Thursday, 30 July 2009

Back To Reality


Back from the Mayan Riviera and I bring great news. 

The world will NOT be ending on December 21st 2012 as supposedly prophesised by the Mayans. As is often the case with these sensational stories, the truth is a little more mundane in that the date simply marks the end of one of the Mayan 52 year cycles, and has no more to do with the end of the world than any other artificial date such as the end of a century in the Gregorian calendar (which incidentally was 31.12.2000 and not 31.12.1999 as most seemed to think). Why any fool (and there are many apparently) would seriously attribute such irrational predictive powers to an ancient people is a little disturbing, but anyway, relieved that I may have more than 30 months left of life, and relaxed and rested, and hopefully without missing too many value opportunities, my thoughts turn once again to the upcoming football season. Not that it is really upcoming to be accurate, since the Scottish season is already underway with the Challenge Cup, and my spreadsheet updating begins again. By way of introduction, here was a comment I read on another blog:

"In football the best trading strategy is to have the current score in your favour. You'll never get a better tip than that"
Is this really true? It is certainly the philosophy for football betting that I have mostly followed myself over the past four years but it has not proven to be a profitable one. In fact, as I will explain later, I think that because so many people think this way, the opposite is true and the best strategy is in fact to oppose the current score.

When trading football in-play, there are two main approaches - you either bet hoping for goals, or you bet hoping for no goals. My natural psychological preference is to be on the current winning position and hope it stays that way, but I am not convinced this is the best approach. It certainly is directly opposed to my approach to other sports where I more often find value by opposing the current leader, but in the end it all comes down to which approach is most likely to offer value. 

I have learned (the hard way) that in football, having the current score in your favour is less likely to offer value than betting that the score will change. Why should this be? Most likely it is because more people are like me and want to be in a winning position (everybody loves a winner at any price) and thus the price for this is driven lower than it should be, and as a result, any value is therefore found on the side of change. I have to admit that I find it most unnatural to make a bet knowing that the price will in all likelihood drift away from me, but this is the position that I believe is most likely to offer value.

The Under / Over 2.5 goals market is a perfect example. When a game started, for years I, and my fellow 'feelgood' gamblers, would back the Under, looking to lay off 'at some point', simply because it was comforting to me to see the price immediately move in my favour. Supporting the price on the other side were the 'contrarian' gamblers. But where is the 'at some point'? The only point where it is logical to lay the bet off is if the price at that time reflects value, and the football markets are so efficient that the only time when value might exist is immediately after a goal has been scored, before the prices have settled down again, but of course for this bet, waiting for a goal is rather too late.

One approach is to lay the bet off after a certain number of minutes, or a certain number of ticks, but as anyone who has tried this over a number of games will tell you, it simply doesn't work. Indeed, there is no reason why it should because for it to work, either (or both) the back or the lay price needs to be value, and the market is too efficient to offer this. The typical scenario is that you win a few bets in a row, then you have two losers close together which wipe out your profits, erase any confidence and you give up. My personal experience is that if I layed off at 10 minutes, the game would usually end as an Under, or I would jump back in again after x minutes convinced that the game was certain to end 0-0, only to see three goals in quick succession! Then if I didn't lay the bet off, there would always be a goal within a minute of my starting to think about laying the bet off. Or so it seemed.

So having said all that, I am not at all convinced that in-play trading in football offers much value at all. The market is simply too efficient, and the only time when value might exist is immediately after a goal before the prices have settled down again.

Or there's always the old fashioned pre-game punt, and let it run method. This will be my primary focus this football season, and more on that later.

1 comment:

LayThatDraw said...

hi,

think i agree with you on the method of trading football, as far as i always prefer to be opposing the current score, for example. this way if nothing happens i am able to impose a stop loss so i will always know what my potential losses will be.