as a goal is fun and encouraging. That might not be the original source for the definition, but it’s where I first came across it, and it’s a good goal to shoot for. There are, in my opinion, better easy-to-read financial advice books out there, such as The Millionaire Next Door - want to be a millionaire? Well stop living like one!
Webbo wrote

Great post Cassini. I think the professional gambler dream appeals because people desperately want to be in control of their own destiny, doing something that they enjoy and gambling is something that anyone can try. I'm pretty sure the reality will never match the dream... well except maybe for a few intelligent bot-makers out there!

Indeed. Most pro gamblers are either in the know, or smart enough to build a bot, and thus smart enough to build a career while their bot is running!

Ben from Sports Trading Life has written a post on what returns it is realistic to expect from sports trading. The opening lines are a little worrying though, as he writes:

“So you have decided to take up Sports Trading or some form of gambling and you might have bought a few systems, looked at a few strategies or even joined a service which means you are now ready to make some money.”

I can tell you right now that if you have ‘bought a few systems’ you are unlikely to have what it takes to make money from trading because for obvious reasons, ‘systems’ do not work long-term. You will need to be a little smarter than that, if you aspire to be profitable.

While it can be confusing to talk in terms of points or units, (10 points profit a week is meaningless, since we need to know up front whether the stake is 1 point or 1000 points, and how many opportunities there are in a week), the ROI makes much more sense. If you’d stuck 1000 into a FTSE 100 index fund at the start of 2010, your ROI for that year would have been 9%. We know what that means – at the end of the year, you have 1090.

The main thrust of Ben’s post though, is that gamblers / traders really expect unrealistic returns. Ben mentions that professional gambler Patrick Veitch, who has reportedly won 10 million, has an ROI of ‘only’ 16%. I was actually initially very surprised it was that high, although on consideration, when you own horses as Mr. Veitch does, and are this privy to the inside information that goes along with this, it’s a lot more reasonable. Anyone returning 16% over the course of several years must have a huge edge.

Any positive ROI is arguably good, but there are other factors to consider. Often overlooked is opportunity cost – by investing money on sports, you are passing up the opportunity to invest in another investment. As Investopedia defines opportunity cost, it’s

“the difference in return between a chosen investment and one that is necessarily passed up. Say you invest in a stock and it returns a paltry 2% over the year. In placing your money in the stock, you gave up the opportunity of another investment - say, a risk-free government bond yielding 6%. In this situation, your opportunity costs are 4% (6% - 2%).”

There’s also the cost of the time to consider, as well as the cost of subscribing to a service for the selections or perhaps for data. You might, if you are lucky, be able to make that 9% ROI on 250 bets during the course of a year, but you’ve invested a lot of time which could have been spent on other gainful pursuits. Investing 1000 at the start of the year and collecting 90 at the end is much easier, if not quite so exciting. It's also worth mentioning that ROI isn't the be all and end all of it - the number of opportunities is also a factor. A method that offers a 20% edge, but only once a year, is not so useful as a method returning 0.1%, but which offers 50 opportunities a day.

The Friendly Tipster League Table illustrates well that a double digit ROI is unlikely in the long-term, especially when you factor in that the returns do not include commission. Of the tracked selections, only one (the rather tongue-in-cheek Back The Lay The Draw Selection) has a double digit ROI, and that will soon change as it heads down with each passing selection these days.

And finally, in a book about Ancient Greece, and a chapter on Sparta, I came across a reference to the Helots, subjugated natives (essentially slaves) of the Spartans. Helots were allowed to continue their farming, but had to give 50% of the fruits of their labour to the Spartans. Ring a bell anyone? The Helots eventually revolted and allied with other Greek peoples to overthrow the Spartans.

Under / Over Prices From Correct Scores

Average Guy wrote:

Hi Cassini, I'm considering drafting a model for price predictions for Overs markets based on correct score probability. My question is, do the correct score probabilites drive the Overs price, or does the Overs price drive the correct score prices ? Hope I asked it correctly as I am even more confused now.

The Correct Score probabilities determine the prices for the Under / Over markets.

Calculate the Correct Score prices and then sum the probabilities for the scores that you need for the Unders. The Overs will be 1 minus the probability of the Unders.

For example, to calculate the probability of Over 1.5, sum the 0-0, 1-0 and 0-1 probabilities, and subtract this total from 1. For the Over 2.5, add the above three to the 1-1, 2-0 and 0-2 probabilities for the Under 2.5 probability, and subtract from 1 for the Over 2.5 probability.

And repeat as necessary. This is actually the easy part!

Great Work

Mark Iverson’s latest post is the inspiration for this one. I concluded yesterday’s post with a call for anyone to seriously consider the full ramifications of giving up a career to go full-time gambling. Note that I said ‘career’ rather than ‘job’. One could argue that a career and a job are both work, but there are differences, and I'm rather assuming that a career might be, if not something hugely enjoyable, at least something tolerable, while a job might not be. There are not too many gainful activities that I would describe as truly enjoyable outside of the world of professional sports or the arts, and even those might not be so enjoyable after a while unless you were one of the few making huge amounts from it which would certainly help.

One of the problems with giving up a career is that it can be very difficult to pick it up again after a break. My background is in IT, so my views on this are biased towards that industry, but a lot can change in a couple of years. In IT, skill sets become obsolete quite rapidly, and whereas the company you are with will (one hopes) re-train you at their expense in new technology, if you are on the outside, the cost of training is not only significant, but it is also hard to get a position when all you have is ‘theoretical’ experience. Even if you are lucky enough to be able to step back onto the ladder, the loss of a couple of years can mean going back to square one in terms of holiday entitlements, profit-sharing awards as well as seniority – since you are now behind others who have not taken a break.

This is not a problem for the unskilled, or for those with a trade of course, where it is much easier to pick up where you left off, but my feeling is that the modern professional trader / gambler is more likely to come from a ‘career’ background than from the unskilled or semi-skilled background. I am sure there are exceptions. If you believe the newspapers, the 1980s London Financial Markets were supposedly full of barely literate financial traders / dealers yanked straight off the street markets in the East End, thrown into the financial markets, and burned out by age 29 incidentally, but my feeling is that for the most part, an aptitude for trading is more likely to be found in someone with career options than not.

Mark talks in his post about the hours we work, and yes, work hours are hours that are not our free time, but there is a big difference between ‘work’ in an office and ‘work’ on an assembly line in a Chinese factory for Apple, for example. The latter really is work, but for many, a twelve hour ‘working’ day (including travel time) is really a lot less than that. Some people even get to write blog posts from their desk, read on their commute, (if they have one – working from home is becoming ever more common, even if not every day), have social chats by the water-cooler or coffee pot, take a lunch hour and breaks, adjust their hours to suit themselves and have access to personal e-mails and Internet while at ‘work’. Getting approved for a mortgage is a lot easier with a ‘proper’ job too, and as you move up the ladder, your income steadily increases too - something that is definitely not assured with betting, and quite possibly the reverse is true.

So I guess it all depends on where you are coming from, and where you want to get to. If I had a 12 hour shift in a Chinese factory, or a ‘job’ that I didn’t enjoy, my views on full-time trading would be a lot different, but the value of investing time in your future is perhaps something only fully appreciated when looking back in life.

As Mark mentioned in his post, Steve Jobs did indeed say this about work:

"Your work is going to fill a large part of your life, and the only way to be truly satisfied is to do what you believe is great work. And the only way to do great work is to love what you do. If you haven't found it yet, keep looking. Don't settle. As with all matters of the heart, you'll know when you find it. And, like any great relationship, it just gets better and better as the years roll on. So keep looking until you find it. Don't settle."

I’m just not sure a solitary life spent in front of a monitor betting on sports is what Jobs had in mind by ‘great work’, (he was probably thinking more Mona Lisa), and I’m not sure that I would ‘love what I do’ if I did it full-time anyway. I enjoy trading, most of the time, because it’s a challenge and because it's a way of relaxing from my real job, but would I enjoy it if the price of failure was no food on the table, or knowing that my income was at the whim of a PLC who could choose to stop doing business with me at any time because some accountants decided that I’m not good for their business model?

Career Advice

Finally, a much better weekend on the football with the XX Draw Selections finding two winners from four selections, and three winning on the Under 2.5 market. I also offered subscribers six value under selections, four of which were winners, and even more pleasing was that three were scoreless games - Bologna v Parma (1.77), Levante v Real Zaragoza (1.81)and Hoffenheim v Hannover '96 (1.92). The other winner was Nurnberg v Hertha Berlin (1.95), with the losers being Bayer Leverkusen v Mainz '05 (2.01) and Santander v Getafe (1.67). The I'll add these to the tipster table once the number of selections increases, but with few matches, the ROI is rather misleading.

The latest Tipster Table is here:

Backing the draw on Ian Erskine's Lay the Draw selections is on a losing run right now, but this method still leads the table in terms of ROI. Backing Under on the XX Draw Selections moves up to second place, while Peter Nordsted's Drawmaster drops to third after drawing a blank this weekend, although a little unlucky with two of his picks losing to 85' and 90' goals.

Mark J's selections are in fourth place, after a small profit this weekend, while Geoff's draws continue to struggle and drop to fifth. The final profitable method is the XX Draws mentioned previously, and in negative territory is Football Elite who had a disappointing weekend with one push, and three losers.

In eighth is Green Pullover, who managed to find one winner in 34 selections before a draw in his final pick this weekend, and Griff improved his ROI, if not his points, with one winner from five for an ROI of 48.5%.The random selections remain in ninth spot because I forgot to randomly pick any this weekend.

It's interesting how all of the draw-seeking methods have had long losing runs of late, of 15, 16, 17 and 20. Not unexpected that a losing run like that would be hit, but for Griff, the XX Draws, Geoff and the Green Pullover all around the same time is odd.

SJ knows the way to my blog roll is with a little sweet-talking, and writes:

Hi Cassini, apparently flattery is a good way to go about getting a blog link. Well yours is definitely the best gambling themed blog I've come across. Its impressive that you're able to blog so consistantly well on such a regular basis.

Anyway, my blog is at http://itonlymatterswhentheresmoneyonit.blogspot.com catchy, I know. Feel free to check it out and hopefully it will be worthy of inclusion on your blogroll

It helped that the new blog actually looks well written. As the Green All Over board of director was reviewing it, he noticed this:

Several times I've considered giving up work and gambling for a living, current winnings whilst trading less than part-time (i.e. when I can be bothered) alone would be more than adequate to live off but I'd be very hesitant to actually do so.

Hesitant with good reason I would say. Unless you have a unique edge (perhaps inside information) that will endure forever, or at least for long enough for you to not worry about working again, why would anyone give up a career to trade sports for a living? Later in the post, SJ wrote:

Secondly, contrary to something I recently read on another blog but conveniently forget the location, the markets do evolve and any edge I have isn't guaranteed to last, what with the Premium Charge about to rear its ugly head and the increasing presence of bigger fish.

That may well have been this blog, because I have written on this subject before - may times. Edges disappear, and external factors such as the introduction of a Premium Charge or Super Premium Charge do happen. The goal posts can and do move. If you can find an edge, then someone else can too. It's unlikely that you will remain top dog forever. And there is always the risk that in-play gambling (for example) will become illegal, or some other black swan event will mean that your ability to make a profit vanishes overnight. If you have a career, be thankful, hang in there, and trade on the side. A career is about much more than just the pay. Each year is an investment in your future, something that gambling doesn't offer. Yes, it may sound very exciting, especially to the younger and more impressionable among us, but the truth is that gambling for your living is unsociable, stressful, and bloody hard work.

Finally, a big day today for the football club that has been a huge part of my life for more than forty years. Another trip to Wembley would be a nice memory.

Proddabilities

Two big games in England today, and there's something a little odd about the Arsenal v Manchester United Unders price. As you all know by now, my spreadsheet calculates the probabilities of each score combination, and from that the Match Odds and any market I'm interested in. My Match Odds are (H/A/D) 3.01 / 2.56 / 3.61 and on Betfair the mid-prices are 3.025 / 2.57 / 3.575 - could hardly be closer, but my Under 2.5 price is 1.74 while 2.17 is available - a whopping 24.7% edge. If the market has a higher goal expectancy than I do, then why are the draw odds not higher? Opportunity knocks.

The Manchester City v Tottenham Hotspur game also has prices close to mine, including the Under where I have 2.13 against 2.17 available. Home I have 1.87 (1.925), Away 4.33 (4.55), Draw 4.18 (3.825). Not much value there.

Recovery

Well, that was a bit better. With today's football, I could hardly put a foot wrong. The first XX Draw selection of two today - Norwich City v Chelsea - finished 0-0, and although the second finished 2-0 to Juventus (@ Atlanta) I was happy to pick another under. The 0-0 was my first 'perfect' selection in 25 selections, so I was due.

As a trial, I also started listing Under selections where value, in my opinion of course, was in excess of 15%, and had two winners Hoffenheim v Hannover '96 (1.92) and Nurenburg v Hertha Berlin (1.95) and one loser - Santander v Getafe (1.67). The latter was probably a little low in hindsight, and I may need to adjust the spreadsheet to award a minimum value to their probability of scoring. Right now, if they've not scored in 12 matches, and not had a shot or a corner, my spreadsheet thinks they are incapable of scoring. I also took a look at the Bolton Wanderers v Liverpool game just before kick-off and had Liverpool much too short, (I had them at 1.86), and took Bolton on the Asian Handicap +1 at 2.1 and +1/+1.5 at 1.75.

I'll update the Tipster League after tomorrow's matches.

I have finally completed Walter Isaacson's biography of Steve Jobs, with some interesting comments at the end from Jobs himself which rang a bell. He said, and I am paraphrasing here, that companies are started by individuals with great ideas and products, but that after a while they are taken over by sales people whose sole interest is in the bottom line, and couldn't care less about the product or innovative ideas. An excellent book, by the way. He was certainly a little different, but his innovations have positively impacted everyone reading this - and a few others!

Disheartening

This month, and year, started full of promise and hope. The NBA season was underway, the XX Draws had hit a winner and ended their losing run, and all was good in the world. Unfortunately the XX Draws have embarked on another depressing losing run, and after a good couple of weeks, even the trusted NBA has gone rapidly sour. This past week has been one of those where I just can’t get a thing right. I lay a team after they go on a run, ‘knowing’ that after a timeout the run will end, and yet they continue on their run. If I make the call that the run will continue, it stops immediately. If I take a loss, it turns out I should have let the bet run, and if I let the bet run, I should have taken the loss. For a couple of nights, I scaled back, and of course was successful, winning small amounts, but when I up the ante again and start risking four figures again, the bad ‘random fluctuations of probability’ recurs. I can’t remember a run like this, and whether it is a blip or there is something fundamentally different about the NBA markets, I’m not yet sure. This season is certainly different, with teams playing a condensed schedule, with teams on occasion playing on three consecutive days, but I’m not convinced that is the source of my difficulties. The Super Premium Charge is now further away than it was at year's end, which is some good news I suppose, but 2012 is not starting out as I would have liked.

Perhaps the XX Draws will get back on track this weekend. The first selection went down in flames as Borussia Moenchengladbach, refreshed from their winter break, easily beat Bayern Munich last night. One of the XX Draw subscribers went so far as to suggest that Google has started to review the draw selections, as my e-mail this week was consigned to his googlemail junk folder. Now that hurts. Griff has selected no less than half the EPL schedule for draws this weekend, selecting Everton v Blackburn Rovers, Fulham v Newcastle United, Queens Park Rangers v Wigan Athletic, Sunderland v Swansea City and Wolverhampton Wanderers v Aston Villa.

Mark J’s value selections are Wolverhampton Wanderers (2.625) v Aston Villa, Freiburg (2.2) v Augsburg, Dundee United (2.25) v Motherwell, Espanyol (1.82) -0.5 v Granada, Borussia Dortmund (1.91) –0.5 @ Hamburg and Rayo Vallecano (2.11) -0.5 v Real Mallorca.

Geoff has an even more diverse selection of draw picks this week, venturing as far afield as the Africa Cup of Nations for two of his eight:

Undergroundtrader posted up his views on statistics in a post on his new blog, and reproduced here:

Nice discussion around in various blogs about a mostly overrated subject, "mathematical approach". In the view of undergroundtrading it goes like this:
With the assistance of maths you solely describe the past! The past is almost nothing but smoke and mirrors, you could it solely take as indicator what the mass are thinking about the event and reference point for bookies and punters. Next step is to take a look at the present (i.e taking into account change the manager, upcoming CL match and so on), to scale the own expectations. Pretended a little bit more experienced traders are going now to define value or not by comparing reference point on maths with scaled "Odds" and given odds. ok, so far so good but real undergroundtrading and value riding is starting only now. You have to think about future aspects (exspectations) or better yet to have "valuable" informations about the future (i.e manager will announce "parking the bus" in the team briefing, heavy snow at match time, ...)
Thinking about what most likely will happen or of course insider informations define the real value and give you the edge.
Just want to sharpen punters mind not to stay in the past and to look "under the ground" of upcoming trading opportunities. Trade the third dimension (future)vs (past,present)!
Looking forward to give you a real trading example in one of my first postings on my new blog. Perhaps already this weekend in German Bundesliga I or II, where i "get deeper insights"

Of course, we would all like inside information, exclusively, but that is not going to happen, at least at the top level of the game - perhaps Geoff has a friend in the Annan Athletic dressing room? - so I think UndergroundTrader dismisses the importance of mathematics, essentially rating form, too easily. Statistics give you an excellent starting point, even if they are not the whole answer. I think I have written before that perhaps our biggest advantage as punters is that we do not have to bet in every event. We can be very selective, and this, together with some solid probability calculations and a sprinkling of subjectivity at the end is the way to make profits. But it's not easy.

Almost

Loudsight, still enjoying his winnings from the Green All Over One-Third of a Million contest a few weeks ago, rings some alarm bells about a couple of bills currently making their way through Congress in the USA. I must admit I wasn’t aware of either until I saw the Wikipedia protest on Wednesday, which seems to have had the desired effect of raising awareness and increasing opposition to it. The two bills are SOPA (Stop Online Piracy Act), a bill originating in the House and its sister bill from the Senate, PIPA (Protect IP Act).

Loudsight says

I notice you sometimes use copyrighted material on your website i.e. pictures and quotes from other publications and blogs. I believe the proposal to combat piracy listed in one of these bills SOPA and PIPA (can't remember which) would allow the copyright holders to send a notification to your service provider i.e. blogger.com and blogger would take down your WHOLE site. You also become responsible for policing comments to ensure links to sites hosting copyrighted material aren't posted. I think it would be cool if your blog took part in the campaign to raise awareness of this issue. This maybe an American law, but affects all of us. So if you have any American friends please let them know that they need to vigorously oppose these crazy draconian bills.

http://www.ted.com/talks/defend_our_freedom_to_share_or_why_sopa_is_a_bad_idea.html?awesm=on.ted.com_ACxO&utm_campaign=defend_our_freedom_to_share_or_why_sopa_is_a_bad_idea&utm_medium=on.ted.com-twitter&utm_source=t.co&utm_content=ted.com-talkpage

http://azizonomics.com/2012/01/18/the-internet-today/

American friends? I have an American wife, but I'm a little short of friends - of any nationality. It's something I'm working on though - with my therapist.

Along with many bloggers, I do sometimes post pictures, quotations or excerpts from other sources on the web, without really worrying too much about my actions. This blog is not a commercial venture and my intentions are never malicious, (ok, the occasional piss-take excepted), and I usually link the extract to their source. Since most such excerpts are from fellow bloggers, and only lead to an increase in traffic to those sites, albeit miniscule, I have yet to receive a single complaint. Usually the source is pleased to have been referenced.

The bills in their original form would seem to have little chance of progressing to become law, with several of the remedies mentioned by Loudsight going too far – shutting down a website without due process is obviously too draconian. Some of the original sponsors of SOPA have also dropped their support in the last few days, but even if these bills pass in some modified form, I doubt that it will have much effect on little old me. The best reason to oppose these bills is perhaps that they are endorsed by Rupert Murdoch.

Rob The Builder wrote:

I spent a while reading Eddie's piece. Heavy going but nice to see some real detail and thought on a blog. But doesn't his example show one of the limitations of calculations. However good the maths, I didn't see the formula include whether De Jong and Barry were holding down in midfield, or whether Mancini was 'going fo it' with Johnson, Balotelli, Silva and Aguero.

Eddie will be writing another piece shortly, showing how to rate the contribution of each individual player to a team, and how to adjust the goal expectancy of a team once a line-up is definite. It will include notes on how to follow all players on Twitter and get a feel for their mood, how well rested they are, how much beer did they have on their last night out, plus an analysis of biorhythms and everything else you need to know. Or maybe not. While football is an eleven player team game, and thus the contribution of individual players more diluted than in a sport such as basketball, the loss of a ‘world-class’ player from a team is something that should be factored into the equation if practical. I’m just not sure how practical this is, and I tend to feel that the market often overreacts to any such absences. Replacements at the top level of football are usually not too shabby. If you are lucky enough to hear 30 minutes before kick-off that Wayne Rooney is surprisingly out of the team, then use that information, but most of us are too remote for it to be of much use. By the time we hear about it, the news is already factored into the price. The sensible thing to me seems to be to use the numbers to identify value, and then verify that there is no team news that would render this irrelevant before placing your bet. What 'team news' you deem relevant is subjective of course. It would be a quiet exchange if we all agreed.

Mark Davies mentioned the topic of bettors trying to buy money in his blog yesterday, and indeed it’s strange that the Daily Telegraph seems to suggest that we should have more sympathy for someone risking 100 to win 2 and losing 2 times in 100 than for someone risking 50 to win 50 and losing 50 times in 100.

“In-running punters on Betfair left to count the cost as two 'certainties' fail to deliver at Newbury: In-running betting has been in the spotlight lately and the risks associated with this form of punting were never better illustrated than in the first two races at Newbury on Wednesday.”

I’m not quite sure why the “risks associated with this form of punting” are any different from any other risks. If you back at 1.02, it’s because you feel that the probability of the event occurring is greater than 98%. If that price is correct, then yes, one time in fifty you will lose, and when that 2% chance happens, it’s hard to feel sorry for someone who should be well aware of the risk:reward he is taking. At least the article put a quote around the word ‘certainties’, although it might have been better to say ‘almost certainties’. Despite what you might read on the Betfair forum, there are few certainties when it comes to sports. I’ve even been on the wrong side of a score adjustment in the NBA half-time market – made long after the half was over! ‘Winning’ field goals in American Football are waved off because the coach called a time-out. Buzzer beaters disallowed because the shot-clock was down to zero before the ball left the player’s hand. Caveat emptor. A few years ago I read that 1.01 shots are overturned about 70% of the time on Betfair. I don’t know for sure of course, but that number seems about right, and given the number of markets in a day, that is a lot of ‘upsets’, although one man’s upset is another man’s delight.

Going Underground

Lazy Trader commented on the numbers I posted up yesterday:

Interesting to see the financials only taking 259K, which should really be in the In play volume btw :)

I remember the financials used to be one of my early markets back in the day and the turnover whilst not huge was decent and playable. As usual betfair started to tinker with the markets brought out tradefair and completely killed off the financials. Wonder if the same will happen with their own fixed odds arm due out soon.

I didn’t generate these numbers myself, but I must admit I was a little puzzled about the financials volume all being pre-event, but as it’s an area I don’t go near myself, I left it as it was.

Then we had a comment from UndergroundTrader:

great thanks to you for your write ups. They inspired me to start a blog, where i m going to provide hopefully useful trading experiences over 20 years now in stock and sport markets.

In terms of your considerations about volume: for profitable trading you need volatility and liquidity and marginal price movements preferably without greater gaps.Thats the reason for increasing matching in-play in basketball, tennis and so on. Btw. just four ingredients lead you to a constantly "green" trader: It s all about 1) discipline 2) value picking 3) money management 4)to do the opposite of what human mind and emotions of your own and the other market player want to mislead you (i.e. exaggerations, cutting profits to early, let losses slide.....). Thats the reason why just 5% of the traders (in stock or sports trading) have a positive ROI. The key is "undergroundtrading" in terms of looking under the ground of your mind and emotions as well as the other players.
i ll point out this subject in one of my first upcoming posts.

Some good points about the ingredients needed for successful trading, all of which regular readers of this blog will be familiar with, but it's always good to get another perspective.

Speaking of which, A Punter's Year posted this up yesterday via Betfair Guru, and I thought it was worth including here because again, it makes some very good points:

"The underlying theme of everything we do is market dynamics and risk reward. It's very important to distinguish between price related entry and opinion related entry.

For our entries it doesn't matter for a second who wins the match eventually but what we do need is tight closely fought games.

One of the points I push repeatedly in the chat room is I have as much chance of knowing who's going to win the next game as you do. IF we take that approach we are basically guessing and hoping we got it right and that's not a road I want to go down.

Our approach is based on taking good risk:reward positions over and over again as long as the price and dynamics are right. Over time we will win an awful lot more than we lose, but lose we will... repeatedly in fact. And that's just the price you have to pay to have your money in the market with a chance of a big swing. The losses are tiny and the wins are big and that's how we make our money.

The MOST IMPORTANT thing to implement here is patience and discipline..... I cannot make the opportunities arise, they just happen or they don't. When they do we'll make the appropriate entry, if they don't come then there's no way I'm going to advise anybody to put their money in a spot that I am not prepared to. Over time you will begin to make your own entries but it's vital that they are at the right places."

We don't KNOW who will win, (despite what you might think on reading the forums), and we can't make things happen. Excellent advice. Be patient, and play the numbers when opportunities arise.

Al asks:

Cass, is picking a 75-1 winner today just luck?

Does he not read this blog? - there is no such thing as luck, only ‘random fluctuations of probability’!

75-1 winners come along every day - look at how often 1.01 shots are overturned on Betfair - but whether or not a 75-1 winner is down to a favourable random fluctuation of probability, inside information / fixing, or there is an element of skill, (the infamous ‘edge’), can only be determined in context. How many 75-1 selections has Al made? If it’s a handful, then it’s a promising start, but nowhere near enough data to be confident that this is the outcome of anything but chance. With no edge at all, you would be expected (have a better than evens) to find a 75-1 winner after 53 attempts, but I don’t mean to spoil Al’s day. I’m sure that 75-1 winner was very welcome, but just don’t give up the day job yet.

Historically, the favourite-longshot bias showed that the better value was in betting shorter prices, (this method still showed a loss, but a slower rate of loss than backing outsiders), but I suspect that this may have changed, or at least reduced, with the evolution, or revolution, of betting over the last few years. The advent of Betting Exchanges heralded the arrival of a more sophisticated investor and while there are still plenty of recreational punters for who making money is secondary to entertainment, for the most part I would suggest that bettors are far more savvy than was the case years ago.

Finally, a quick mention again of, not Pete, but Eddie - aka Soccer Dude, who followed up his excellent Correct Score market write-up with a Poisson For Dummies piece which is a good introduction to the subject. I await his ideas on handling the 'too-low' results that Poisson gives for binary numbers, and his views on whether the probabilities are independent or related, i.e. does Team A's probability of scoring 2 goals increase if they are playing a team expected to score 3 goals, versus if they are playing a team expecting to score 1 goal?