Always One

I'm not sure that the BBC meant the above comment to be taken literally, but the Academy Awards are a good opportunity to earn some Premium Charge credits, if not to win a huge amount. Upsets are relatively rare, and because many films are represented in multiple categories, you can often glean some insight into what films are being favoured early on. For example, when the Sound Mixing award goes to Inception, and this film is a leading contender in the Sound Editing category, it doesn't take a genius to figure out that as form goes, this is as reliable as it gets. Similarly, when The King's Speech Director Tom Hooper wins Best Director as the second favourite, the price of The King's Speech (backed in November) for Best Picture is likely to shorten. It dropped from about 1.35 to 1.18 on the 'news', a link I mentioned after last year's awards. Colin Firth won Leading Actor, and even at 1.02 managed to bring the price on Best Picture down to 1.1. It's not that easy of course, but the chances are good that you can at worst break even and get those all important losers on your side for the PC. When all was said and done, I showed a net loss of £12.38 (thanks to a £681 loss on True Grit in the Cinematography category - note to self "you know nothing about Cinematography") - but the boost to the PC Total Charges means this was a good loss. There's always one shocker! It was Sound Editing a couple of years ago.

One of the things I like about this style of betting is that the events come thick and fast, and there is little time for self-pity after a loss because the next category is right there. Contrast the above loss on Cinematography with a similar loss on football, and the latter would discombobulate me for days.

Cognitive Bias

“To neurophysiologists, who research cognitive functions, the emotionally driven appear to suffer from cognitive deficits that mimic certain types of brain injuries. Not just partisan political junkies but ardent sports fans, the devout, even hobbyists—anyone with an intense emotional interest in a subject loses the ability to observe it objectively. You selectively perceive events. You ignore data and facts that disagree with your main philosophy. Even your memory works to fool you, as you selectively retain what you believe in, and subtly mask any memories that might conflict. Studies have shown that we are actually biased in our visual perception—literally, how we see the world—because of our belief systems. This cognitive bias is not an occasional problem. It is a systematic source of errors. And it is the reason most people are terrible investors.”

Barry Ritholtz in The Washington Post

League Cup Final

If the League Cup, aka Carling Cup, final between Arsenal v Birmingham City today were a league game, I would have Arsenal at 1.505, Birmingham at 9.08 and the Draw at 4.45, and while it is not a league game, the argument that it is a Cup Final and will somehow play out differently is a thin one. Certainly for Arsenal, this game will not be top of their priorities this season, but they are in the final with their first chance of a trophy in six years, so they'll be trying. With the odds at 1.44, 8.8 and 5.2 respectively, I find some value in the draw, with a view to laying off if the game starts to open up, and switching to Arsenal.

Bewildered And Depressed

Strong draw picks this weekend are Cesena v Chievo Verona, Arles-Avignon v Brest, Racing Santander v Villareal and Kaiserslautern v Hamburg. The strike rate on these this season is 34.2%.

Peter Nordsted's Drawmaster tips this week are Wolves v Blackpool (3.5), Everton v Sunderland (3.50) and West Ham v Liverpool (3.25).

For home value picks, I have Stoke City (1.96) v West Bromwich Albion, Sporting de Gijon (2.02) v Real Zaragoza, Monaco (2.04) v Caen and Hoffenhein (2.16) v Mainz '05.

I had Valenciennes as amazing value at 2.26 to beat Lorient, until I noticed that their code for the spreadsheet was 'VLN' not 'VAL' which is Valenica's, and all of a sudden, the value was not so good, although still worth a small interest actually.

I have abandoned keeping the ratings going on all leagues bar the top 5, i.e. EPL, Serie A, La Liga, Ligue 1 and the Bundesliga. It was interesting, but it wasn't making me any money, and the time can be better spent elsewhere. No longer will I risk Eintracht Frankfurt being mistaken for East Fife! I'm actually finding just five leagues more than enough. One of the problems with football is that come the weekend, and there's a whole slew of matches, and with so much choice, it is hard to focus. I actually almost prefer it when there are just a handful of games, and there is time to look at each one in depth. Choice leaves me bewildered and depressed. Well, maybe not, but it does make it hard to focus.

Cata-Strophic

It seems that often when reviewing the weekend's results on here, I mention a late goal that either cost me a win or gave me a win. It's the late goals that cost me money that are more remembered, although over time these things clearly even themselves out. It's part of the game, and while it is annoying when they go against you, the strategy of locking in a profit 'because you can' rather than 'because it is value to do so' will cost you money in the long run. Ian Erskine posts on this subject today:

No football today. I often get mail about people who cannot make gambling work for them and usually think they are unlucky and then move on. The last three months I have struggled and know exactly how those people feel. I often mention winning and do not like to dwell on losing as it is part of the game and you have to move on. In the week I layed the draw in the Nottingham Forest v Preston match at 1.85 for a reasonable sum with about 20 minutes to go and the match poised at 1-1. Forest scored in the 92nd minute and it was happy days. I could have got out then but it was injury time so why bother with a minute or so to go, Preston equalised in the 96th minute for that to go down the swanny. Last night I made almost exactly the same play in the Sporting v Rangers match but at slightly lower odds. Sporting score with about 8 minutes to go, I could have got out. Didn’t! Rangers score in the 92nd minute and that too goes down the swanny. Now of course when it happens it hurts and we can curse our stupidity for not getting out or whatever. The facts are it is gambling and it will happen but in the grand scheme over time these moves have made me much more than I have lost. We all have tough times and that is the nature of the beast. The break will come and I will go on a good run maybe starting today or this weekend. It is not fate, it is not bad luck it is just plain old gambling!

I do accept that when you have backed something of an outsider, and thus stand to make a significant percentage profit, it would be hard to justify not trading out at say 1.04, even you considered the true odds to be 1.03. There was a discussion on Patient Speculation recently, where the example was a horse named Strophic that had been backed at 5.9 had traded in-running at 1.04 before finishing fourth. Apart from the fact that it would have been nigh on impossible (for me anyway) to determine whether 1.04 was value or not in the heat of the battle, giving up four ticks would have been very cheap insurance. My comments on laying off for the sake of it are typically written from a football match viewpoint, where the back price is seldom anything like 5.9, and thus the four ticks is more significant. If I back at anything like 5.9, it is usually because I think that price will shorten, rather than because I think it will go on to win, and as you all know, I don't go near horses anyway!

Betfair Woes

So close! With the Total Charges at 19.96%, I fell just shy of avoiding the Premium Charge first the first time this year. A little more effort this week, and no big wins, should put me over that threshold, although I'll take the big win and the extra payment if I have a choice!

It doesn't look as if it'll be the Utah Jazz giving me that next big win though. After losing their coach of twenty plus years a couple of weeks ago, they have now traded their best player Deron Williams to New Jersey, a move which makes sense long-term for the franchise, if not for the immediate future. So the heart of the team that was capable of coming back from double digit deficits is ripped out, and I expect them to finish the season rather lamely. Last night they played in Dallas, and I had the Mavericks value at 1.95 giving 9.5. Dallas won by 19 on a night where I went five out of six on the handicaps, with just the New York Knicks letting me down on Carmelo Anthony's debut. I needed them to win by 6.5, and they won 114-108.

When I was growing up, the West Indies were a force to be reckoned with in cricket, but not these days. South Africa looked very generous at 1.4, and while they drifted out to about 1.7, West Indies never looked like winning. Australia look value at 1.45 v New Zealand in the next game, and with a view to a trade, England look worth a bet at 3.0 v India, but be warned that trading cricket is not really my forte.

Meanwhile, Betfair's share price continues to slide, and with continuing problems with their web site over the past few weeks, (which Betfair fail to explain), their PR department must be overworked. The Casino Happy Hour promo from a few months back is about to be ruled upon by the Advertising Standards Authority which could further damage their reputation.

The huge furore than ensued towards the end of last year following an apparently botched Betfair promo seems to have triggered one or more public complaints with Britain's advertising watchdog, the Advertising Standards Association.

In response to an enquiry this week, ASA spokesman Matt Wilson advised: "Further to your query, the ASA did launch a formal investigation into the Betfair "Casino happy hour promotion". We will be publishing our findings in this case shortly."

Players on gambling message boards across the internet posted numerous complaints that Betfair not only withdrew an apparently badly designed promo that gave players an advantage, but subsequently made a number of controversial decisions regarding player account balances, despite the fact that the punters involved claimed they had complied with the promo T&Cs.

In one now infamous incident, a Portuguese player claimed that Euro 32 000 was 'reclaimed' from his bank account by the gambling group, an occurrence that motivated him to launch complaints with a slew of banking & licensing jurisdictions & trade associations.

The situation was further exacerbated by the lack of general & public statements on the row by Betfair - a surprising omission given the high level of complaints & the ill-will which greeted the manner in which the debacle was handled.

This sort of issue is not without precedent in the industry; one of the more memorable cases occurred some years ago when a major online gambling group erred on a promotion, & absorbed the consequent multi-million dollar costs itself rather than passing them on through disqualifications on players who had taken part.

The outcome of the ASA investigation will be keenly followed by the player community. Although the ASA lacks real teeth in a punitive sense, its decisions receive wide publicity, and an adverse finding against Betfair could exacerbate an already bad PR problem.

Now if only someone could get the Premium Charge ruled unlawful, and Betfair have to repay that money. That would be a nice windfall!

Exhibition Games

West Ham United sent Burnley packing easily enough to complete a nice weekend for my FA Cup picks, (three for three) and with Real Sociedad beating Mallorca, Football Elite went four for six this weekend, to complete one of the 'better' weekends of the season.

Mug (hopefully not his given name) had a comment on my Shoot Out Logic post saying:

tonight the same logic we meet in NBA all star game

which I think means that in an exhibition game, go for the outsider. This strategy is profitable for pre-season games in many sports, especially NFL, where the price seems to assume a competitive game, whereas these games seldom feature many starters, at least not for long. Winning is not everything in these matches - no one cares - so there seems to me no reason to back the favourite. In the NBA All-Star game, no defence is played, and the outcome is a crap shoot. How the West getting 1.5 were available at 2.22 was very strange, but despite thinking this was great value, these are not games to go too crazy on. The Totals Line of 268.5 shows just how seriously the players take this game.

Jake over at The Bankbuilder blog wrote an excellent post which I'm unashamedly copying here (in part so that I know where to find it in the future):

J.P. McManus "Racing is a great leveller. The day you think you have mastered the game, you will be made to pay for it the following day.What you must do is build up a bank of experience that allows you to reduce and eliminate as far as possible the factors that make for foolish betting. In a word, you act to strict ground rules always and you endeavour to become an investor rather than a pure addictive gambler..."

Very strong paragraph. What does this mean to me?

(1) Betting bank...An amount suitable for the inevitable losing runs.
(2) Plan..What bets to make and how to bet them in order to maximize your gains and minimize your losses.
(3) Loss acceptance...Ability to accept a loss and make the same wager the next positive betting opportunity.
(4) Never willingly settle for less then acceptable value.
(5) Patience to wait for and invest only on the advantage spots...and the rule is sometimes you wait a long time.
(6) The ability and willingness to work hard and gain an edge on the competition ie. the bookmakers or the betting public.
(7) Playing to win and not playing to lose. There's a big difference. This means passing winners (below fair odds), avoiding guilty throw-away bets, races where there are too many variables for a confident wager etc.
(8) Confidence in making your own decisions and avoiding the influence of so-called experts and 'smart money'.
(9) Emotional control. Avoiding emotionally connecting to wins and losses and their sequences.
(10) The positive belief that you can win and once you seriously believe this you'll have all the confidence to make the decisions which in turn will make you successful.

Golfing God

My last post was apparently a little confusing in that I didn't make it clear that I had layed Everton at 1.16 with one kick to come. That was my insurance premium. In two outcome events, I tend to focus on the side where the price is between 1.01 and 2.0 and as a result I talk of laying (Everton) at 1.16 rather than backing (Chelsea) at 7.2.

My PC comment also caused some confusion, and the best explanation of the logic here is the comment from Ben back in December, when he patiently spelled out to me (a slow-learner) how this can work:

Imagine someone who pays the premium charge, and also is on 5% commission, betting on the new Betfair 'virtual coin flip' exchange games markets (I really wouldn't be surprised if they introduced this... anything to make BF more money!)

The gambler backs £100 at 2.06, and being an evens shot, they can expect to win as often as they lose. So we'll look at the results after one win and one loss:

Gross profit from the win: £106. Commission at 5%: £5.30, profit: £100.70.
Losing bet: £100 loss. Gross win from both bets: £6. Total profit: £0.70

This punter has paid a massive 88% of their winnings in commission!

But wait, the premium charge comes to the rescue...

Let's say this gambler already has £1000 gross win for the week, with £100 paid in normal commission: £1000 gross win, £100 commission, that's 10% and so BF add on a £100 PC charge => £800 net profit.

Now, add in the two coin flip bets: £1006 gross win, £105.30 normal commission. Thats 10.47%. Betfair will still want their 20%, which is £201.20. Net profit now is £1006 - £201.20 => £804.80

Do you see? If this person DID NOT pay PC, they would have made £0.70 from their bets. But because they pay PC, their additional profit is actually £4.80

Paying PC has meant that the gambler has made *more* profit from these bets. In other words, they have a bigger profit margin, and could be making money from these coin flip bets by backing as low as 2.02.

A final comment from Paul had me scratching my head to be honest - and the splinters took time to remove. He asked:

Hi...I have a question. If i trade at match odds before game starts, the big traders figure that I placed 1k? They will go in the opposite direction of what I buyed? Please answer :(

With millions traded on the more liquid markets, 1k is not going to move the Match Odds market, but I guess on a Bulgarian Third Division match (if there is a Bulgarian Third Division) it might.

No joy in the draw bets today, with goals in the 82' and 86' taking away two wins. C'est la vie. Football Elite had Chievo to win, but the draw seemed a better bet to me, and Genoa's 86' winner v AS Roma was the decider in a 4-3 shoot-out - not the low scoring game I was looking for. Once I was able to log in to Betfair (what the hell are they doing?) for the Leyton Orient v Arsenal game, I was able to recover most of those losses on the Under 2.5 market, and then moved into profit on the day with Under 2.5 coming in on the Napoli v Catania match.

The final action of the week was the golf where third-round leader Aaron Baddeley made me a small profit after Fred Couples tied the lead early in the final round. His religious views are ridiculous unfortunately,

"I'm one to quote scripture a lot, especially when I'm out there. One of my favourites is 2 Timothy 1:8. It says, "For God did not give us a spirit of fear but of power and of love and a sound mind. I'm a Christian, born-again Christian. Grew up in a Christian home. Gave my heart to the time Lord when I was 12. At about age of 19 was when I really started growing in my relationship with Christ, that I understood it was a relationship and not a religion. It's a relationship of being close to Him and growing in the knowledge of the Bible and sort of a changing of the person."

- A sound mind? For crying out loud, use it man! No surprise that he 'grew up' (debatable) in a Christian home though - funny how most people inherit their religion. With views like that, it's true to say Baddeley is "out there", but I agree with him that "God did not give us blah blah blah". He certainly didn't. Anyway, moving on and for the second post in a row, I have no stats on this, but the third round leader by two or less rarely climbs aboard the 1.01 express. Not the greatest of weeks overall though, and the Total Charges could be close to 20%. Even if they're not, the charge will be less than usual.

Shoot Out Logic

I got involved in the Chelsea v Everton game this afternoon, when it went to the penalty shoot-out. I've not got any stats on this, but logic tells me that penalties are close to a 50/50 shot (unless it's England, in which case you can bet the house on the opposition!) so I had a lay of Chelsea at 1.82 (sorry son) with the view that it was value and even if it lost, it was a Premium Charge reducer! It wasn't looking good for a while, but Ashley Cole's body language when placing the ball was quite revealing, and it was no surprise when he missed. I did lay off at 1.16 - was it value to do so? Not sure to be honest, but it was a situation where I paid my insurance premium and to heck with it.

Easy to say after the fact, but Birmingham City and Stoke City at home to opposition from two divisions lower, really did look good value at 1.7+. The only concern with these matches is whether the class teams are 'up for it', but neither club have had too many days at Wembley in their history, are relatively safe in the Premier League, and I felt they were value to make progress. One of the concerns about West Ham on Monday is that they are not anywhere near safe in the Premier League, and may not be fully focused, hence the 'apparently' generous price of 2.04.

My weak draw picks are 1 from 2 so far today. The bad news was Bologna hitting a 90' winner, but not too bad as this was a welcome winner for Football Elite. The good was Valenciennes who came from 0-2 down at Caen to score in the 80' and 88' minutes to give me a winner at 3.35. Real Zaragoza v Atletico Madrid still to come.

A nice dip into League Two again for Pete Nordsted's Drawmaster finding 2 winners from 3 picks, and two for two for Football Elite with Hannover joining Bologna in the win column.

Learning To Fly

It seems positively boring to post the draw picks for this weekend after a week of good comments and lively discussion, but here they are anyway.

Two strong draws with Nice v Paris St Germain and Chievo v AC Milan, and weaker possibilities in Caen v Valenciennes, Real Zaragoza v Atletico Madrid, Bologna v Palermo and Genoa v AS Roma.

Pete Nordsted's Drawmaster picks are from League Two, where he did rather well on FA Cup Fourth Round day, and they are Stockport v Macclesfield, Northampton v Aldershot and Gillingham v Bury.

Back to me, and I find value for a small interest in Stoke City at 1.7, although as a Palace fan, I am open to the suggestion that I may be a little biased. Similarly, Birmingham City at 1.73 v Sheffield Wednesday and on Monday night West Ham United at 2.04 also both look value against lower division opponents.

Today's coincidence is that draw pick Nice v PSG reminds me of the time I got to take the controls of an Air UK BAC 1-11 passenger plane flying from Paris to Nice in the early 1980s. The plane was empty of passengers, and the pilot was cool enough to offer me a couple of minutes at the controls as we flew over the Alps, a once in a lifetime experience that I can still vividly recall. I'm pretty sure it was against the rules back then, and even more so today.

Divine Intervention

After I had posted yesterday, cooked breakfast – eggs over medium (Americans are very picky about their eggs, as well as their men), eaten, donned my manly apron and washed the dishes, I realised that I should have included in my post on partners a comment about those of us with children. If wives and / or girlfriends can be demanding on our time, if we allow it, having young children certainly is too. My children are now young adults, (I started very early in life), so this is not an issue for me, but for someone looking to trade at a stage in their life when they have a young family, I think this would be an additional challenge.

Rowan, aka The Portfolio Investor concurs. He writes:

I found your blog after you very kindly wrote a nice paragraph about a piece on my new blog (The Portfolio Investor) recently and suddenly my "Page Views" took a sharp rise!

Your post today is the first I have seen that refers to the importance of a supportive partner. I don't trade, I run a portfolio of tipping services, and I also hold down a full time job and am a father to two young children. What I am trying to say is that I don't have much free time! If my wife didn't support me as she does (i.e. 100%), then it would simply be impossible to try to achieve what I want to achieve.

It seems that our partners have a lot in common. My wife never asks me how my gambling is going. When we have a big winning day she smiles; she shrugs and reminds me that the long-term performance is everything if I happen to mention that we've had a bad losing day. She is aware of the amounts being gambled and doesn't bat an eyelid, and she does everything she can to ensure that I can maximise my time doing whatever needs to be done. She also seems to share with your spouse the attention to detail regarding wedding arrangements!

My wife reminds me of "long-term performance" too, but anyway, moving on and I find it interesting that Rowan says “when ‘we’ have a big day”. Personally, good days are things that “I” have, although the occasional bad day is one that ‘we’ have! There is no ‘we’ in ‘all mine’.

As HCE says, we are two lucky men. My wife also makes sure my time investing is maximised. Things like keeping the tea and coffee flowing may seem small, but I really don’t have time to be messing about with those things when I’m ‘working’. She understands that trading is basically a second job, and while I sometimes feel slightly bad that she’s doing all the cooking, lawn mowing, gutter cleaning, car servicing, shopping, painting, decorating, plumbing, electrical, laundry, dusting, ironing, cleaning and bill-paying, it’s really much more cost-effective for us to operate that way. I am, of course, exaggerating - she doesn’t do everything. I clearly remember paying the gas bill last October.

Rowan continues:

I agree totally with your comment about bloggers having a short time on the blogging world due to a lack of material to write about. I must confess that running out of subject matter over time is a concern to me, and therefore I am trying to encourage others to comment on what I write and engage in debate. Early days for me yet, but you seem to have the art down to a tee, and truth is that on a personal basis, I find that tremendously encouraging.

Of course now that your blog has caught my attention, I feel duty bound to start investigating the trading angle. My schedule seems to be getting busier!

Maybe you should check out Mark Iverson's post on his day at Centaur Trading before you take the trading plunge. I've never attended any training like this, but I'm not closed to the idea of it. I just fear that after seven years, the price of learning a few new things would be steep. For someone starting out in trading though, a day of training might be a worthwhile investment. Possibly the part of Mark's post I found most interesting was the final paragraph:

Two years ago these types of courses would have revolved around pre-race horse racing, but not anymore! The majority of attendees had little interest in the nags and nearly all of them spoke about how keen they were to trade the soccer markets. Should racing be concerned? I think so.

For me, you couldn't invent a sport that's more punter unfriendly than horse racing if you tried - and trying is something you can't rely on in that sport. Of course, that's just what the bookmakers want, and before you all start laying on the exchanges, remember that unless you have inside information, someone always knows more than you do.

I had another good comment from Mark a couple of days ago, which was:

Another great thought provoking post.

I think that regarding the lack of women trading sports, it may be worth looking at how people in general get into sports trading. I would say that the there are two main paths that are taken:

1. Punters on sports like football and horse racing who probably after years of backing selections with limited success found the exchanges and realised that they could become the bookmaker by laying selections, they probably soon realised that laying was not the golden egg they thought it would be, but in the mean time had learnt from the betfair forum etc about sports trading.

2. IT professionals who through their liking of sports found out about the concept of sports trading and because of their higher than average level of IT skills (I’m not including the IT bloke at my work place in that group) took to the technical aspects of sports trading like fish to water.

As far as I can see the main commonality between the two groups is that before they became sports traders both groups were probably interested in certain sports that are predominately followed by men . IE horseracing, football etc

So as a natural consequence more men would take up sports trading.

I’ve bored you all before about how I got into trading, but that won't stop me from boring you all again, so I will. My background in gambling is really quite boring. My Dad has never set foot inside a bookie’s, and at 83 is unlikely to start now, so I was never around gambling as a child as some people are. When I was a teenager, the only options for betting, other than the football pools which my Dad DID do (and incidentally won about £10,000 three years ago to possibly break even in his lifetime - he didn't even realise he'd won until the cheque arrived) were horses and greyhounds. I would see the prices on Saturday’s Grandstand, but never took much interest in them until one government mandated weekly Religious Studies lesson (called Divinity in my school) when the conversation somehow turned to how betting odds worked. My guess is that the teacher assigned to the task shared my opinion of religion and had no interest in filling our heads with nonsense. After that lesson, arguably the second-most important one of my school days, I now understood that 5 to 1 meant a probability of 1 in 6, the meaning of odds-on, why prices were quoted so ‘odd’ly (from the days when there were 240 pennies in a pound, and prices such as 11-8, 100-30 came about because of half-crowns) and how bookmakers built in a big over-round to be sure of winning. This lesson must have been pre-1971, because I recall someone asking if odds would be decimalised after Decimalisation Day which has just passed its 40th anniversary, but change comes slowly to racing, and it was only earlier this year that they finally introduced decimalisation friendly new prices of 7-5, 8-5, 9-5, 11-5, 12-5, 13-5, 14-5, 16-5, 17-5, 18-5 and 19-5.

The lesson piqued my interest in gambling, but at age 13, practical opportunities were limited to the occasional peer-to-peer bet with a school friend or running my own football forecast pool which deducted 10% for expenses and boosted my pocket money for a while. I certainly paper-traded though, and as I wrote three years ago in the About Me section of this blog, discovered the double up at a meeting system that was almost guaranteed to succeed, until my Dad checked around at work and came home to report that there one or two tiny flaws in my cunning plan. After my A-Level in Pure Mathematics With Statistics had further solidified my understanding of probability, and with little interest in horse-racing, my betting was limited. I do remember backing Red Rum to win the Grand National in 1975, and putting £2 on Crystal Palace to win the FA Cup at 66-1 in January 1976, a value bet in that they reached the semi-final that year, but hardly value given that Palace were a Third Division team and still had to win four more games. Then in the late 70s after switching careers and moving into IT, I got fairly serious about backing favourites in 6 to 10 runner Novice Chases and Novice Hurdles. Even though winners were frequent, with no value, I soon realised that even if the losses were small, it wasn’t the road to riches that I was hoping for, and that small losses soon add up.

Betting was restricted to social outings to places like Epsom, Goodwood, Windsor, Lingfield and Cartmel, and the occasional casino visit was for entertainment purposes rather than serious gambling. Told you it was boring. I just don't like to throw money away on losing ventures.

The next venture was my Elo ratings in the early 1990s, which were profitable despite being very basic. I used to buy the Racing Post every day, pick the best odds available, make phone calls to the appropriate bookies and as the 1991-92 season was ending with a profit, albeit after hours of work, I then blew the lot buying money on a Labour win at the General Election on April 1st. What a fool. That night, Neil Kinnock staged the infamous rally at Sheffield Arena and not only went on to lose the election, but more importantly, my money with it.

By then my children had arrived and were growing, and betting just fell by the wayside until I stumbled upon Betfair in late 2003, by which time the opportunities for the nerdy guy like me were plentiful with sports betting having expanded exponentially in the intervening years. With some experience of trading options and shares, an interest in sports, and the ability to invest £100 without too much hurt, the opportunity to get involved in sports trading was irresistible. To say that the £100 deposited was the best £100 I have ever invested, would be an understatement. As I have written before, that £100 is the only deposit I have ever made to Betfair. I turned it into four figures, and then into two figures - to a low of £21.40 – during my my apprenticeship, before getting serious and building from there. In hindsight, that loss down to within a whisker of busting out was probably the best thing that could have happened to me. I learned a lot.

My IT background isn't much help in itself, but what is of use is that solving programming problems requires the same logical thought process that solving how to beat other people on Betfair requires - with a touch of psychology thrown in to the mix, something that you don't need when dealing with computers.

I must say there have been some quality comments and posts in the blogging world this week.

And finally, this week's strange coincidence is that there is a new book about Bobby Fisher, whom I mentioned a couple of days ago, and I came across a review today. A quote from the review was "Few people more convincingly possessed both genius and madness than Bobby Fisher...grandmaster at age 15 and to anti-Semitic diatribes and various 'crackpot' behaviours in later life". I pretty much said the same thing, so if the IT and trading don't work out, I shall become a book reviewer!

Trading Partners

One of the reasons why most blogs don't last for too long, at least not gambling related blogs, is that the writers run out of things to write about. Right now, that is not a problem for me, with comments leading to lively discussions, which is what I had in mind when I started this three years back. So here's what Mike had to say about my last post, on why trading is predominantly a male activity:

Some thoughts :

First a generic one :

You clearly have a very organised and educated brain - is it intentional this blog isn't easy to browse, the older stuff. If you could put an archive section up, a lot of your hidden gems, may get even greater traffic.

Is any blog easy to browse? It's certainly not intentionally difficult, and at some point I may create a website since, although I say so myself, there's some good stuff in here. (Law of averages - after three years of rambling, one or two posts must be OK). As for extra traffic, while it's interesting to see the numbers climbing, I don't actually make any money from this, so traffic is not that big a deal for me. I write because I enjoy writing.

Mike continues:

Secondly, the above discussion re male/females is an exceptional post. I haven't shown it to a female trader yet - but will, and await her response. If it's constructive, I will post it.

I am not sure how lucky I am to know 300 traders - I was happy to know 5, 3 yrs ago, when in-running trading was ridiculously easy, and huge profits accrued. Now, 300 or so, inhabit the space, and it's more challenging, which is not always a bad thing.

Whilst on the subject of females - I have often tried to involve spouses on the ins/outs of trading, and they just don't get it. That's OK, I don't understand a lot of what they do, but traders don't always win .. and wimpy men often want solace from their partner. If the partner doesn't understand, and can't contribute, is this a source of irritation ? How do you shrug off a bad day - as you can't talk to anyone close, and it's hard to talk to like minded souls, as they are few and far between ?

Anyway, great Blog.

While there are some female traders, clearly there aren't too many. On the face of it, there is no reason why men and women shouldn't be equally good at trading, (or at maths, chess or any other cerebral activity for that matter), but the percentage is far lower. It would be interesting to find out what the females that do trade have in common with each other. Do they all have brothers or fathers who trade for example? How educated are they? Are they employed? What got them into trading?

Mike seems a very sociable trader. I know hardly anyone who trades. My son occasionally does, and an old school friend, but most people in my (limited) social circle don't, primarily, I think, because they don't have the time. Well, they DO have the time, but they choose to spend their time doing other things, which leads me nicely into Mike's final paragraph about the role of spouses, by which he means wives!

Does my wife understand trading? No. Does she want to learn? No, although she did say that if there were trading opportunities in Synchronised Swimming, she might be interested.

As I said in my last post, she's too cautious by nature. You need to act fast, if not in a split-second, within 24 hours. This time one year ago, when we were planning our wedding, she would spend hours and hours looking at different options for some detail before, and often with some hesitation, making a decision. Invitations. I would have popped down the road, bought some from the closest stationers, hand-written them with a cheap biro, popped a stamp on, and posted them off. Mrs Cassini-to-be? Oh no. She, bless her heart, ordered personalised, engraved invitations, that were then sent to a professional calligrapher (that's a hand-writing person...) for addressing in Spencerian script (I kid you not), before being tied with a blush pink satin bow, placed in the envelope with a special stamp, taken to the Post Office where she insisted on the postmark being applied neatly by hand, and then dispatched. The point is that she paid far more attention to detail than I ever would have, and when it comes to making quick decisions, someone whose mind likes to review all the options is going to get left behind. I've likened trading decisions to the Blink instinct before - you simply know it is value because past experiences stored in the brain tell you it is.

Mrs. Cassini is totally supportive though. When I have a good day, she doesn't care too much, and when I have a bad day, she doesn't care too much. There's no reason why she should. The money isn't money we 'need' - and she never even asks how much I made. I don't bother telling her most days, usually only if it was a particularly good or bad day, and she just leaves me alone to do my thing. Perhaps I'm just a solitary person, but whether I've won or lost, it's something I keep to myself. I will admit to feeling the need to tell people when I first found a way to make a profit, but soon realised that no one is any more interested in my having won or lost than they are in my holiday snaps. Would I go to the pub and announce that my shares went up by £1k or whatever in a day? Why would I do that with betting wins or losses? Mrs. Cassini doesn't even look at her stocks on a daily basis. I do - I just like to know what's going on, even though I am not looking to act to the price.

I'm also extremely fortunate to be with someone who is quite content to stay at home a lot, and it probably helps that trading is something that I was doing when we met, so she knew what she was letting herself in for! I think some friends of mine would actually like to learn, but their balls are firmly in their demanding partner's purse, and they spend their time cooking or running errands when they could be making extra money.

It might have been harder if I had discovered trading after I had met the lucky Mrs C, and tried to take up the new hobby if she was already used to more attention, but she really is low maintenance. The worst situation must be to be short of money, and be with someone who likes to go out a lot and / or needs a lot of attention. Very stressful, and to be a successful trader, you do not need to be constantly worrying about things like that. You need to be able to focus. Some of my worst losses have actually been when I have been limited by time, and got involved too deep and had to take a loss due to other commitments. I've learned now to just stay away.

More comments on other comments later - there are some good ones, but Mrs C. wants me to cook her breakfast now... Just a moment dear - I'll be right there. How would you like your eggs?

Inferior-Parietal Lobule

I posed the question, "why do you need to be male to be a successful trader?" the other day. After I'd written my recent post on youth versus experience, I got to thinking that in some ways trading is a little like chess - the important part is knowing what move to make rather then in how quickly the move is executed. Mike said:

I suppose a lot depends on what type of trading you partake in. For the last 5 yrs, mine has been speed based, so, I think you are a little premature to say, the emphasis on reaction time, isn't so important.

Many traders would pay many £000's, for a 1.10 sec edge.

The type of trading is everything, and speed based trading sounds hard work to me. While you certainly can't hang around when trading any sport in-play, if split-seconds are that important, then you would presumably need to be at the event rather than watching at home, given that "court-siders" are always going to have a speed advantage. While "court-siders" are certainly giving themselves the maximum possible advantage, the downside is that they are limiting themselves to one venue, as well as adding considerable expense (time, petrol, food, admission etc.) and inconvenience to their trading day. As for buying a 1.1 second edge, it sounds great, but it would be useless unless the advantage was exclusive to you. Good luck finding that deal anywhere. Fastest-finger might be OK when competing against a few people, but against hundreds if not thousands? And wouldn't a bot always beat a finger? It depends on the trigger I guess. Is it objective (scientific approach) or subjective (arty).

Anyway, back to my comparison of trading with chess, and I could have asked, "why are there so few women chess Grandmasters" or should that be Grandmistresses?. Mike again:

The male/female divide, is another really fascinating subject. I probably know - 300 traders, and only 2 are female. I am not sure I understand why, they can't or won't, make a living in these markets.

I would really appreciate your thoughts as to why females don't make it. (No sexism, just apparent fact).

My first thought is that Mike has a lot more friends than I do. I don't even know 300 people, never-mind 300 traders! My second thought is that the predominance of men in activities such as trading, chess, mathematics, and my own profession of IT is indisputable. Pythagoras observed 2,500 years ago that men are better at maths than women, so perhaps not much has changed after all. The top prizes in Mathematics, the Fields Medal, the Wolf prize and the more recent Abel prize, have been awarded a combined total of 105 times. Female winners? Not one.

Mathematics, and similar activities, just seem to be more of a male thing than female. My IT department had a meeting last week, about 40 people in attendance - and females? One, and that was because the Director needed his Administrative Support (read: Secretary), to press the "Next Slide" button. And I am totally serious. Not one developer is female. There are exceptions of course, but overwhelmingly, the computer related field is very much male.

The female brain appears to be better suited to other pursuits though, and there is a wealth of information and research findings on the Internet as to why this might be. Anything requiring empathy for example, and it's interesting that Autism and Aspergers, in part the extreme of lacking in empathy, is primarily a male trait, and I would imagine that autism 'sufferers' make excellent traders. They make excellent programmers!

It could all be down to our inferior-parietal lobules.

Scientists at Johns Hopkins University have discovered that there is a brain region in the cortex, called inferior-parietal lobule (IPL) which is significantly larger in men than in women. This area is bilateral and is located just above the level of the ears (parietal cortex).

Furthermore, the left side IPL is larger in men than the right side. In women, this asymmetry is reversed, although the difference between left and right sides is not so large as in men, noted the JHU researchers. This is the same area which was shown to be larger in the brain of Albert Einstein, as well as in other physicists and mathematicians. So, it seems that IPL's size correlates highly with mental mathematical abilities.

In general, the IPL allows the brain to process information from senses and help in selective attention and perception (for example, women are more able to focus on specific stimuli, such as a baby crying in the night). Studies have linked the right IPL with the memory involved in understanding and manipulating spatial relationships and the ability to sense relationships between body parts. It is also related to the perception of our own affects or feelings. The left IPL is involved with perception of time and speed, and the ability of mentally rotate 3-D figures (e.g. Tetris).

Chess Grandmaster Bobby Fisher may have been good at chess, but his anti-semitic, pro-Hitler and religious views as well as this comment on women chess players make it clear that something was missing.

They're all weak, all women. They're stupid compared to men. They shouldn't play chess, you know. They're like beginners. They lose every single game against a man. There isn't a woman player in the world I can't give knight-odds to and still beat."

Strange how someone can be so brilliant in one area, and such a retard in others.

Back to trading and women, and on a personal note, I've suggested that Mrs. Cassini learn to trade, but she doesn't think it's a good idea. She envisions a scenario whereby she's in one room trading away, while I'm in another. At the end of the session, I report a win of £1,234.56 while she reports a loss of ... £1,234.56!

She's more cautious by nature, doesn't care for sports, doesn't have the love for numbers that I have, and thinks investing would be more likely to be 'divesting'. She may be atypical, but I'm not sure she is. Women, in general, aren't into mathematics, are more cautious, aren't as interested in sports as men, and for trading on sports, all those factors are essential.

A final piece of research I found, and couldn't resist adding -

scientists have revealed that beer contains small traces of female hormones. To prove their theory, the scientists fed 100 men 12 pints of beer and observed that 100% of them gained weight, talked excessively without making sense, became emotional, and couldn't drive - no further testing is planned.

Casino Trading

Aside from the obvious physical benefits, running is also a wonderful way to free up the mind and let it wander. As is often the case, my thoughts today turned to investing, specifically strategies for beating the Premium Charge and the perennial debate over "Should You Get Out While You Can When Trading".

The answer to the latter is "No", if the only reason to do so is because "You Can". Just because "You Can" do something, doesn't mean that you should, that it is right, or that it makes sense to do so.

The easiest thing in trading is to find a trending market, ride the move for a tick or two, and jump off. But is that strategy going to make you money in the long-term?

Think of the Under / Over x goals markets. It's a given that so long as there are no goals and no one is sent off, the under price will contract and the over price will expand. Rocket science it is not.

At any time you can jump on, wait a few seconds or minutes, and you can jump off again with a high probability that you will have made a tick or two of profit.

Does it make sense to do this? It's a bit like playing in the casino. Do it one-time, and you have a good chance of walking away with a profit, but do it repeatedly, and successful trading doesn't usually mean a one-off trade, and you're not going to come out ahead. Sooner or later, that inevitable goal comes, and all your small tick profits are gone. And more.

The point is that you need to have an entry point and an exit point. You enter a market when it is value to do so, and you exit a market when it is value to do so. You may be able to lay-off at 1.01, but if the true probability is 0.001, why would you want to give that value away to someone else? If you need the 'insurance' then you are guilty of over-staking. If you need to free up the funds for something else then you are guilty of over-staking. If it's a life-changing amount, then I concede that losing a little value is acceptable, but I doubt that is the case too often.

If you backed Crawley Town to win the FA Cup at 1000 (bad value in the first place if you did, but bear with me), I doubt that you would wait until they took a 4-0 in the Final before considering locking in some profits.

The Young And The Reckless

Mike commented:

On the theme of growing up, do you think there is a prime age, within which traders blossom ? Or, is ageing actually a benefit, as what we lose in reaction time, we gain in maturity and balance ?

I am now 50, and still trade in-runing, where the ability to press a key quickly, is still needed. I can still compete though, sure, kids with Play-station honed reflexes, should be faster.

I think oldies are less likely to go on tilt - though, obviously, we all still do.

I have seen a lot of kids, do their bankroll - but by the same criteria, have also won, more than their share, due to a less caring attitude to risk.

Do you have any thoughts re the best age, for a trader ?

It's an interesting subject, and one that was touched on in this excellent piecewhich touched a nerve with me a while back, and may do the same for you!

I know that when I worked in the City, (70s/80s), traders on the FOREX markets and options traders were almost without exception in their twenties. Hit thirty, and they were moved to the back rooms, but these were traders who needed to focus on screens all the time, and react quickly. The infamous Nick leeson was still in his mid to late twenties when he brought Barings Bank down, so youth is clearly not everything!

Here's a typical response to a question on what is the right age to start (financial) trading:

I believe that the earlier the better. The younger you are, the more able you will be to change your personality and traits to be the ones of a great trader. (ever hear the expression you can't teach and old dog new tricks?) Same goes for here I think. I'm not saying that adult can't start trading, I'm just saying if you are the spontaneous, indecisive, risky and wreckless type of person, I don't think you can change yourself to better your trading if you are older.

My personal view is biased, because I'm an old bastard myself, and so tend to exaggerate the benefits of experience, but there are some. It also depends on your trading style. Personally, I am not involved in trading where I need rapid physical reflexes. Certainly I can't afford to sit around and twiddle my thumbs, and on occasion a great deal pops up that I move fast for, but any decline from your 20s to 50s is less than from your 50s to 80s and probably negligible. It's the brain that needs to react fast, rather than the fingers. Making the decision is the time consuming part, and in my opinion, an activity like trading is perfect for keeping the brain sharp.

Money will mean less to someone in their 50s than to someone in their 20s. Although I funded this whole enterprise with less than £100, I could have, if needed, raised more. £200 wouldn't have been out of the question. Seriously though, £1,000 to a fifty-something is a lot less than it is to a twenty-something so if things go tits-up, as happens to the best of us, I would favour experience over youth when faced with a loss in that range.

Bottom line - I think Mike puts too much emphasis on the importance of a fast reaction time. Trading isn't an athletic event, it's about identifying value. Older people, a lot older than me I might add, seem to have trouble understanding the concept of value, but if you understand that, have a few quid in the bank so that the odd loss doesn't impact your life in any way, I would favour age and experience over youth. At least to a point, and that point is still a few years away. We're good for a while Mike.

Oh, and to be a successful trader, you need to be male. Seriously - why?

Intuition And Harnessing The ParaBrain

- The act or faculty of knowing or sensing without the use of rational processes; immediate cognition.

When used in regard to trading, I think I would amend the above definition of intuition to include the word 'conscious' so that it becomes "The act or faculty of knowing or sensing without the conscious use of rational processes" because as Mark says, "

for an experienced trader such as yourself who has spent hundreds if not thousands of hours studying figures and watching matches and the markets it is all stored in your subconscious so when you get a feeling of how a game is going to pan out it is infact your subconscious that has trawled through all the data and is then driving your thought processes."

I was recommended a book a few years ago called "Harnessing The ParaBrain" by Tony Buzan, published in 1977, and I found a copy for £2.99 in a bookshop in Brighton a few years back, but it might have been easier to wait for amazon.co.uk to come along and order it from there! On the back cover it says:

Research shows that many of us use barely 1% of our brain's capacity. All of us have massive intellectual powers at work all the time; but we have learned to access only a tiny portion of that intellect. This enormous untapped potential is what is meant by the ParaBrain - continually at work in parallel with our 'normal' brain.

When you read some of the comments on the forums, it's hard to agree that all of us have "massive intellectual powers" at work, but the author's ideas are backed up by more recent research. The problem is not storing the data, but learning how to access it again.

Look After The Pennies

The above screen-shot (from tonight's Fulham v Chelsea Over/Under 2.5 goals market on Betfair) shows just how important it is to pay attention to the price you take.

For unders, you have two choices - back unders at 1.87, or lay overs at 2.14. A lay of 2.14 is the equivalent of backing at 1.877, and while that may not seem a lot, for someone backing with £1k, and winning, that's a lost £7.

For overs, you can either back at 2.12, or lay unders at 1.88. A lay of 1.88 is equivalent to backing at 2.136.

For the record, I have unders priced at 1.82, so I'll be laying the overs at 2.14...

Consideration

A winning weekend for Football Elite with both selections winning. Real Sociedad beat Osasuna at 2.2 and Valenciennes beat Brest at 2.1. After a torrid year to date, I'm sure these winners were very welcome for Matt. This weekend, I have added a couple of new blogs to the blog roll (and removed some dead ones) and one of the new ones is The Portfolio Investor which seems to have taken over in part from JP's old blog in that he uses a number of services for his bets, but I like that he adds a little commentary rather than simply list the P&L totals. He wrote a post called You gotta have faith in which he talks about Football Elite and what the best approach is during a bad run. Well worth a read.

My three strong draws produced two winners, and the ROI on these for 2011 is currently 25.53% with 7 winners from 19 picks (36.84%).

Rugby wasn't so good this weekend. England were too short to back, Scotland lost, while France were a winner but an overall loss for the weekend. And a small loss overall on the Super League opening weekend.

DA Points (I guess he doesn't think Darren is the best of names) won the golf at Pebble Beach to give me a small late night profit on the lay-the-leader after three rounds strategy, and that was about it for the weekend. A profitable week, which should have been better, but did I get the Total Charges up to the 20% level with the losers? That remains to be seen.

I seem to have mentioned the Utah Jazz a lot lately, and happened upon this piece about their former star Karl Malone:

Sportswriters who covered the National Basketball Association in the late 1980s and 1990s like to tell a story about Karl Malone, the great forward for the Utah Jazz. It seems that one day in the baggage-claim area of the Salt Lake City airport, a woman was trying to lift her bags from the carousel and, seeing Malone, who was there to pick up his brother from an arriving flight, mistook him for a skycap.

She asked him to carry her bags to her car.

Malone was a wealthy and world-famous athlete at the time. He could so easily have hurt the woman's feelings, rebuked her. But what did he do?

According to longtime Salt Lake Tribune sports reporter Steve Luhm, who covered the incident at the time and who confirmed it to me last week, Malone carried the woman's bags all the way to her car. Only when she reached for her purse to give him a tip did he in a friendly manner introduce himself and decline the offer.

I love hearing stories like this. A couple of friends of mine once found themselves dining in a restaurant in California along with John Travolta and Kelly Preston. Just the four of them in there, late at night, and the Hollywood stars invited my friends over to join them. Whatever you may think of their religious views (completely nuts), it's nice to know that they are decent, friendly, human beings. Other superstars do not have such a favourable reputation - with many NBA stars renowned for tipping badly for example.

As for DeMarcus Cousins, who allegedly took a swing at Sacramento Kings team-mate Donte Green for not passing him the ball in the last few seconds of their Saturday night game (they lost by two), this writer for one wouldn't miss him if he never played in the NBA again. Fifth overall draft pick he may have been, but he has a lot of growing up to do.

Art vs Science

Continuing on from my post a couple of days ago about falling in love with positions and going into games with a bias, I have a couple more things to add. Last night, one of the midnight NBA games was the Atlanta Hawks v Charlotte Bobcats. As I wrote before, one of my 'like' teams are the Bobcats, but having backed them they went on an 0-18 run to trail by 22, at which point I decided that enough was enough and reluctantly made my screen match my face (red all over). Somewhat annoyed, I no longer felt in the mood for trading and called it a night, except that I couldn't sleep. Maybe two hours later I got up to look at some other games, only to find that incredibly the Bobcats had rallied and won by two with a last second buzzer beater. To say this made me angry wouldn't be accurate, but I was a little fired up. Checking the scoreboards for other games, I found the New Orleans Hornets v Chicago Bulls game in the fourth quarter and after watching for less than a minute, I formed the opinion that the Bulls (down by four and priced at 2.7) appeared to have the momentum (all important in basketball) and took a position on them. In short, I let the bet run, they won going away, and I had made up for the earlier loss, although not the earlier 'lost win' if only I had let that bet run, if you follow.

Now, I generally don't jump into games in progress, because I don't have information that I need - things like foul counts and times outs left, all very important, or so I thought, but maybe that 'blink' moment Malcolm Gladwell writes about is all you need, and possibly it is actually advantageous in trading. You may not know all the stats, but maybe what's more important is how the game feels. I guess this is the 'intuition' that commenter Mark mentioned. His comment was this:

I agree that you need to take the emotion out of trading but do you think that there is a place for intuition within the discipline.

Do you think that if you have "a bad feeling" about a trade you should still make the trade if all of your research says you should.

What then would happen if that trade went the wrong way and a few days later you had that same bad feeling about a new trade. Would the damage done by the first trade affect your judgement, or taking it further what would happen to your confidence in the numbers if you just encountered a short run of trades that you had bad feelings about and they went on to become poor trades.

I think that if you are an experienced trader who has extensive records of your trades you could look back at them and help bolster your confidence, but what if you are relatively inexperienced, how would you cope then?

I am only making the above point because it sounds so easy to take emotion out of trading but I believe it is one of the hardest things to do.

Great post by the way.

I don't know about other traders, but keeping a record of every single trade would just be impossible. Far too many that are based on 'feeling' or 'gut instinct' - call it what you will, and hard to track all of them. Regarding the impact of previous 'bad breaks' on future bets, the answer is that it depends. If I have had bad beats in games involving certain teams and I have a game between two 'new' teams to consider, the past doesn't affect that decision, but if one or both teams were involved before, then it certainly does. Jason had some words on this:

It is interesting how social psychology has investigate commitment and consistency in people's behaviour and how this may be good and bad for gamblers - often the latter. What I find intriguing is how in some ways we wish to distance ourselves from our emotional attachments but at the same time that gut feeling is often just as compelling and just as meaningful - although often at first thought the two may seem contradictory.

I guess it boils down to whether trading is a science or an art. If it's a science, you build a bot, turn it on and watch the profits roll in while you stay emotionally detached. If it's an art, you rely on your gut instinct and emotions and watch the profits roll in with emotions stirred. I love my numbers pre-game, but my experience is that once a game starts, it is better to rely on feelings, often profiting from those whose scientific approach doesn't adapt fast enough to the reality of what's transpiring. I've written before that if a game is tied late on, then there is no logic behind a big discrepancy in price based solely on pre-game prices.

The Golden Age

Some interesting and kind comments over the past couple of days. Mike had this to say to my thoughts about the exchanges being a big game:

This is a quality piece. Its a shame about all the Spam, that Blogs seem to attract.

I have been with exchanges since 2001, and can certainly relate to a lot of what you write.

The Golden age is probably behind us, for many reasons, not least, Internet Bookmakers have stopped laying decent bets.

You can definitely beat exchanges, but, you have to an expertise in a certain field, and not be distracted to lose in others, where you are just gambling.

This should be easy, but, I find it incredibly hard.

Well done with this Blog. It looks good, and I especially like the General Betting blogs update.

I have started a blog - beatingbetfair - at wordpress.

I'm not sure it was a 'quality piece', but I appreciate the compliment. The point Mike makes about specialising and not getting distracted and losing in other markets where you are just gambling is a good one, and something I was guilty of for a while myself. After losses on football in 2005 and 2007 that made a big dent in the year's final profit total, I finally realised that jumping in and out of the in-play markets with no pre-defined entry and exit points was just never going to be profitable. I had no edge. What did I know, watching my TV that a few thousand other people didn't know? Nothing. Admittedly I do still sometimes dabble in these markets, but not with four figure sums. When you get burned with a couple of hits for those sums, (my biggest loss was £5k), you learn your lesson fast enough. When I get involved now, it's with small sums, and when things go wrong, as they do, I tell myself that any losses are for the anti-PC fund. Mike again:

I note you seem to like trading sports, especially Basketball. As this is pre-eminently an American sport, what are your thoghts re the legalisation of on-line gambling, in New Jersey, and maybe California ? Will they become gambling havens ? - will Betfair benefit ? Cheers Mike

The land of the free is a long way from allowing online gambling in my opinion. There are promising signs in New Jersey as you say but as Scott Ferguson, who knows far more than I do on this subject says

Sports betting still remains illegal in all bar Nevada, it covers racing only, and at that rate, probably only New Jersey racing. To make matters worse, it's likely to only be offered to New Jersey gamblers as well, at least initially, so there's no chance for any liquidity of note to build.

Betting in the US is hugely popular though, but unfortunately, so is Jesus, and religious people like nothing more than trying to impose their beliefs and ideals on others. Hear voices and want to own a gun? No problem - just sign here. You have a constitutional right to own an AK-47, Kalashnikov, Uzi... Want to play poker from your living room? Bad luck - there's nothing in the Constitution about that, but most states will let you buy a lottery ticket.

The kindest compliment?

Hi Cassini, Quit your day job and write a book!! You have a fantastic talent in your ability to write informative information and in keeping the readers intrigued on many various topics! Best blog about by far! keep it up and thanks for doing it for so long. Peter.

Thanks Peter. It's hard to believe that I started this blog just shy of three years ago with a post called "Opening Thoughts" where I wrote:

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.

Not much has changed, and what I wrote on the eve of my birthday almost three years ago still applies. I think the quality of blogging has improved though, although there are still plenty of P&L or challenge blogs that don't exactly set the pulse racing. The blog is also closing in on 200,000 hits and should meet that total before the three year anniversary.

The other comments I shall get to later.

Football today, and I haven't had time to look beyond the draw bets yet. My strong picks are Blackpool v Aston Villa, Bari v Genoa and Brescia v Lazio, while weaker selections are Nancy v Auxerre, Koln v Mainz '05, Juventus v Internazionale, Atletico Madrid v Valencia and Sunderland v Tottenham Hotspur.

And finally, nothing to do with betting or sport, but there was some confusion at work earlier this week when a telephone conference with about 200 invitees had to be rescheduled due to problems with the dial-in. A hastily put together e-mail was sent out, with the subject line: "This meeting will be reschediled - they apologise for the incontinence". Someone commented that there were two errors, which was true, but somehow I suspect it is the second that will be long remembered.

Stiff Upper Lip

The hardest lesson to learn in trading is that of letting winners run and cutting the losers short. It's a mistake I made when I used to mess about with traded options, and it was a mistake I made often when I first started trading sports. And I still do it occasionally. All the trading manuals caution against 'falling in love with a position', but it's easier said than done.

My boss sent me an article about interviewing, written by Blink author Malcolm Gladwell for a magazine, and there was an interesting part which read:

"Are there things that you think you aren't good at, which make you worry?" I continued.

His reply was sharp: "Are there things that I'm not good at, or things that I can't learn? I think that's the real question. There are a lot of things I don't know anything about, but I feel comfortable that given the right environment and the right encouragement I can do well at." In my notes, next to that reply, I wrote "Great answer!" and I can remember at the time feeling the little thrill you experience as an interviewer when someone's behavior conforms with your expectations. Because I had decided, right off, that I liked him, what I heard in his answer was toughness and confidence. Had I decided early on that I didn't like Nolan Myers, I would have heard in that reply arrogance and bluster. The first impression becomes a self-fulfilling prophecy: we hear what we expect to hear.

The point here is that the interviewer had decided very early on in the process that he liked the candidate, and so the candidate's answer was always going to confirm that opinion. As the article says, had he taken an instant dislike to Myers, he would have found the answer he gave 'arrogant'.

It's one of my faults, (not being arrogant, well OK, maybe) but I need to pause here for readers to recover from their shock that I do have some - it's a fault that I am guilty of the same crime of forming an opinion when it comes to trading. OK, so forming an opinion isn't the crime, it's the inability to easily change that opinion that's the problem.

Basketball is the best example here simply because there are so many games in a season, and over the course of several months one can't help but get a feel for different teams and for certain players. I have negative feelings about some teams, and positive feelings about others, simply because some have been good to me (by doing what I expected - be that winning or losing) while others have not been so good, either by fading badly or by being brilliant. Of course it's just the nature of the game, and overall I do OK, but when it goes wrong it is immensely annoying and almost seems personal, and when it all goes perfectly, then it's all down to my ability to astutely read the game of course.

So it's hard sometimes to take a detached view of a position. Ideally I trade games where I have no real feelings for either team, and my reading of the game isn't influenced by past experiences, but sometimes there aren't many games to choose from and if, for example, the Celtics cost me money on a Tuesday, then my opinion of them the next day is going to be different from if they had hit a buzzer-beating basket to win for me.

I have never had a good felling about the Lakers - they can be lazy, and Kobe Bryant can't score when I need him to, and when I don't need him to, he takes over games, and can't stop scoring. It's hard for me to put money on the Lakers even when I should - like last night!

On the other hand, my feelings for the Utah Jazz (who incidentally yesterday lost their head coach after a 23 year tenure) are positive because they can come back from big deficits. But in the NBA, any team can do that (well, except maybe for the Cleveland Cavaliers). It's just that I happen to have been on the Jazz a few times when they did it. And I'm positive on the Charlotte Bobcats. They've served me well in the past few weeks, while the New Orleans Hornets haven't. Just about every team evokes some kind of emotional response, even if I pretend it doesn't. I have a long memory, and can bear a grudge for years!

The trick is to take the emotion out of trading of course, but that's sometimes hard to do with so many games and just 30 teams in the league. It must be worse if you closely follow individual sports like tennis and darts, but I prefer team sports for trading.

One Big Game

Another compulsory donation to Betfair yesterday, (charges only up to 19.78%), money which apparently isn't being invested in improving the stability of the site. As someone with a few years experience of working in an IT, I'm well aware that these things happen, but a little honesty would go a long way. On Saturday when the site was up and down like a whore's drawers, they put a notice up claiming the outage was 'planned'. No one believes that, because it wasn't true. And I thought integrity was important in business too.

I was reading "The World Is Flat" recently, and it got me thinking that in some ways, the exchanges - read Betfair - are like a big game. We all turn up with our boots, (hoping to fill them), optimistic that on day one, we know something that a million other people don't know.

Some of us struggle from the beginning, and are driven out of the game early on. Some leave the stadium never to return, while others keep coming back, paying the entry fee and supporting the successful players financially. The officials running the game take a fee from the more successful players, and stand outside the ground waving the money around with special deals in an attempt to recruit more players. The rules change from time to time, and some winners fall by the wayside to be replaced by more innovative or perhaps fresher players, while others adapt, improve and prosper. It's not quite eleven years since the game started, and I have no idea how many people from the early days are still prospering, but I doubt that it is too many. There's the odd geriatric who thinks that horse-racing and punting is the way to go, and that value doesn't exist, but for many, including me, horses are smelly and unreliable things, and the best opportunities are in sports.

I am coming up for seven years on Betfair, having signed up at the end of March 2004. The early bird gets the worm, but second mouse gets the cheese (so THAT'S where it went!), and although I wasn't in the first wave, I wasn't too far behind. Seven years is a long time, but while the sun is still shining, it's not yet time to quit the hay-making. I may take a few more breaks though. April through September for example.

I came across the term Frugal Fatigue the other day - a term meaning essentially "a tiredness over pinching pennies" and the principle can be applied to trading. Why trade at all on days or events where your return is expected to be significantly reduced from other days when your better events are available? If you have nothing better to do, then so long as you make a profit, then it may be worth it to you, (at least you're not out spending money), but after seven years, and a pretty good idea of where the good and not-so-good days are, I'm becoming a lot more selective. Quality not quantity.

Royals Ransom

I was told this past weekend that my "blog is interesting when it's not about betting" and that I should write more about non-gambling related stuff, so here's a post about a relatively obscure baseball pitcher named Gil Meche. (At least it's sports related).

His story actually received some coverage in the Daily Mail, but as that 'paper' is unreadable for anyone with half a brain, I'm hoping no one saw it there. Gil Meche made the headlines last month because he announced that he would retire and forfeit $12.4 million on his contract, money he would have been entitled to simply by reporting to spring training with the Kansas City Royals. Shoulder injuries have made him ineffective over the past few years, (5 losses from 9 starts last season) and he felt that taking the money "just wasn't the right thing to do".

There's no need to pass the hat around for Mr Integrity though - over the last four years he's pocketed $43 million, so he should be able to put money on the table for a while yet. What did the hapless Royals get for their $43 million? Over four seasons, Meche won 29 games, and lost 39.

Liverpool and Chelsea will be hoping for more from their recent investments.

Goal Famine

I seem to have been all over the place this weekend. With the knowledge that a hit from the PC is coming, my bets have been, if not reckless, a little more free-spirited. I didn't pick a good weekend for the Over / Under experiment in the EPL, with a record breaking Saturday for goals, and Overs everywhere. Today I had Over in the West Ham United v Birmingham City game, and of course it finishes 0-1. When I looked at the Chelsea v Liverpool game on Friday, the Under / Over market was priced at exactly where I had them (1.9 / 2.11), but a little before kick-off this afternoon, and the Under 2.5 had lengthened significantly and was value at 2.08. I was a little hesitant, guilty perhaps of the 'anchoring' effect of yesterday's goal-fest, (a partial reason perhaps, why the odds had drifted so much) but I jumped on the Under and it paid off nicely for a profit on the day. Overall a small loss on the weekend on these bets, but if the Total Charges are over 20% this week, it'll be worth it.

There was an interesting discussion on the Betfair forum concerning someone (the Investor) who had lost £14k on the Newcastle - Arsenal game. The main point of contention was whether or not he should have layed off at 1.01. The individual concerned is one of the more successful on the exchanges, at least as far as one can tell, and my feeling is that he is successful, at least in part, because he DOESN'T lay off at 1.01 unless it is value to do so. A number of, to put it kindly, less experienced, or more bluntly, clueless, posters seem to think that you should always lay off at 1.01. Of course, these same individuals who have no concept of value are people whose banks never build up to the level where one can 'afford' to lose £14k. There's also the issue of how much £14k is to someone. One poster referred to it as a 'mortgage deposit' and for him that may be true, but for someone with a paid-for house, and a million or two in investments, (there were 489,000 UK millionaires in 2007), a loss of £14k is not much more than an irritation. In fact, it is quite likely that a down day for the stock market (not an infrequent occurrence) would result in a loss exceeding that amount, which is one big reason why the number of UK millionaires dropped to 242,000 in 2009! The bottom line though, is that you do not lay off at 1.01 simply because you can. You should do so only if it is value to do so.

At 4-0 to Arsenal, I would say that 1.01 was a value back, but borderline when reduced to 10 men. I wasn't watching this market, so I'm not sure how it moved, but I would imagine 1.01 was available on the back side once Newcastle had scored, and if I had £14k on the line, I'd be looking to close out fast!

No joy for Peter Nordsted's Drawmaster system this week, going 0 for 3, as did my strong draw picks. Two wins from four for Football Elite, with Bologna (2.16) following Hannover (2.6) today. Osasuna and Cagliari were the losing picks.

One strong draw out of three for me, with Auxerre v Lille at 3.3. These continue to be very profitable, and three for three in the Six Nations, with the brilliantly thought out strategy of backing all favourites paying dividends.

And then there's the small matter of the Super Bowl later tonight. The unique Green Bay Packers face the Pittsburgh Steelers in Arlington, Texas. While the Dallas Cowboys arrogantly claim to be America's Team, in my opinion it is the Packers who are more deserving of this name. The Packers are the only non-profit, community-owned franchise in American professional sports major leagues, and while the typical average city population of other NFL franchises is not far short of a million, the city of Green Bay, Wisconsin, has barely 100,000. Between them, the Packers and Steelers have won nine Super Bowls, with Pittsburgh winning a record six titles.

It should be a close game, with Pittsburgh +2.5 at 2.2 looking like the value punt. As one tipster says "Big Ben is really good at two things: avoiding rape charges and winning Super Bowls". There should be plenty of trading opportunities though for those who can sleep in.

Goals Galore

Quite a day so far in the EPL with goals galore and anyone on Under 2.5 goals being taken to the woodshed.

The early game set the tone for the day, with Stoke City and Sunderland coming up with five goals between them, and a game that was a likely loser from the second minute.

The Overs was won inside of 10 minutes at Newcastle with Arsenal off to 3-0 start, and Carlos Tevez had won for me within 39' at Manchester City. Wigan Athletic and Blackburn Rovers combined for seven for the third winner.

A last minute goal at Tottenham took away a small profit, so three winners from seven games at 1.74, 1.99 and 2.34. I need the Overs at West Ham tomorrow and the Unders at Wolves in a few minutes to turn a profit on these.

One advantage of backing Overs versus Unders is that they can be winners long before the game is ended, and even a goalless game late on can still turn into a winner.

An example of never-say-never was seen in an amazing finish at Newcastle as the home team turned a 0-4 deficit into a 4-4 draw, taking full advantage of Arsenal's reduction to 10 men. Obviously Arsenal traded at 1.01 for a lot (see screen-shot), the draw traded at 490, and Newcastle United traded at 1000. Very nice for someone, agonising for the money-buyers. Was 1.01 value at 4-0? Arguably, given that no EPL team has lost a 4 goal lead before, but I doubt that's much compensation to a lot of people.

Peter Nordsted's Drawmaster system picked Stoke City v Sunderland, Wigan Athletic v Blackburn Rovers and tomorrow's West Ham United v Birmingham City. Two losses so far, but a nice win for Football Elite with Hannover '96 beating Wolfsburg 1-0 at 2.6.

The Six Nations is off to a profitable start, with England winning at 1.59 last night, the only real close contest. I also bought some money in the Ireland v Italy game at 1.18 - Cassini going with his head rather than is heart - but a 13-11 win suggests that this was hardly value. I have France tomorrow at 1.14.

An apology is owed to Steve, whose post I referenced earlier today on the subject of targets. Steve's mention of 10% wasn't actually in reference to that number being a target for him, but as the daily percentage that his bets were returning.

However, my point remains that targets are nonsensical. Bet when it's value to do so, and don't when it's not, and if that means no action on some days, and 16 hours on others, then so be it.

Off Target

The author of one of the blogs on my blogroll had this to say in his most recent post:

I have done well today, considering my bank size and staking, I don't want to get ahead of myself too quickly, as I have been in this situation before and don't want to end up where I am out of my depth in terms of liability exposed to the market when it goes against me. Don't get me wrong it's been good making and increasing my Betfair bankroll by 10% a day but sooner rather than later I feel I would be in for a big shock if didn't start taking some out each day.

So what I have decided is that there are 24 days left in February so I am going to increase my bank by only 3% a day and withdraw the remainder of the profit at the end of each trading day.

Today I made £12.14 but I did get lucky by being on the right side of a couple of market spikes, not saying its all a bed of roses as I took a loss of £3.21 in the Lingfield 3:25 race, it wasn't a case of not accepting the loss quick enough, it was me getting involved in the market too early with too high stakes and market just plummeting away, I redded up but everything I tried just made it worse so I took the loss and moved on.

So bank increases by 3% and I take home £8.39

I have written before that the actual amounts people make is meaningless, since a £1 win for one person can be far more in real terms than a £1,000 win to someone else, but I don't understand what the writer of the above post is going to achieve by withdrawing a sum that is equivalent to about three pints of beer.

Nor do I understand the point of having a daily target, be it 10% a day (impossible to achieve for more than a few days) or 1% (equally impossible but achievable for a little longer perhaps). Targets just add pressure, and have the effect of either making you stop trading too early, or push you to make poor value bets. It's logical to stay on while the going is good and quitting when there's not too much happening, which is the complete opposite of what targets do for you.

But back to the subject of building a bank up, which is surely the goal of all of us. Fund your betting account with money you don't need - now or ever, and leave it there, at least until it can reward you with more than a few beers. The writer uses as justification that "I don't want to end up where I am out of my depth in terms of liability exposed to the market when it goes against me". This suggests that the bank reflects your liability, which is not true. Your liability is limited to what you put into the market, and if you lack the self-control to not risk your entire your bank on a trade, well, I'm sorry, but you shouldn't be trading. Leave the money alone, and slowly increase your staking in proportion to the size of your bank. You'll soon reach a level above which you either can't get bigger bets on, or you don't feel comfortable betting them. A stake of 2% is fine when you have a few hundred in the bank, but when you have say £50,000 in there, 2% might make you uncomfortable.

My personal preference is to pull out money only if (OK, when) my wife tells me I have a specific (and large) expense to cover. I typically have far more in my account than I will ever need, but in the event of a disaster, I like to have more than enough of a cushion to bounce back without ever having to top the bank up again.

Holidays, air fares, (and in recent months apparently windows, furniture, engagement ring and weddings) - expenses like that are legitimate reasons to me (if I know what's good for me) for a withdrawal, and I pull out round numbers occasionally (five times last year), which makes it much easier to track P&L.

And for married men out there, there's another reason to leave the money in your trading account. The wife can't see it or get her hands on it! Note to self - do not share news of decent wins any more.