Sunday, 9 January 2011

Always v Often

Another comment from Mouldhouse:

However your comments about the source of odds and their predictive abilities are wholly inaccurate I am afraid.

Do you realise that the vast majority of markets on the exchange are shaped by external forces - cricket by the Asian/Indian market, soccer by the Asian books, american sports by pinnacle and Vegas lines?

And if liquid markets can often accurately offer probabilities of an event (they can't!), what's the point behind trying to beat them with football ratings? Why is it possible to lay the odds on teams year in, year out, blindly, and make a profit?

You can't hold all those views simultaneously, they contradict each other on a number of levels.
Prices on the exchanges reflect the opinion of members of the exchange. The price is where supply equals demand. External forces sounds very dramatic, but in any competitive business, all things being equal, prices will be similar from one source to another. If you set a price that is out of line, then it will either be completely ignored or snapped up. However, I qualified my comment with "...the BEST prices are from individuals" because if individuals like you and I want our bets to be matched, we need to at least match the odds available elsewhere.

As for the prices on liquid markets reflecting the true probability of an outcome - I am not saying that the markets 'always' accurately reflect the probabilities of events. I was addressing the comment about oddsmakers odds reflecting probability, which they don't, and while the prices on the football markets are for the most part extremely accurate, as Football Elite have shown, it is possible to win long-term if you are selective. The implied probabilities are often correct though, or the layers would soon be out of business, but the trick is to identify those games where the prices are 'wrong'. Football Elite do not have Recommended Bets in more than a small number of games each week.

The goal of the ratings? - to identify those games that offer value. The aim is not to try and win in every market. The market may often be right, but it isn't always right.

As for blindly laying odds-on teams year in, year out, I'm sure that would not be a profitable strategy, but selectively laying odds-on teams can be as I have written about in the past, although it would be surprising if the market didn't adjust at some point.

Having said all that, it is far easier to find value in back-and-forth in-running events which is why football and my ratings are just a small part of my betting arsenal.

Which leads me into today's football round up, and starting with the worst, the Serie A home picks were nothing short of awful. AC Milan gave up four goals at home in a draw, and Parma and Lazio both lost 1-2.

In Spain, Espanyol at least won comfortably enough, but Racing Santander gave up a 90' equaliser.

Football Elite had Santander and Parma as their Recommended Bets, but value doesn't always mean a winner and their poor run of late continues.

The silver lining today was the performance of the draw selections, which saved the day. The nap strong draw Chievo Verona v Palermo (3.3) finished 0-0 as did the weaker picks of Osasuna v Getafe (3.4) and Cesena v Genoa (3.25).

And of course, Manchester United came in at 1.72.

The first NFL Wildcard game didn't go to plan today though with the Kansas City Chiefs making turnover after turnover and costing me most of Saturday's profits in the process. And the worst of it is that the loss was on BETDAQ so it doesn't even help the PC this week! Hoping for better from the Packers and Eagles coming up shortly.


mouldhouse said...

"Prices on the exchanges reflect the opinion of members of the exchange. The price is where supply equals demand."

Nope, that's not correct. Watch the asian bookmakers prices, and watch when they change, and watch what happens to betfair a couple of seconds after. The pricesetters from there are beating the drum, and the betfair market just follows accordingly.

There's one supplier with a very fast bot that moves to the asian lines or into that spread within a couple of seconds.

In the recent premiership games the vast majority of teams traded in a very large range of prices. E.g for decent money liverpool traded 2.3 - 1.87 away at blackburn.

Did the opinion of the members on the exchange really change that much? At what point was this extremely liquid market "providing an accurate assessment of probabilites"? The same can be said of almost all the games the other night (last wednesday).

I know its nice to think that betfair is a massive market, and follow the EMH, etc, but its just not the case I'm afraid. Hundreds of millions is being bet in asia where the prices come from, which filter down to betfair, where a million or two is matched on a game pre-off.

I take positions in >50% of UK football matches and win money over the season. Not at the same ROI as F-E or even similar, but the absolute profit of course vastly exceeds his. How is it possible to make 5%-10% ROI over many seasons if the markets are even loosely efficient? Betting in over half the games is selective to a degree, but nothing like the degree which you are suggesting.

I'm afraid the sports markets are nowhere near sophisticated enough to be considered efficient as yet. The very successful stock investors (e.g. Buffett) show that the stock market as a whole isn't efficient as yet, although the EMH is a lot easier to "accept" there - sports markets simply have no chance, as yet.

Simon Davis said...

Your blog is the first I read of the day - please keep up the good work. I am inspired by your ELO ratings and would like to set up some of my own for an A v B (no draw) sport. Could you point me in the direction of some guidance for getting some ratings set up from scratch? I am complete novice, am not a maths genius but can hold my own.

Best Regards,