Wednesday, 29 June 2011

Home Sweet Home

Pete (Omegabetting.co.uk) said...:

I must admit to not having visited the states at all, however I believe the comment holds true despite Mexico's occasional use of the stadium. I suppose it depends on your opinion of what causes home advantage, which is a very interesting topic in itself.
Indeed it is, although when it comes to football, I tend to think that the home advantage comes from playing in front of a partisan crowd rather than from a sense of 'feeling at home'.

As international games are relatively infrequent, the argument that players "sleep in their own beds" before home games doesn't apply. The USA players were as unfamiliar with the Rose Bowl as the Mexico players. Not a single player plays there on a regular basis. Travel was similarly a non-issue - both teams had played previous games around the country. The USA in Detroit, Tampa, Kansas City, Washington and Houston (none even close to Pasadena), while Mexico had played in Arlington, Charlotte, Chicago, East Rutherford and Houston (again, none even close to Pasadena).

In the case of the USA v Mexico, technically the game was a home game for the USA, but as anyone watching the game will confirm, far more fans were there supporting Mexico than were for the US.

Until Saturday night, the United States had not lost to Mexico on American soil when at full strength in twelve matches dating back to the 2000, but as ESPN reported:
Still, the American players know that soccer draws many fans to Mexico's team, as was evident at this weekend's game. Hispanics are now the nation's second-largest group under the latest census.

"You come into your country and you know they are going to have more fans than you are," U.S. defender Jonathan Bornstein said in remarks on the confederation website, "but nonetheless, we're going to have enough fans out there supporting us. We're on our home turf, and so we need to be considered the home team even though we might not have all the fans."
I would suggest that the technical home advantage for the USA was neglible, if not non-existent. The Mexican diaspora in the USA is at least 9.9 million, in Los Angeles County about 2 million, and in Los Angeles itself, about 1 million and Mexicans love their football unlike most Los Angelenos at the weekend, who would have been more interested in the intra-league Dodgers v Angels rivalry.

The precise nature of what home advantage is in sports is an interesting topic. Obviously in some sports, cricket springs to mind, playing at home is advantage because the home side prepares the pitch and is aware of the ground's nuances. Football fields, especially at lower levels, can feature slopes or are narrowed or widened to suit the home team's style of play for example, and certain teams gain a home advantage from being used to playing in certain weather conditions or at a certain altitude. Bolivia were temporarily banned from playing home games at the Estadio Hernando Siles stadium, which is at an altitude of 3,637 - above the 2,500 metre limit that FIFA briefly introduced.

Mano has this to say:
Pete, I agree with Cassini. Your comment doesn't hold true. It isn't about "occasional use". It's about the fact that most of the crowd were supporting Mexico. This was easy to predict. It was the first game between the US and Mexico to be held in Southern California in 11 years. In the 2000 census, 32.4% of California was reported as of Hispanic or Latino origin (Pasadena, where the game was held, was a shade higher, at 33.4%). Immigration from Mexico has risen in the past 10 years -- and bear in mind that undocumented workers may not be fully accounted for in census figures.

I agree that different things make up "home advantage", but surely crowd support is a part. When a US team walks out to a 93,000 crowd where the majority is supporting the opposition -- some reports called it "a sea of green" -- in a stadium in a city that has a large Hispanic and Mexican population, you have to feel that any advantage they might have had due to the fact Pasadena is on one side of the border is diminished. Perhaps not diminished as much as if the game had been played in Mexico City, but diminished some.
My only criticism of that assessment is that the word 'may' can be safely replaced with 'are'! The USA had no home advantage, but the more people believing they did, the better for those looking a little deeper than simply scratching the surface.

Olaf posted an interesting link on the topic of home advantage here.

Winners Welcome - Close The Door After You


I've cautioned many times in this blog, usually on the subject of giving up a job and going pro, that in the world of betting exchanges, the rules can change fast.

Doubtless, every Betfair user and reader of this blog, is aware of the latest news concerning the Premium Charge.

From 18th July 2011 Betfair will be making some changes to the Premium Charge. The current Premium Charge mechanism will remain in place but higher rates may now apply to a small number of customers (less than 0.1% of annual active customers).

Full details of the changes can now be found on the Betfair Charges page under the About Us section of the website. However, the changes can be summarised as follows:

• Customers will only be subject to Premium Charges at higher rates if they satisfy all of the following conditions:

o Lifetime net profits (amounts won less the amounts lost, on all exchange markets, less all commission paid and Premium Charges debited) exceed £250,000

o Lifetime commission generated less than 40% of lifetime gross profits

o Bet in more than 1,000 markets
Rumours have abounded for some time about this, and I guess there's no smoke without fire.

The third condition is just silly - 1,000 markets is nothing for anyone who is close to £250,000. My total is approaching 15,000 markets, in a little over 7 years on here.

The second condition is similarly not even close - my lifetime commission percentage is 6.985%, which is some way under the required 40% needed to avoid this new fee. This puts me in the 50% charge band. Anything under 5% is 60%, anything over 10% is 40%, and in between is 50%.

Many people seem to be taking comfort in the fact that the bar is currently set at £250,000, and while that may seem a lot to new customers, for anyone full-time or even successful as a part-timer, that figure isn't as big as it sounds. Many join Betfair for fun, and happily have fun losing slowly, but there are a lot of people for whom making decent money is an achievable dream. Clearly Betfair haven't introduced this latest twist to catch a handful of players, and while they say it is 0.1% of active customers, given how many customers they have, that's a lot of successful people. It's also likely that this is a bar that will come down at some point in the future, to £100,000 or even £50,000. Why not? If they find they can get away with it.

Since its introduction in September 2008, I have paid nearly £23k in Premium Charges. I'm not happy about it of course, but Betfair is a de facto monopoly, whatever they may argue, and while occasionally BETDAQ or WBX has a spark of life, Betfair is still, for now at least, by far the market leader. Yes, I could always walk away from it, but while 80% isn't as good as 95%, it's still better than the meagre percent available elsewhere. It also had a positive impact in that I expanded my horizons a little. Since the inception of the PC, my average net monthly profits are actually up 86%.

There was a comment on the forum to the effect that anyone paying 60% must be cheating, and while some of those might be horse-racing insiders, someone put it well when they replied that
people who are very efficient and specialise and lose on very few markets will be on 60% too
Perhaps some of us are too efficient for our own good. One of the problems as I see it is that by moving the goal posts after seven plus years on here, the accumulated numbers are now counting against me. Had these rules been in place from day one, the need to have lots of losers to accompany your winners would have been clear, but as a trader specialising in certain sports, it's not unusual to go several days without taking a loss. But Betfair don't allow you to start again. To increase that 6.985% to over 10% would be easy if you are just starting out, but it'll take some doing after seven years of efficiency and specialisation.

Betfair might say they welcome winners, but they are making it mighty hard to believe that. For everyone affected, they will need to decide what to do. What is certain is that many people will whine about it, including many whom it will never affect, but how many take action and walk away, either to another site, or to another job, remains to be seen. For people like myself, it comes down to how much my time is worth. 50% of something is still more than 100% of nothing, and I actually enjoy the mental challenge of trading. It's a challenging hobby rather than a stressful job, and it's strange how a four figure win that I would have been ecstatic about six years ago is now just a number on a spreadsheet. Losses are annoying, (the avoidable ones especially), but not the end of the world. In fact now, a loss is viewed as something of a bonus!

My hours trading aren't exclusive either - I often work my real job at the same time, or attend to other business, as many sports don't need constant attention, and it's often (not always) better to distract myself anyway.

The Racing Post has an article on this subject, and on the Betfair Forum, the recent thread I highlighted a while back from Dr J has been updated with his views:
It's also worth remembering that conditions could change very easily and very quickly. What if Betfair raise their commission levels, or change the threshold at which the PC applies?

I knew I shouldn't have tempted fate like that...

As I've mentioned above, I've never been asked to pay a penny in PC. However, the new rules rules means that if I'm lucky enough to hit the £250k mark (at current rates this would happen in one year's time), I'll be charged at 40%.

This isn't a whinge. I don't expect anyone to feel sorry for a gambler who's made a quarter mill. However, it does exemplify why Betfair are wrong to pursue this policy, and it demonstrates how they'll forfeit both business and liquidity.

As the moment, for every £1 I make in profit, I generate 27p in commission for Befair. From next year, Betfair will demand I generate 40p and dip into my account to make up the shortfall. As I result, I'll either switch to an alternative exchange (I don't know how practical that is in terms of liquidity) or quit laying altogether. Either way, Betfair will lose both my comission and my contribution to seeding and sustaining the racing markets.

What's worse for Betfair, because I know what's coming, I've made an immediate decision to slow down my betting and focus more on other things in life. The radically higher charges are too big a deterrent to me. I'll be having more non-punting days and will be happy to creep up the £250k threshold at a much slower rate. This is bad for Betfair's business too.

Some people refer to the PC as a tax, but I would be much more sympathetic to the charge if it was being directed towards building new schools and hospitals. The fact that it's going to the shareholders and board members of an off-shore company only reinforces my decision.

Presumably, other punters will, like me, see their PC charges rise from 0% to 40% simply because an arbitrary threshold has been reached. I'd be amazed if anyone in this situation continues to bet in the same way. It would be like laying at 9-2 where you previously laying at 7-2 (sorry if the maths is imperfect there, but the principle is what's important). Betfair has enhanced my life considerably over the last decade and I feel saddened that it's taking a decision that effectively closes my account.

Sunday, 26 June 2011

Gold Cup


Omega Betting had a brief comment on the CONCACAF Gold Cup final last night between the USA and Mexico (as usual):

The Draw odds [3.25] reflect that this is a final and are rather skinny, however their really isn’t much between these teams when home advantage is factored in and USA are a value pick at 3.3, with a minimum price of 3.25.
I'm guessing Omega hasn't spent much time in Southern California if he thinks the US have home advantage in a match there versus Mexico! My play on this was a lay of Mexico pre-game at 2.32. The price then dropped like a stone, going odds-on within about five minutes of play which seemed rather bizarre to me. I don't often trade the Match Odds market, so maybe this isn't unusual, but it seemed to me that while Mexico certainly opened strongly, to go odds-on from 2.32 based on the first five minutes or so of a game was a bit of an overreaction. I doubled down at 2.08, and the USA promptly scored, at which point I greened up and called it a night.

Sports Trading Life had an interesting write up on the subject of Slicer's Secret Bet. I must confess to having downloaded (for free, thanks to the link in STL's post) the method that a certain user was selling to a limited (200) number of users for just £99. As I suspected, it isn't risk-free at all. You lay the half-time 0-0 score, and back the full-time 0-0, and then lay an 'unlikely' correct score at half-time if there has been no goal. The problem of course, is that 'unlikely' scores do come along, and at correspondingly high prices, but I must admit the idea does have some merit on first sight, even if it's not the promised Holy Grail. I might look into how some of these prices move, but I won't be giving up my day job any time soon. I did actually put in a lay of the HT 0-0 in the USA v Mexico game at 2.52, but it won rather quickly, so the half-time adjustment will have to be reviewed another time. The 0-0 was around 9.4 pre-game.

Thursday, 23 June 2011

Tipping Vehicle


A few comments on my post yesterday - with Mr. Mark Iverson's probably the most disturbing! Curly mentioned that it didn't seem that long ago that I was at the 100,000 mark, which of course made me look back, and in fact it was March 2010 when I reached that milestone. So it took two years to reach 100,000 and 15 months for another 150,000. Under / Over on the 500,000 mark?

Andy took umbrage with me, although I did at least provoke to post for the first time in almost two months. He wrote:

I have been spurred on to add to my blog by a few factors. The biggest one is by Cassini at Green all Over and his extended post this morning celebrating his 250,000 hit. It is a big achievement to keep blogging to the extent that he has over the past three years but I take umbrage to his sweeping statement that bloggers who have not lasted the course are losing money. He may have the time to devote many hours to blogging but some of us make lifestyle changes that make it very difficult to continue.
I didn't actually mean the blogs with infrequent posts, but rather those that start and then suddenly disappear completely. Perhaps the author has dropped dead, but more likely they took some losses, and lost any enthusiasm for blooging about betting and losing.

There was also a question from G -
When you're identifying an in-running value trade/bet in a basketball match do you have a spreadsheet with what the price should be for a team at a certain time during a game?

E.g. Dallas are up by 5, 7 mins gone in the 3rd quarter (would you have on your 'sheet a price for this type of scenario and if a bigger price is available then you would play?) - is this how it's done?

Or have you honed your skills to such an extent that you can determine a value bet/trade almost auto-magically now?
At the risk of sounding arrogant, it really is now more of the latter. Usually, my strategy relies on taking advantage of people's greed by laying low, and then greening up when the realisation sets in that they have backed too low and the price rebounds.

There are too many variables in basketball for a spreadsheet to be of any use. The brain has to constantly factor in the score, time remaining, momentum, foul situation, possible injuries to 'star' players, which players are due a rest, which players have had rests, time-outs remaining, mood of the crowd to name but a few and there is nothing like watching games to learn what a price 'should' be. Spreadsheets are invaluable pre-game, but once a game is under-way, not so much. I'm sure many people have in-play spreadsheets for most of the football markets - enter the probability of a goal and adjust for time remaining, but I don't.

Back to basketball, and the example posed above, "Dallas are up by 5, 7 mins gone in the 3rd quarter". There is no correct price. Is Dirk Nowitzki in foul trouble? Has Jason Kidd just been carried off the court? Are Dallas playing Miami or the Cleveland Cavaliers? Did Dallas (or their opponents) play a triple-overtime game last night? Have Dallas let a 20 point lead slip to the current 5, or were they down by 20 at half-time? And then there are those occasional 'Blink' moments when my subconscious 'sees' that a price is wrong without necessarily understanding why. Your subconscious registers things that the conscious doesn't. I suspect it reads body language pretty well, but it's hard to prove that. As a recent example, to me, Miami had a defeated look about them in Game 6 of the NBA Finals and it just 'seemed' that it was Dallas's day.

Little football again today, but Ian Erskine made a comment yesterday
To be clear all my research is done pre-game and I do not watch games I trade on TV or follow them online as my view is you make panic decisions on what you are watching.
I'm of a similar mind on this. Mexico (v Honduras) looked too short last night at 1.37 and I layed £300. Had I been watching the game, I know I would have been tempted to get out after 45 minutes or possibly even earlier, but it was nice to wake up to a decent win. While I know the result was 0-0, I am blissfully unaware of how many shots hit woodwork, or penalties were saved. Tick-nicking doesn't work for me in football. I wonder how many Lay-the-Draw or Lay-the-0-0 got caught out on this game?

Finally, a gentle poke at one of the new blogs I mentioned yesterday - All Out To Win. In the "About me" section Roy writes:
Hello readers, it's been a few weeks since I was last here. As some readers know it was a turbulent time ending with me wiping out my entire bank of 10k. Since then I have taken a break from betting alltogether, I tend not to bet much anyway during that period of the season. Overall though I feel it has done me good. What struck and suprised me somewhat was the amount of positive response I have had from readers, as at one stage I was unsure wether anyone was reading! Quite a few people continued to follow a number of horses I bet on with some pleasing results, a few double figure odds landed. This has inspired me to kick start the blog again as I have a new bank of 5k along with a different staking system. The blog was not orginally intended as a tipping vehicle, but a number of people have asked for just that.
My question really is this - why would anyone with half a brain want to follow the tips of someone who recently "wiped out their entire bank of £10k"? Credit to Roy for his honesty, and maybe it was all down to the old staking system, but I suspect it's more that Roy doesn't have an edge. After starting on Sunday with a bank of 100 points, Roy's already burned through 18 points (£900) and maybe it's just me, but this seems very much like throwing your money away. Cue a 25/1 winner today, but even if one did come in, this looks like a quick way to the poor-house. The continued interest in horse-racing for serious betting continues to amaze me. If you are on the inside, then yes, I get it, but your average man in the street isn't, and I don't get it.

Wednesday, 22 June 2011

250,000


With a daily average of 341 (give or take), it is 1.01 that at some point in time today, this blog will receive it's 250,000th hit. That's quite a lot. The inaugural post was three years and three months ago, the opening day of Spring, 2008.

While these stats may not be totally accurate (they were introduced after I'd started by Blogger at the 110k hit mark) the number one post in terms of hits is the one titled Free Betting Systems which suggests that many a) people are looking for a quick fix and b) they don't want to pay for it. Incidentally, before I am deluged with e-mail requests for them, the Free Betting Systems are no longer available - I lost them when I had a technical failure, but they were all rubbish anyway and they are not missed.

The top referral blog by some distance is Sport Is Made For Betting followed by the blogs of Cran The Trader and Mark Iverson. All three have been around for some time, with Marky Sparky going back to 2006, Scott 2008 and Cran 2009. The blog world changes fast, and the longevity of all of us is no mean feat.

I get frequent requests for a link exchange (two just yesterday) and while I usually accommodate these requests, many fall off the blog roll after hitting three months without update. I suspect that many blogs are started by people younger than myself (OK, so there are not too many people left who are older than me), and they are brimming with youthful enthusiasm as they discover betting exchanges and the promise of untold riches. It must come as something of a shock to find out that it's not that easy, and recording losses on a blog or writing about a losing hobby, isn't easy.

While I am disciplined enough on the betting part of my spreadsheet to enter the numbers each day, (I almost enjoy losses these days because of the Premium Charge) there is certainly not the same enthusiasm for updating spreadsheet pages with disappointing data whether it be weight, financial or running times.

The top Internet search words that land a surfer on my blog, other than "Green All Over" or similar, is "Adam Heathcote fake". "Psychoff" also gets a place in the top 10. Again, it appears there are a lot of gullible people out there all looking for easy money. I know Adam Heathcote had his disciples, but once he cashed in on his 'advisory service', he rapidly fell out of favour. One subscriber to his 'service' wrote on 16 Aug at 23:34:

"Adam Heathcote is totally legitimate and a bloody nice guy. Reasons for setting up the service is, why not? It's nice to run your own business and it increases self worth, and it's a great price for what he is offering in fairness."
Same guy, (20 hours later) 17 Aug 19:27:
"Can I post a full and frank apology. Got this all very wrong. The service being provided is truly truly, utterly horrific."
I really hate being right all the time. It's a curse.

Having opened my Betfair account in March 2004, it was almost four years later that I started blogging. I can't remember what made me decide to start one, but I've always enjoyed writing, and perhaps after four years and several wrong turns, I felt I had something to offer. John the Gambler's blog was one of the first I read, but that spiralled into a sad tale of woe not long after. John O'Dwyer continues the trend. "Lost £1.23 this week. It's no good - I just haven't got the bank to make it work. I'm still up overall, If I had £500 I could start making money tomorrow. Common sense says I should get a job, but I have no common sense etc..." Same every post.

But back to me. Was it coincidental that the previous January (2008) was, at that time, my best ever month of trading? I made no reference to it in my opening post, repeated here:
What is "Green All Over?"

The title is a reference to 'Greening-up', a term used by Betfair users to describe the ideal scenario whereby every possible outcome on an event will result in a profit. (The 'what-if' figure shows on the screen in green.)

I have been active on Betfair for almost four years now, and have had some moderate success. Some good wins, some small wins, some small losses and some frightening losses, but overall I have made a steady profit.

I have recently starting reading a number of blogs themed on Betfair, hoping to pick up some ideas, but sadly most seem to be a diatribe of eating and drinking habits, interspersed with less than informative betting related comments like "Lost £2.67 on the cricket today".

So, as arrogant as ever, I am hoping to fill this gap with a blog that goes a little deeper into the reasons why I made or lost money, my thoughts and emotions as the win / loss was happening, and perhaps filled with other observations from the world of betting.

If horse-racing is your thing, then this blog is probably not for you. Racing is just not for me. Rather like the stock-exchange, there are far too many insiders with access to a lot more information than I have and I find that the world of sports offers a more even playing field.

My investing style, and I prefer the term 'investing' over 'betting', is to trade fast moving sports in-running, looking for value. The markets are driven by two factors, fear and greed, and in the heat of battle, these factors drive people to make bad decisions and take or offer poor value bets. This is what I look for. I don't always win, but like I explained to my old Mum, if I can get 2-1 on a coin toss, I'll lose some but win a lot more. Sadly I don't often find 2-1 on evens chances, but in Betfair terms if I can get 2.1 on a 2.0 chance, I'm happy.
In many ways, not much has changed. My old Mum is even older. I'm still as arrogant as ever, taking pride in being called the Marmite Blogger!I still don't like horse-racing and P&L blogs continue to leave me cold, but has blogging helped my bottom line? It may have. I certainly don't bet with the thought "...but would my readers approve of this?" but it has undoubtedly led me to think about betting a little differently, and I have probably read more betting and trading books than otherwise might have been the case.

My first 4 years on Betfair yielded about 33% of my total profits, with the past 3 1/4 years generating the remainder, in spite of the Premium Charge that was introduced in September 2008. That's a significant improvement although 2004 and 2005 were my apprentice years, barely ending 2005 in four figures.

There have also been a few comments that have got me thinking, and my Elo based spreadsheet has probably evolved far more, or far sooner, than it might have done with no blog.

The most amusing comment in 250,000 hits was probably one in support of Adam - A "Stephen Hughes" said...
sorry, but you are clearly a miserable old man. Get a life pal, having read snippets of your blog you demonstrate extreme arrogance. Who the hell do you think you are? Take a look at yourself and learn from people like Adam. Your the type of bloke that would marry a Thai bride, sport a little beard and wear crocs. Write about something interesting ffs. Youre an idiot.
I cried for days after reading that, married a Californian girl, shaved off my goatee and bought some alligs.

Tuesday, 21 June 2011

Lower Risk <> Greater Value


There's currently a thread on the Betfair forum on laying the 0-0 score, and the opening line is this gem:

Laying 0-0 IMO is profitable in the long term if you have the patience to wait until the match is in-play and the odds have dropped to give yourself better value
Amusingly, the author adds 'in-depth research' to the thread title, presumably an attempt to add a little gravitas to a silly idea, which just made the thread all the sillier. Why exactly should the price after x minutes be better value than the price at the start? Yes, the liability is lower, but similarly there is also less time remaining, and there is no evidence that more value is available in-play than at kick-off. That people think this way is encouraging though, but it won't work. This kind of a strategy, if you can even call it that, is doomed to fail. You might string a nice run of winners together, but that scoreline will come along soon enough. There's a reason why the prices on these markets drop quite quickly once the game is in-play, and it's not to offer layers better value.

I've seen similar threads on the 3-3 scoreline, but that scoreline doesn't work either. They may be few and far between, but they do happen. 3-3 is a result that reminds me of a story from the Racing Post many years ago. In a similar, but lower profile, to the coup achieved by the Hole-In-One-Gang someone noticed that the 3-3 draw price was value, and would back doubles or trebles every Saturday. I honestly don't recall the precise details, but I think I am right in saying that the generally available 100-1 on that scoreline became 80-1 pretty soon. Anyway, back to laying the 0-0, and like the 'lay-the-draw' system, it's an old strategy that, even if it did work at one time, has long since been found out, and if anything, I would expect there to be more value in on the back side - if you'll pardon the expression.

Sunday, 19 June 2011

The Bet Collectors


The Economist has an article on Internet Gambling this week. More suited for Scott Ferguson's blog perhaps, but it's worth a read. The bet collectors

GAMBLING, like pornography, is perfectly suited to the internet. Yet while the sex industry has largely evaded regulation, most countries have tried to control online betting to some degree. America in effect banned it, but Britain sought to become a hub for it; a new, liberal licensing regime came into force in 2007. The tactic hasn’t worked. Online betting has proliferated: there are now more than 2,000 sites worldwide. But even among those that target British consumers, most have based themselves abroad. The would-be internet Vegas of Europe is more like an abandoned seaside town.

Now the British gambling industry as a whole is being overhauled. The sale of the Tote, the state-run bookmaker, agreed earlier this month, was one part of that effort. In the next few months the government plans to outline new regulations for online betting, which currently accounts for a fifth of the £11 billion industry, though that share is rising.

The rhetoric that accompanies the announcement will doubtless be about protecting vulnerable citizens and preventing crime. But another big concern is the tax take—or rather the lack of it. The Treasury’s gambling revenues have stagnated since 2007, even as the industry has grown. That isn’t surprising: it is perfectly legal for websites to woo customers in Britain without subjecting themselves to the 15% gaming duty resident companies face (in Gibraltar, one alternative location, the rate is 1%).

The gambling firms’ financial manoeuvres are a problem for some sports, too, particularly horse racing, which since 1961 has benefited from a levy paid by bookmakers to fund events and training. Few fixtures have ever been as popular with punters (or attracted such a fine array of hats) as Royal Ascot, which was held this week; even so, the volume of bets on less glitzy races has declined. The rise of online operators, only a handful of which pay the levy, has compounded racing’s travails.

But how to make online gambling pay? Governments have long staked a special claim to “sin” taxes. That still works for alcohol and cigarettes, but not when the sin is virtual. Gambling levies have in the past been based on the physical premises in which betting takes place: the internet renders that approach unworkable. Some countries, such as Austria and Sweden, have defended their revenues by squeezing out offshore and foreign outfits, but that sort of protectionism is being challenged. For example, in 2010 the European Court of Justice found that the Netherlands had violated free-trade rules by refusing to consider an application for a licence from Betfair, a gaming company based in London. The European Commission is now looking into gambling regulation across the union.

The betting companies naturally argue that the government’s best hope of bringing gambling firms and revenues back to Britain is to slash the gaming duties. The relatively high rates explain why Britain’s two biggest bookmakers, Ladbrokes and William Hill, have moved their online operations overseas. Even the Tote based its online services offshore just before its sale. In the current fiscal climate, however, the chances of such a tax cut seem slim.

It is hard to see how the government can overcome these odds. And with the advent of betting on mobile phones, even more of the market is moving beyond the taxman’s reach. The even bigger worry is that where the sinful have led, others are following: industries such as financial services and retail are going online, and offshore, too.

Moneyball Comes To Football


From the Financial Times this weekend comes an interesting piece by Simon Kuper on the increase in the use of statistics in football. A Football Revolution.

I recently visited Manchester City’s tranquil training ground in the village of Carrington. It was a glorious sunny morning, and outside the gates hired hands were washing footballers’ SUVs and sports cars. The defender Kolo Touré coasted past in a giant black contraption straight out of The Godfather. Carrington is used to cars like that: Manchester United train in the village too.

“Abu Dhabi Travellers Welcome”, said the message on the façade of City’s sky-blue training centre. Abu Dhabi’s ruling family owns Manchester City, and one thing it has done since buying the club is hire a large team of data analysts. Inside the building I found Gavin Fleig, City’s head of performance analysis, a polite sandy-haired man in a neat black City sweater. Hardly anyone outside Carrington has heard of him, and yet Fleig is a prime mover in English football’s data revolution. Largely unseen by public and media, data on players have begun driving clubs’ decisions – particularly decisions about which players to buy and sell. At many clubs, obscure statisticians in back-rooms will help shape this summer’s transfer market.

Fleig gave me the sort of professional presentation you’d expect from a “quant” in an investment bank. Lately, to his excitement, City had acquired stats on every player in the Premier League. Imagine, said Fleig, that you were thinking of signing an attacking midfielder. You wanted someone with a pass completion rate of 80 per cent, who had played a good number of games. Fleig typed the two criteria into his laptop. Portraits of the handful of men in the Premier League who met them flashed up on a screen. A couple were obvious: Arsenal’s Cesc Fàbregas and Liverpool’s Steven Gerrard. You didn’t need data to know they were good. But beside them was a more surprising face: Newcastle’s Kevin Nolan. The numbers wouldn’t immediately spur you to sign him. But they might prompt you to take a closer look.

In recent years, after many false starts, the number-crunchers at big English clubs have begun to unearth the player stats that truly matter. For instance, said Fleig, “The top four teams consistently have a higher percentage of pass completion in the final third of the pitch. Since the recruitment of Carlos Tévez, David Silva, Adam Johnson and Yaya Touré to our football team, in the last six months alone, our ability to keep the ball in the final third has grown by 7.7 per cent.”

That stat had not necessarily driven their recruitment, Fleig cautioned. Indeed, there are probably clubs that lean far more on stats than Manchester City do. I recently toured several actors in football’s data revolution, and was struck by how far it had progressed. “We’ve somewhere around 32 million data points over 12,000, 13,000 games now,” Mike Forde, Chelsea’s performance director, told me one morning in February in the empty stands of Stamford Bridge. Football is becoming clever.

Probably ever since the personal computer arrived, a few pioneers in football have tried to use data to judge players. Among the first was Arsenal’s future manager, Arsène Wenger, an economics graduate and keen mathematician. In the late 1980s, as manager of Monaco, Wenger used a computer program called Top Score, developed by a friend. A less likely pioneer was the late, great vodka-sodden Ukrainian manager Valeri Lobanovski. When I visited Kiev in 1992, Lobanovski’s pet scientist, Professor Anatoly Zelentsov, had me play the computer games that Dynamo Kiev had developed to test players. When Lobanovski said things like, “A team that commits errors in no more than 15 to 18 per cent of its actions is unbeatable,” he wasn’t guessing. Zelentsov’s team had run the numbers.

But the broader breakthrough came in 1996, after the Opta Index company began collecting “match data” from the English Premier League, explains the German author Christoph Biermann in Die Fussball-Matrix, the pioneering book on football and data. For the first time, clubs knew how many kilometres each player ran per match, and how many tackles and passes he made. Other data companies entered the market. Some football managers began to look at the stats. In August 2001 Manchester United’s manager Alex Ferguson suddenly sold his defender Jaap Stam to Lazio Roma. The move surprised everyone. Some thought Ferguson was punishing the Dutchman for a silly autobiography he had just published. In truth, although Ferguson didn’t say this publicly, the sale was prompted partly by match data. Studying the numbers, Ferguson had spotted that Stam was tackling less often than before. He presumed the defender, then 29, was declining. So he sold him.

As Ferguson later admitted, this was a mistake. Like many football men in the early days of match data, the manager had studied the wrong numbers. Stam wasn’t in decline at all: he would go on to have several excellent years in Italy. Still, the sale was a milestone in football history: a transfer driven largely by stats.

At Arsenal, Wenger embraced the new match data. He has said that the morning after a game he’s like a junkie who needs his fix: he reaches for the spreadsheets. In about 2002 he began substituting his forward Dennis Bergkamp late in matches. Bergkamp would go to Wenger to complain. “Then he’d produce the stats,” Bergkamp later recalled. “‘Look Dennis, after 70 minutes you began running less. And your speed declined.’ Wenger is a football professor.”

Few would suspect it of West Ham’s new manager “Big Sam” Allardyce, and yet his somewhat neolithic appearance also conceals a professorial mind. As a player, Allardyce spent a year with Tampa Bay, Florida, where he grew fascinated with the way American sports used science and data. In 1999 he became manager of little Bolton. Unable to afford the best players, he hired good statisticians instead. They unearthed one particular stat that enchanted Allardyce. “The average game, the ball changes hands 400 times,” recites Chelsea’s Forde, who got his start in football under Allardyce. “Big Sam” would drum it into his players. To him, it summed up the importance of switching instantly to defensive positions the moment the ball was lost.

More concretely, stats led Allardyce to a source of cheap goals: corners, throw-ins and free kicks. Fleig, another Allardyce alumnus, recalled that Bolton would score 45 to 50 per cent of their goals from such “set-pieces”, compared with a league average of about a third. Fleig said, “We would be looking at, ‘If a defender cleared the ball from a long throw, where would the ball land? Well, this is the area it most commonly lands. Right, well that’s where we’ll put our man.’”

In 2003, football’s data revolution got a new impetus from across the Atlantic. Michael Lewis published his seminal baseball book Moneyball, and some people in English football read it and sat up. Moneyball recounts how the Oakland A’s general manager Billy Beane used new stats to value baseball players. Aided by data, the little A’s briefly punched far above their weight until bigger clubs began hiring statisticians too. The Boston Red Sox, owned by John Henry, himself a “numbers guy” who had made his fortune trading commodities, won two world series using “Moneyball” methods.

This February I visited Beane at the Oakland Coliseum. We spoke in what looked like the junk room, but is in fact the dingy clubhouse where the A’s players change. Beane – soon to be portrayed by Brad Pitt in the movie Moneyball – was keen to talk about the data revolution in soccer. Like many Americans this last decade, Beane has embraced the European game with the almost unhealthy fervour of the convert. He can often be found sprawled on a dilapidated sofa in the clubhouse watching European soccer matches.

He believes that just as baseball has turned into “more of a science”, soccer will too. Beane said, “If somebody’s right 30 per cent of the time using gut feel, and you can find a way to be right 35 per cent, you create a 5 per cent arbitrage, and in sports that can make the difference between winning and losing.” If using numbers gives you an edge, then everyone will end up having to do it, Beane thinks.

Mike Forde, who had studied in Beane’s hometown of San Diego and followed American sports, made the pilgrimage to Oakland to quiz Beane about the uses of data. That proved tricky: Beane spent the first few hours of the conversation quizzing Forde about soccer. “In the last half an hour I managed to turn it around to talk about his role in baseball,” laughs Forde. He became friends with Beane, as did the Frenchman Damien Comolli, a former assistant of Wenger’s. In 2005, Comolli became director of football at Tottenham and began using data there.

Comolli’s three years at Spurs encapsulated many of the early struggles of the data revolution. British football had always been suspicious of educated people. The typical football manager was an ex-player who had left school at 16 and ruled his club like an autocrat. He relied on “gut”, not numbers. He wasn’t about to obey a spreadsheet-wielding Frenchman who had never played professionally himself. Comolli was always having to fight “nerds versus jocks” battles. With hindsight, he unearthed some excellent players for Spurs: Luka Modric, Dimitar Berbatov, Heurelho Gomes and the 17-year-old Gareth Bale. Yet eventually Comolli was forced out.

There was one question the nerds kept having to answer. Yes, the traditionalists would say, stats may well be useful in a stop-start game like baseball. The pitcher pitches, the batter hits, and that event provides oodles of clear data for nerds to crunch. But surely football is too fluid a game to measure?

Forde responds: “Well, I think it’s a really genuine question. It’s one that we ask ourselves all the time.” However, the nerds can answer it. For a start, good mathematicians can handle complex systems. At Chelsea, for instance, one of Forde’s statisticians has a past in insurance modelling. Football – a game of 22 men played on a limited field with set rules – is not of unparalleled complexity.

Second, in recent years the fluid game of basketball has found excellent uses for data. Beane says: “If it can be done there, it can be done on the soccer field.” And third, a third of all goals in football don’t come from fluid situations at all. They come from corners, free kicks, penalties and throw-ins – stop-start set-pieces that you can analyse much like a pitch in baseball.

The new nerds could point to so many obvious irrationalities in football, especially in the transfer market, so many areas where smart clubs could clean up. For instance: goalkeepers have longer careers than forwards, yet earn less and command much lower transfer fees. Clubs often sign large players but actually tend to use the smaller ones, having belatedly realised that they have overvalued size. And few clubs have asked themselves even basic questions such as: do they earn more points when certain players are on the field?

Given that you can hire perhaps 30 statisticians for the £1.5m that the average footballer in the Premier League earns each year, you’d think it might be worth paying some nerds to study these questions. Nonetheless, to some degree football’s suspicion of numbers persists. “Letting even a top-level statistician loose with a more traditional football manager is not really the right combination,” Forde once told me. He himself looks like a football man: trim, greying, regional accent, nice suit. That helps him sell numbers to old-style football men. But, in many clubs, the nerds are only slowly gaining power. Probably every club in the Premier League now employs analysts, but some of these people get locked in computer-filled back-rooms and never meet the manager.

That’s why the data revolution was led by clubs where the manager himself trusted numbers. Arsenal and Allardyce’s Bolton began to value players in much the way that financial investors value cattle futures. Take Bolton’s purchase of the 34-year-old central midfielder Gary Speed in 2004. On paper, Speed looked too old. But Bolton, said Fleig, “was able to look at his physical data, to compare it against young players in his position at the time who were at the top of the game, the Steven Gerrards, the Frank Lampards. For a 34-year-old to be consistently having the same levels of physical output as those players, and showing no decline over the previous two seasons, was a contributing factor to say: ‘You know what, this isn’t going to be a huge concern.’” Speed played for Bolton until he was 38.

Football’s shrewdest number-crunchers have always understood that data can only support a decision about a player. They cannot determine it. Biermann tells the story of how Wenger in 2004 was looking for an heir to Arsenal’s all-action midfielder Patrick Vieira. Wenger wanted a player who could cover lots of ground. He scanned the data from different European leagues and spotted an unknown teenager at Olympique Marseille named Mathieu Flamini, who was running 14km a game. Alone, that stat wasn’t enough. Did Flamini run in the right direction? Could he play football? Wenger went to look, established that he could, and signed him for peanuts. Flamini prospered at Arsenal before joining Milan to earn even more.

Conversely, the clubs that stuck with “gut” rather than numbers began to suffer. In 2003, Real Madrid sold Claude Makélélé to Chelsea for £17m. It seemed a big fee for an unobtrusive 30-year-old defensive midfielder. “We will not miss Makélélé,” said Madrid’s president Florentino Pérez. “His technique is average, he lacks the speed and skill to take the ball past opponents, and 90 per cent of his distribution either goes backwards or sideways. He wasn’t a header of the ball and he rarely passed the ball more than three metres. Younger players will cause Makélélé to be forgotten.”
Pérez’s critique wasn’t totally wrong, and yet Madrid had made a terrible error. Makélélé would have five excellent years at Chelsea. There’s now even a position in football named after him: the “Makélélé role”. If only Real had studied the numbers, they might have spotted what made him unique. Forde explained: “Most players are very active when they’re aimed towards the opposition’s goal, in terms of high-intensity activity. Few players are strong going the other way. If you look at Claude, 84 per cent of the time he did high-intensity work, it was when the opposition had the ball, which was twice as much as anyone else on the team.”

If you watched the game, you could miss Makélélé. If you looked at the data, there he was. Similarly, if you looked at Manchester City’s Yaya Touré, with his languid running style, you might think he was slow. If you looked at the numbers, you’d see that he wasn’t. Beane says, “What stats allow you to do is not take things at face value. The idea that I trust my eyes more than the stats, I don’t buy that because I’ve seen magicians pull rabbits out of hats and I just know that rabbit’s not in there.”

Yet by the mid-2000s, the numbers men in football were becoming uneasily aware that many of the stats they had been trusting for years were useless. In any industry, people use the data they have. The data companies had initially calculated passes, tackles and kilometres per player, and so the clubs had used these numbers to judge players. However, it was becoming clear that these raw stats – which now get beamed up on TV during big games – mean little. Forde remembers the early hunt for meaning in the data on kilometres. “Can we find a correlation between total distance covered and winning? And the answer was invariably no.”

Tackles seemed a poor indicator too. There was the awkward issue of the great Italian defender Paolo Maldini. “He made one tackle every two games,” Forde noted ruefully. Maldini positioned himself so well that he didn’t need to tackle. That rather argued against judging defenders on their number of tackles, the way Ferguson had when he sold Stam. Forde said, “I sat in many meetings at Bolton, and I look back now and think ‘Wow, we hammered the team over something that now we think is not relevant.’” Looking back at the early years of data, Fleig concludes: “We should be looking at something far more important.”

That is starting to happen now. Football’s “quants” are isolating the numbers that matter. “A lot of that is proprietary,” Forde told me. “The club has been very supportive of this particular space, so we want to keep some of it back.” But the quants will discuss certain findings that are becoming common knowledge in soccer. For instance, rather than looking at kilometres covered, clubs now prefer to look at distances run at top speed. “There is a correlation between the number of sprints and winning,” Daniele Tognaccini, AC Milan’s chief athletics coach, told me in 2008.

That’s why Fleig cares about “a player’s high-intensity output”. Different data companies measured this quality differently, he said, “but ultimately it’s a player’s ability to reach a speed threshold of seven metres per second.” If you valued this quality, you would probably have never made the mistake Juventus did in 1999 of selling Thierry Henry to Arsenal. “For Henry to reach seven metres per second, it’s a relative coast,” said Fleig admiringly. The Frenchman got there almost whenever he ran.

Equally crucial is the ability to make repeated sprints. Tévez, Manchester City’s little forward, is a bit like a wind-up doll: he’ll sprint, briefly collapse, then very soon afterwards be sprinting again. Fleig said, “If we want to press from the front, then we can look at Carlos’s physical output and know that he’s capable of doing that for 90 minutes-plus.”

Just as clubs have learned to isolate sprints from other running, they have learned to isolate telling passes from meaningless square balls. On the screen in Carrington, Fleig flashed up a list of City’s players, ranked by how many chances each had created. One name stood out: David Silva had passed for a third more goal-scoring opportunities than any of his teammates.

The new wash of data has made it easy to compare players to players, and clubs to clubs. Wigan, for instance, were recently conceding a greater proportion of their goals from crosses than any other team in the Premier League. If you’re playing Wigan, that’s handy to know. Increasingly, clubs are acting on the data. A quant has controlled Arsenal for 15 years now, but last autumn the numbers guys took over another English giant. The Boston Red Sox’s owner John Henry, who in 2002 had tried to hire Billy Beane, bought Liverpool and immediately hired Beane’s mate Comolli to do a “Moneyball of soccer”.

From his perch at Anfield, Comolli often chats to the father of Moneyball 5,000 miles away. Beane says: “You can call him anytime. I’ll e-mail him and it will be two in the morning there and he’ll be up, and he’ll e-mail me and say, ‘Hey, I’m watching the A’s game’, because he watches on the computer. The guy never sleeps.” At Liverpool, Comolli has genuine power. He has said that data informed the club’s recent purchases of Andy Carroll and Luis Suarez for a combined £60m.
And football’s data revolution has only just got going. Fleig thinks there is an exciting future in sociograms: who passes to whom, who tends to start a team’s dangerous attacks? If you play Barcelona, that man is obviously Xavi. But in another team, the data may show that the launcher of attacks is someone unexpected. If you know the zones where he puts his key passes, you can try blocking them.

Someone who has thought harder than most about the future of soccer stats is the director of baseball operations at the Oakland A’s. Farhan Zaidi is a round MIT economics graduate with a sense of humour. He’s the sort of guy you’d expect to meet late one night in a bar in a college town, after a gig, not at a professional sports club. For work, Zaidi crunches baseball stats. But he and Beane spend much of their time at the Coliseum arguing about their other loves: the British band Oasis, and soccer. In 2006, in the middle of the baseball season, they travelled to the soccer world cup in Germany together. Zaidi chuckled: “We spend so much time together, that if all we ever talked about was the numbers on these spreadsheets, we would have killed each other a long time ago.”

Because Zaidi knows where the data revolution in baseball has gone, he can make predictions for soccer. The sport’s holy grail, he thinks, is a stat he calls “Goal Probability Added”. That stat would capture how much each player’s actions over his career increased the chance of his team scoring (for instance, whenever he successfully passed the ball five yards forward from the halfway line), or decreased it (for example, whenever his pass was unsuccessful). I asked Zaidi whether one day pundits might say things like, “Luis Suarez has a Goal Probability Added of 0.60, but Carroll’s GPA is only 0.56.”

Zaidi replied, “I tend to think that will happen, because that’s what happened in baseball. We talk now about players in ways that we wouldn’t have dreamed of 10 or 15 years ago.”

In their ancient battle against the jocks, the nerds are finally taking revenge.
Simon Kuper is author of ‘The Football Men: Up Close with the Giants of the Modern Game’ (Simon & Schuster, £16.99)

Saturday, 18 June 2011

El Tricolor


I am beginning to think that backing the Over 3.5 goals in elimination games when the score is 2-1 is a winning strategy. It worked rather well in the UEFA Champions League final, and it worked again today in the U-17 World Cup game between Mexico and the Democratic People’s Republic of Korea, aka North Korea.

Obviously, in elimination games, teams trailing by 1-2 have no option but to chase the game and leave themselves exposed to a breakaway goal. While I have no reason to believe that the market is incorrectly pricing these games, for an interest and a Premium Charge reduction strategy, I can think of worse ideas. It is always possible that the relatively small number of matches that meet this criteria means that the market is not priced efficiently, but something to watch anyway.

The elimination phase of the CONCACAF Gold Cup 2011 tournament begins today with Costa Rica v Honduras and Mexico v Guatamala. In a lean summer for football, this is as good as it gets, and I'll be watching for 2-1 score-lines!

Dry Summer


Summer's are supposed to be dry. OK, so technically, Summer isn't here for a few more days, but the dry spell from my betting perspective is here. Cricket continues to be a challenge - as I've written before, it appears that others understand this sport far better than I do, and for the most part I leave it alone. I got involved in an India v West Indies ODI a couple of days ago, and read it all wrong, in the end walking away with no loss, but no win either. A waste of time in other words.

I don't even enjoy watching cricket, which would probably help! I didn't much care for playing it when I look back. Batting or bowling was fun, but my preferred fielding position was wicket-keeper simply because it meant I had an interest in every delivery, and when my team was batting, I secretly wanted my team to lose wickets so that I could get out there and swing away.

I wasn't much of a team player in my youth. One new football season, my under-strength Croydon West End team lost the opening game 2-9, but the two goals were both scored by me. At the end of the game, when the manager tried to cheer us up, I needed no cheering up. It's fair to say that my comment, partly joking, but with a grain of truth, along the lines that I would rather lose 2-9 and score both goals than win 1-0 and not be the scorer, didn't go down too well.

It's fortunate that betting is a solitary activity.

Baseball liquidity remains poor, and while I remain up overall on the season, this last week has been poor. I'm continuing to track the MLB Free Daily Picks but they appear to be going the same way as the free Under Over Soccer Picks, with both showing an ROI of around -7.5%. Updated results at Gold All Over.

Thursday, 16 June 2011

Stanley Cup Runneth Over


As I suggested in the recent Mouths To Feed post, the pre-game value in game 7 of the Stanley Cup 'lay' in opposing the Vancouver Canucks at home at 1.71.

While they had won all three home games, they had not impressed in doing so, winning each by just the one goal, and as luck tends to do, it ran out last night as they lost 0-4 to the Boston Bruins.

Boston could still be backed at 1.89 when a goal ahead, and when the dust had settled, it was my biggest ice-hockey win of the season. Not that that announcement is as good as it sounds, since my forays into the sport are few and far between these days.

At the half-way point of June, usually a quiet month, this is already the second best June ever, although 2009 is unlikely to be beaten.

It's usually at this time of the year, when the NBA and NHL seasons conclude, that liquidity starts to pick up in the baseball. Time will tell.

The 'void-if-tied' rule on the 5 Innings Moneyline market means that in a game tied at the middle of the fifth innings, you can get a free bet on the home team. Unfortunately the only money available is usually £2.43 at 1.01 which is not going to make you rich any time soon, but it IS free money. I'm exploiting a loophole, something that many of you may have read about day trader Barnett Alexander, who has been fined £1 million for exploiting a loophole, or price-rigging the markets depending on your point of view, and making profits from spread-betting companies after betting on subsequent price movements. 

Sounds rather similar to 'spoofing' which reportedly goes on in horse-racing markets on a frequent basis. While Alexander claims to have done nothing wrong, when you use the accounts of others for your trades, that doesn't look good. Still, it was quite a clever idea I thought, unlike this motley crew from Shropshire, some of who, it is alleged, funded their gambling from 'pimping out' an under-age girl. Classy.

Wednesday, 15 June 2011

Comfort Level


Average Guy asks:

Hello again, constant reference to appropriate stake size both here and on other blogs. Do you have a hard rule whereby it's a simple % of bank or is it related to %bank and the odds ? Is there a comfort level of exposure that should not be exceeded (obviously varies from trader to trader) or do you allow your stake / exposure to be affected by your own perception of the likelihood of the outcome ?
Appropriate stake size may not be as important as value, but it is very important.

In simple terms, the bigger your edge, the greater the percentage of your bank that you should be staking. 2.5% is probably a reasonable maximum to stake, although I can't honestly say that I adhere to that percentage myself. With a decent sized bank, achieved for the most part through in-play trading, 2.5% is an amount that I consider too high for a pure punt.

In-play trading is another matter altogether. For one thing, as has been discussed recently, the 'stake' is the maximum amount that I am prepared to lose, and while it does happen that I lose the lot on occasion, it's rare. Losses are usually far less than the maximum amount put out there.

The second thing is that in-play value can be huge. Not in sports like football (proper) perhaps, but look at a sport like the American version as an example - a sport where an interception returned for a seemingly game-winning touchdown can be overruled seconds later. Turned over 1.01s are not that rare and if you can lay at a price with a high degree of confidence that the price will soon be significantly higher, and if the worse comes to the worse you can exit with a small loss, then it would be pretty silly, in my opinion, to limit yourself to 2.5% of your bank. I've written before how one of the safest methods there is, is to lay the team scoring the opening touchdown in a game. The price always goes too low, and each £1,000 layed will make you £10 a point when the market corrects, and you can lay several thousand for little risk at these times.

To answer the second part of the comment, yes there definitely is a comfort level and my subconscious often recognises this before my conscious. I know I have exceeded the comfort level when I feel uncomfortable! Simply put, £5,000 at risk might be comfortable or uncomfortable. It's not the amount - it's the situation, and my perception of value.

Tuesday, 14 June 2011

Mouths To Feed


A very pleasing end to the NBA Finals, with the Dallas Mavericks showing that you don't need three superstars to win the Championship, but that playing as a team works rather well. Dallas is an awful city, full of Texans, but it's hard not too be pleased for owner Mark Cuban, star Dirk Nowitzki and veteran Jason Kidd as they won the franchise's first ever title. "Cavs for Mavs" shirts sold well in Cleveland apparently.

It's unfortunate that the NBA season has to end, and even more so with the prospect of a prolonged close season as the Collective Bargaining Agreement between players and the NBA expires. It happened in 1998 too, when the season was reduced to 50 games and as Newsburglar.com puts it:

The league broke the union last time and there is no reason to believe that they can’t do it again.

Many NBA players seem to have no difficulty blowing through the millions they collect. Give sixty percent of your earnings to the government and your agent and $10 million a year quickly becomes $4 million. That $34 million contract is really only worth $14 million.

That’s a lot of money. But when you’ve got four houses, fifteen cars, eight illegitimate children, a twenty person entourage and a few bad investments, it's no wonder some NBA players live paycheck to paycheck.
Indeed, it must be a hard life. As former star Latrell Sprewell once said while turning down down a three-year, $21 million contract extension, "I've got my family to feed". Largely remembered for choking and threatening to kill his coach in 1997 and receiving a 68 game suspension, Sprewell's comment didn't draw too much sympathy from the public, though most of them, I'm sure, were saddened to hear that since retiring, his yacht was repossessed, two of his homes foreclosed upon, and he has been prohibited from seeing his children. Classy.

Sprewell's not the only one with mouths to feed. While my kids are pretty much feeding themselves these days, I do have two dogs to feed, and the loss, or partial loss of an NBA season would not be good news, and it's a situation exacerbated by the possible disruption to the 2011 NFL season.

The NBA season just ended was my best to date, helped by a more cautious approach during the play-offs. After three losing Aprils in the last four years, strategies that worked in the regular season didn't seem to work quite so well in play-off games, but why not? I think the answer was that the fact it was a play-off game subconsciously made me think that I should be able to win more, and I over-staked, often going in too big too early. As we all know after reading this blog, over-staking leads to poor decision making. This year I made a conscious effort to have a profitable April, likely losing some profits in the process, but the psychological boost to my confidence, while worthless in cash terms, was of more importance for once.

I have updated the final results for the NBA Daily Picks site over at Gold All Over. At one time, one of my best (most lucrative) sports was NHL, but the lengthy countdown introduced by Betfair in 2007 pretty much killed liquidity. It was said at the time that the change was to protect clients from Canadian viewers who had 'faster' pictures, but as with games involving the Toronto Raptors in the NBA, or Toronto Blue Jays in baseball, I simply avoided these matches. Yes, there are plenty of Canadian NHL teams, but a Colorado Avalanche - Dallas Stars game isn't likely to have high viewing figures in Canada.

And finally, consider this. In 1976, Montreal hosted the Olympics. The following year, the Montreal Canadiens won the Stanley Cup. In 1998, Calgary hosted the Olymics. The following year, the Calgary Flames won the Stanley Cup.

The 2010 Olympics were held in Vancouver. The 2011 Stanley Cup winners? It's either the Vancouver Canucks or Boston Bruins. It's come down to a game seven on Wednesday night - in Vancouver. So far, the home team was won every game, although Vancouver's three wins have all been by a single goal, including one in overtime. Not too convincing.

A lay may well be the play here, depending of course, on Vancouver's price. Strangely, four of the first five games were won by the team with the fewest shots - including game 3 where Vancouver had 41 shots to 38, yet lost 1-8.

Sunday, 12 June 2011

Trading Your Fastest 5k Ever


Towards the end of the first mile on my run this morning, the thought of how similar running is to trading - specifically that you can read all the books in the world about how to do it, but nothing helps you until you start doing it yourself.

It's all very well reading about rest days, long runs, intervals, fartleks (snigger) etc., but the only way to "Run Your Fastest 5k Ever" is to get out there and start running. Reading the theory is useful to an extent, but it in no way prepares the body. Similarly with trading, you can read all the books in the world about trading, and paper trade for months, but it's only when you start to do it for real that you really start to learn.

When you're reading about running at a certain pace, you have no idea how you will feel physically, and similarly you can read about taking a position size of 2% of your bank, but you have no idea how you will handle this unless it's for real. What might be an insignificant amount when you are paper trading can seem a lot more significant when your money is on the line.

Practice makes perfect. Well, maybe not perfect, but running frequently will increase your pace over time, although for those of us over a certain age it's a battle against the decline in athletic performance that comes with old age. Same with trading I guess - there was an excellent post on the subject of how our peak age for financial decisions is 53 - before that we are gaining experience, after that age, we are heading downward to senility! With running, the age is more like 28 I would guess. Which is at least better than women's gymnastics, where you peak at 12!

Saturday, 11 June 2011

Anatomy Of A Trade IMO


Average Guy had a comment that is worth discussing further:

Hello, respect your thoughts but referring the basketball trade that nearly went very wrong. Are you really trading if you only get out when it suits you with a profit but do not accept a substantial loss ? Not questioning your logic as you are obviously successful but what's the difference between a blind punt and what you did ? I need to rationalize this as I do it constantly and feel like crap as I watch the losses double or treble because of an inability to cut and run ?
Ignoring that in my experience, when someone says "With all due respect" or "I respect your thoughts" what they really mean is "I think you're an idiot", it's a good question.

First of all, I was in and out of that market several times before that lay at 1.69, all trades that were exited when the value was to do so (in my opinion). I have no doubt that I am a trader rather than a punter although on occasion I will let my trades run, or add to a position, if it is value (in my opinion) to do so. Looking at the details in My Account, prior to laying Dallas at 1.69, I had layed them at 1.74, 1.72, 1.67 and 1.96, with lays of Miami at prices ranging from 1.68 to 2.38.

Secondly, I do not "only get out when it suits [me] with a profit". At one point in the first-half I was green on both sides to the tune of around £400, (thinking "this is easy") but by half-time, I was down to around just £50 on each side. I took the losses because the value was gone, and it was the right decision to 'cut and run'.

Thirdly, and specifically with the lay of Dallas at 1.69, this was a position entered in the second half of a game, and I believe it is true that Dallas never led by more than 7 until late on in the game after Miami had closed the gap, gone odds-on and I had closed out my position. In my opinion, it was never value to close out, and in fact I added to my position by laying an additional £1,886 at 1.46 16 minutes later, and 13 minutes after that, a little more at 1.32. It was my opinion that, as is often the case in a close basketball game, the prices available were value lays, not backs.

I've used the term "in my opinion" several times in this post, and for a reason. Betting odds are not exact probabilities in the same way that the outcome of throwing a die or tossing a coin are. They are the result of opinions. If your opinion is right more than it is wrong, then you will come out ahead in the long run. My opinion will not always be correct, at least not when it comes to betting, but it would be wrong for me to have 'cut and run' for a big loss if it wasn't value to do so - in my opinion. It's a spin on the "should I green up at 1.01 or let the bet run" issue. Assuming you are not over-staked, then you lay at 1.01 if it is value to do so, not just because you can.

I don't like big losses, but the occasional big hit is unavoidable. Fortunately the more frequent wins mean that the trend is upwards, and it's only when the trend becomes downward that you need to re-consider your strategy. Some might argue that you should always have a stop-loss in mind when entering a position. I don't agree, at least not for sports where the prices can move fast. What price should my stop-loss be? A stop-loss for the sake of it doesn't make sense. The game-state is constantly changing, as are the prices. Backing back at say, 1.5 might be value if Dallas are up by 20 (excellent value in fact, and used for illustrative purposes only), but would be terrible value if they were down by 20 (bear with me, I'm trying to make my point). What if Dallas are up by 10? Would 1.5 be value then? Well, it might be, but it might not. How much time remains? What is the foul situation? Any key injuries?

The fact is, I never felt that backing Dallas at the prices available, given the state of the game, was value. Experience gives you the confidence to put your money where your mouth is, and means that even if you lose, you're OK with it because you made the right decisions.

A good comment though, and while it's not good to take a big loss, it's far worse to take a big loss when it is not value to do so, and then watch as your initial opinion is proved correct and the price comes roaring back. If you stake sensibly, you should be able to make the correct decision. It's when you are over-staked that panic sets in and you close out a position in desperation. Fear and greed drive the markets remember. To quote Warren Buffett "Be fearful when others are greedy and greedy when others are fearful".