Friday, 17 February 2012

Roman Lesson

I had an e-mail, and a couple of comments on my last post, that rather neatly tie together. Ian Erskine, of ‘Lay the Draw’ fame and fortune, was touting his new £1,000 a member, poor man’s version of the ill fated Centaur Trading’s Index Fund – invest, sit back and relax as the money rolls in and you pay Ian a monthly fee, but the part of the e-mail that was of more interest to me was his comment up front that:
Gamblers are negative, they make me negative, the forum is negative. In fact I look at things daily and wonder why almost any of you bother putting yourself through it and I am sure you would be better elsewhere with your time and money.
Shortly before reading this, I saw a comment on the blog from BigAl regarding the XX Draw Selections and the Selections Century post of yesterday. BigAl wrote:
You can probably knock about 7 units off the draws’ profit.

What I mean by this is a) take commission into account b) not upping the price of selections by using the price which is available to lay.
a comment which rather illustrates Ian’s assertion about negativity. It speaks volumes that this is a trait you tend not to see among the more successful of traders.
A silent struggle with our money is raging. Everyone wants to keep up with the Joneses, regardless of income, occupation, or net worth. Our contentment is based not on the size of our bank account but on how we measure up to those around us.
As I am sure BigAl is well aware, the reason that most, if not all, services do not include commission is that this cost varies for each individual, depending on where they bet and the commission structure in place. Similarly the starting cost of any services is usually excluded from the figures, as is any mention of the time it takes to operate the bets, which allows for Service A to be directly compared with Service B. If you are thinking of using a service, then you of course need to factor in your initial costs, your commission, the time it will take to manage your bet (an in-play system taking more time than a punt for example) to decide whether or not it is worth it. The numbers are a guide, and a way of comparing different systems on as level a playing field as possible.

As for the prices recorded, these are all matched prices. BigAl may be a subscriber, and getting a little confused here. When the XX Draw Selections e-mail is sent out, oftentimes the market is immature, and I suggest a price that ‘should be attainable’. It is not the price that is readily available, because in my experience, if the back / lay prices are 3.5 / 3.55 respectively on a Wednesday or Thursday, you will be matched at 3.55 more often than not for a weekend game (especially if the match is a Lay The Draw pick!). Ask, and you shall often receive, and it is best practice not to take what is readily on offer. Those 0.05s can add up over time. The draw price rarely moves significantly, and so getting in early and being patient usually works. If the 3.55 is not matched by kick-off, then I will take the 3.5 available and use this price in my records. The price sent out in the e-mail (suggested) is not necessarily the price used in the records, which is the price that I am myself matched at. If others are matched at higher, then great, but using the prices that I get makes sense to me. Incidentally, it can be worth putting in a back at 3.6 (using the earlier example), as the market does occasionally mean these get matched.

Anyway, apart from being mathematically incorrect (even if we assume 5% commission on winners, and take .05 less than the matched price, this does not amount to 7 points), the negative tone of the comment is typical of many who, even when presented with a profitable set of results, prefer to nit-pick rather than use the information to their advantage. It would seem that this is something that Ian Erskine is also seeing. Whether or not his claims to have won £168,436 in 2011 are true or not, and I have no reason to doubt the claim, it would appear that many people are simply unsuited to gambling. They lack the ability to see long-term, the discipline to keep making the necessary bets, and the patience to see the task through. As a side note here, according to a lecture I was listening to recently, the three great strengths of the Romans back in the day were their determination, organisation and discipline. Seems like some of us can learn from history, as those strengths are all very relevant to profitable gambling.

And yes, as Mark Iverson commented, depending on when you start following these selections, returns will vary, although Mark is teasing with his numbers. He claims to have 8 points to make up, yet even if he had started at the worst time, he would be down only 7.3 points - not including commission of course! The Draws had a poor run for the two months of late November to late January with just one winner in 24 bets, but anyone following the suggestion to back the Unders in these games would have at least have had their losses cushioned. Had Mark been betting the Unders, his loss of 7.3 points would only be less than 2 points - 1.96.

The success of the Unders is interesting, in that they were the by-product of my attempt to find draws, whereas it is arguably more logical to look for low-scoring games, knowing that if you can find those, the draws will come. With the price closer to evens, (average is 1.92), losing runs on these bets are also much lower, although the current record of four is unlikely to remain the longest sequence for too long. An ROI of 13.4% (excluding commission) is really quite a bonus, or perhaps the selections should be the XX Under Selections with backing the draw as the bonus?

I make no claims that the XX Draw Selections, or their sister Unders bets, will forever continue to perform as they have done over 300+ events, but with a strike rate that represents an average price of 3.04, and bets matched at an average price of 3.58, that seems to be far more of a positive to comment on rather than complaining that commission isn’t included.


Mark Iverson said...

Think it was only 1 draw in my first 23 selections that killed me, but that's life.

Steve said...

As always an excellent read

BigAl said...

I think the important point is, if you're advertising a service which has "achieved" a ROI of x% historically, then the x% should be the true number. By not including commission, you're hiding the truth which suggests a less than reputable service.

You're correct, I miscalculated when I came up with the number 7. But it would still make a highly significant difference to the profit (ROI). And ROI is exactly what it stands for. Your ROI isn't.

It's like betfair advertising the fact their prices are better than those offered by traditional bookmakers, without mentioning commission. Something I believe they have rightly been pulled up on in the past.

Since you're charging subscribers for your service, you should be wholly transparent with your promotion of the service.

The bottom line is, you're claiming you make a much higher ROI than you do. Should the "P/L" hit zero, then you'll actually be making a fair loss but not declaring it as such.

Cloppa said...

The ROI on the XX Unders is actually 13.38% not 13.4% as stated in your post ;-)