Saturday, 29 November 2008

Spinning Value

John the Gambler continues running with the value ball

"...but the general way for in-running traders to perform is to nick a bit of in-running value and then sell it back for a slight/small/large profit".

My comment is that one should ONLY sell it back if it is now value to do so. If the value is in holding your position, HOLD it.

Back to the coin toss example, if I have got 3/1, and the coin is still in the air, should I 'sell' off to someone else at 5/2? Sure, I would make a guaranteed profit, but 5/2 is not value to me.

There are many times when one should hold on. Of course, as I have written earlier, if someone lets me lay off at say 21/20, then that might well be worth doing for the peace of mind, and to let me relax and enjoy watching the last few minutes of the coin-toss.

John also points out in his post that there is a difference between identifying value pre-off and in-play, and I would add that there is also a difference between identifying value on a two-team sporting event and a 30 runner handicap horse race.

I do not come from a racing background, (probably a good thing - a few Epsom Derbys, some drunken lads' outings to Lingfield and Goodwood, and a vacation trip to Cartmel is about it!), but I have long been fascinated by two / three outcome events.

I would spend hours back in the 1980s updating ratings on teams, something I have recently started doing again, and comparing my estimation of probability with the bookies or the exchange's is a cerebral challenge that I enjoy.

However you find value, you have to have it to be successful long-term. Even if you are not aware you have it.

In my opinion nicking a bit of profit isn't going to be a long-term winning strategy unless you are entering a position at value, and laying it off at value. (I suppose that if you could find enough coin tosses at 3/1, then you could consistently lay off at 5/2 and still come out ahead, but you would still be giving away money).

I look to my experience with the under/overs goals markets for evidence. Backing unders, laying unders a little later - lots of small profits, but then the goal just when you least expect it (and they often come along just like that!) and you take a big loss that wipes out all those small wins and more.

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