Friday, 27 May 2011

Hurrah For Greed

One of my finer moments this morning when a sizeable lay of the Chicago Bulls at 1.02 was snapped up by someone eager to buy some money. The price dropped even lower, before the Miami Heat staged a recovery to win from some 13 points down and for once I rode the wave all the way. Well, most of the way. I made sure that I wouldn't end up with nothing once the price started moving out. It seems that when I'm lopsided on my outcomes, the luck never goes my way. If I need a three-pointer for a big win, the shot rims out. If I need a three-pointer to stay out, the shot sails through "from downtown". Or it's a two "and one" that spoils the day, but not today. Unfortunately the PC now returns after a two month hiatus, which will get June off to a bad start seeing as the next Wednesday falls on the 1st.

Love 'em or hate 'em, we probably all have an opinion on 1.01 (or close) backers. When a 1.01 is turned over, or 'gubbed' to use the forum phrase, threads spring up pointing out how much was matched, and usually from people not involved in the carnage / ecstasy.

While my lay was at 1.02 rather than 1.01, Scott Ferguson's post titled "the money buyers get burned again hurrah, hurrah...." on the topic of laying / backing at low prices drew an interesting comment. A George commented that

I have been following the blog for about 1 year now and I have seen a few posts about 1.01-backers getting burned or having to go through a gut-wrenching reversal before getting their cent. I find all those examples interesting and have two questions. First, why are you so negative on these backers e.g. "hurrah, hurrah"? Second, by only showing the spectacular losses and never pointing out the frequent, boring wins you are not giving a fair (RoC) treatment of the strategy? I believe that it can be very profitable when paying attention to the right factors (like investment grade credit investing) and a good psychological fit for a certain type of people. Thanks.
As Scott points out in his reply, backing at 1.01 leaves little room for manouvre. The reward of laying is huge, while the risk is small, but as with any price, some 1.01s are value backs, and others are value lays. In some quieter markets, you can sometimes find 1.01 available on a completed event - now that is buying money, but in sports like NFL and basketball, the 1.01 seems to get matched too soon quite often. Scott's reply in full:
That's fair comment. The 'hurrah, hurrah' part actually related to a song I'd been listening to this morning, an old song by The Jam, so it follows the tune. But yes I do cheer when 1.01s get beaten.

Surely 'frequent, boring wins' can be achieved with far less risk by trading one tick briefly at a much higher price? Just one going wrong in 101 markets and all you can do is break square at best. Betting circles over the years have been littered with leviathan punters who took the short odds for huge sums with win after win after win.... then it all went pear-shaped and they ended up selling used cars or the Big Issue.

In the States, they call them Bridge Jumpers (where they'll end up if it loses). In Australia, we call them bank teller bets - when a horse called Ajax in the 1930s would run, it was so good it would start very long odds-on. Bank tellers would take all the cash out of their drawer on a Friday night, take it to the racetrack, take home the 'interest' and put the money back in the drawer on Monday morning. When Ajax got beaten one day at 1-40, the brown stuff hit the fan.

No doubt there is someone who can make it work but the cost of just one mistake is just far too high. At least if you were backing 1.02 shots on Betfair, there'd be an upside you could cash in on (lay 1.01) without sweating a result. Backing 1.01 leaves nothing to chance.

I'm an 'educate the masses' guy. There will always be an exception to my advice but I'm trying to stop people falling into traps (eg thinking 1.01 always equals sure thing) and using their brains to find a strategy which suits them.
When backing at 1.01 in a binary event, you do have the possibility of backing the other side at 120 or more, but in my experience, it's not easy to get matched at those prices unless you really are giving away value.

Markets are driven by two things - greed (lay low) and fear (back high).


teamprofit said...

I have no problem backing 1.01 if I find value in it. Let´s say there is 3 minutes to FT in a football game, 1-0 and someone wants to green up on the U4.5 market, leaving 1.01 on the table. Of course I take it!

Sometimes you are also in a position of exiting at 1.02. If it goes against you less than half of the time, you are a long time winner backing 1.01.

The trick is to know when there is value in 1.01/1.02.

Luckily there are both layers and backers...


Pete said...
This comment has been removed by the author.
Omega said...

"Surely 'frequent, boring wins' can be achieved with far less risk by trading one tick briefly at a much higher price?"

My Theory behind why people prefer to "Buy Money" at 1.01 compared to this is that backing at 1.01 is a bet, compared to the trade that a back at 2.1 and lay at 2.08 would be, and that it doesn't give the same thrill for many. (despite that that 1 tick trade would earn you twice as much...)