Tuesday 19 February 2013

True Fiction

The Fibonacci Fibbing post drew a couple of comments. First, this one from WhyAlwaysMe:

Backing draws is quite a limited strategy in my opinion. I believe the common argument put forward is that the draw can be 'value' because it is not a popular bet. However this conveniently ignores efficient market theory - on Betfair the odds are generally accepted to represent a 'true' price in liquid markets. In other words if the draw gets too big the big pro players will come in and take up the slack. So the draw can be unpopular among small bettors but also well supported in the market.
But I have another reason for not being keen on the draw, which is the limited upside. If you look at historical odds the draw is always going to conform to a narrow range, there will always be a ceiling. For the vast majority of games the range will be between 20% and 32% for the draw, so however good you are you are always playing in this narrow band. About the best you can hope for is an advantage of 2 or 3% realistically and that's if you get everything right.

If you are on a winner system it is possible to identify winners prices at 33% that are close to 50%. The margin of safety is much bigger on the win because you are operating in a much bigger band than with the draw.

I hope I am getting the point over - if you are playing the draw you do have to be super accurate because the bands are so narrow.

Don't get me wrong - beating the market by 2 or 3% is very decent if your model is that accurate. But personally I prefer a bigger margin of safety than that which is why I would always look to the winner markets on football betting.
An interesting point of view, and it’s worth addressing some of the points. To start, I don’t agree that backing draws is a limited strategy. When viewed on a match to match basis, it is certainly not a get rich quick strategy, but it’s important to consider the number of opportunities a strategy provides as well as its potential rewards.

Most would agree that a small edge on several bets a week is more useful than a larger edge on an annual event. There are football matches every day, so even a small edge here will soon add up. For this reason, I don’t view the ‘limited upside’ as a problem at all. If I can find draws that should be 3.25 at a price of 3.5 or so, I am a happy camper. The sky's the limit, and for me, the robustness of the draw price, meaning that any downside is limited, is more important. Despite what the Fibonacci article implies, draws are very rarely in the 2.62 range, and rarely as short as 3.2, and for my XX Draws the average is closer to 3.5.

WhyAlwaysMe suggests that it is possible and safer to identify winners at 3.0 that have a ‘true’ price of 2.0, (a 50% edge incidentally), than it is to identify draws at a smaller edge.

Possible? Yes, safer, yes. Probable? No. Seriously, how often is 3.0 going to be available on a ‘true’ 2.0 chance in a football match? If it is with any frequency, then you simply employ Kelly and retire with a small fortune after just a few weeks.

It’s simply not realistic. Betting is not that easy. This so-called big ‘margin of safety’ doesn’t exist. Unless you have inside information on a fixed match, successful football betting isn’t about having rare big wins at 3.0 on a 2.0 chance. It’s about finding repeatable, and typically much smaller, edges and eking out a profit in the long run.

It is also wrong, in my opinion, to talk about the draw as somehow different to the ‘winner markets’. It is precisely this, to my mind illogical, way of thinking that reinforces why it may be easier to identify value on the draw than on a so-called ‘winner’.

Does it make the draw more back-able if the three outcomes are listed as Home, Away or Draw rather than Liverpool, Arsenal or Draw?

As I wrote in a post at the weekend, whether you are obtaining 1.61 on a 1.46 shot or 3.3 on a 3.0 or 8.8 on an 8.0, it all works out the same. You have the same edge (10%) in each example. If you find it easier to find this edge on the Home team or the Away team, then that’s great, but I’m not sure it’s consistently that easy, especially with odds-on selections. Sometimes it pays to be unfashionable.

On the ridiculous Fibonacci staking method, Richard writes:
Martingale by another name isn't it? I've always felt that the reverse Martingale type plans are best, or at least more fun, for sports betting i.e. increase stakes on a winner, reduce stakes on a loser, though clearly it depends on what sport and the winner/loser ratio.
Martingale is simply doubling up after a loss, and can only be used for selections priced at evens or above. Its limitations are well known. Fibonacci increases stakes after a loss somewhat slower, (but rapidly nonetheless, and requires a price of around 2.618 (after a handful of losses) for a winner to recover previous stakes.

Some of you might enjoy reading Norman Leigh’s 1975 book Thirteen Against The Bank - “The True Story of How a Roulette Team Broke the Bank with an Unbeatable System” although the accuracy of that statement is placed in some doubt with the book’s classification as ‘Fiction’!

It supposedly describes using the Reverse Labouchere (cancellation) staking method on roulette in a fictional casino in 1966, and I remember it was an interesting read, although I was easily impressionable back then thinking that a clever staking system should be able to make a negative expectation game profitable.

It was in the late 70s when, anxious to try out one such brilliant system, I wrangled an invitation through a colleague to an illegal Chinese run gambling den somewhere close to Piccadilly Circus. I was a little surprised that not only did they let me record the outcomes of spins and take notes, but they provided the pencil and cards for it. This was all too easy I thought.

I didn't win, and had to go in to work next day.

My partner in crime that night stopped coming in to work soon after. He was working the graveyard shift, and thought it would be amusing to call the department manager up at 3am and report a problem with the computer system. In those days such a call necessitated getting dressed and driving in to the office, and he was none too pleased to arrive at the office and find my erstwhile friend somewhat the worse for wear and slurring "April Fool" to him. I never saw him again. Perhaps he found the Roulette Holy Grail?

This quote from Calvin Ayre has already been highlighted on Peter Webb's blog, although Peter's choice of post title - Betfair weilds the axe -looked most unwieldy, but the quote was very funny and worth repeating. 

Writing about the latest Betfair redundnacies, and Betfair's 'rescue plans' announced by CEO Breon Corcoran , Calvin wrote:
Pardon us for saying so, but this is akin to a straight guy planning to ‘reinvigorate’ the number of girls he scores with by working out, getting his hair cut, then spending a lot more time in gay bars. There is no ‘free’ nor ‘easy’ business to be had in highly regulated and competitively mature markets, just as there are comparatively few straight single girls to be found in gay bars. But we suppose this is just the way public companies view the world.
Perhaps Betfair should keep their eyes on developments in the US, which is finally moving towards legalising on-line gambling. 

Opportunity dances with those already on the dance floor.” - H Jackson Brown Jr.


WhyAlwaysMe said...

Thanks for the reply Cassini, I did have a wry chuckle at your clever headline too!

OK first things first, you were correct to say my 33% to 50% example is totally unrealistic. Think I must have been using one of those 'inflation tools' that certain system sellers market. But to give an example from real life, it was possible to back Huddersfield on Sunday at 3.80 and they kicked off around 3.10 on Betfair which works out at 22.55%. Now I know this sort of movement is not very common but a 10% edge can be found a few times a week. I do however accept it won't be much more than this, to get more turnover you have to look at other sports too I think.

That post you did on working out your edge was really important and very helpful, it really gets to the heart of the matter.

Turning to your draw systems, I believe you previously said your average advantage was about 3.25/3.11 which I make to be just under 5%. Is this a direct comparison with the Betfair kick-off price or a theoretical estimate ie Betfair is wrong on the particular match and your 3.11 is the 'true' odds?

What I am getting at is how do you measure your system's performance? I see the two draw system's are up about 10 units on 300 selections against a theoretical 15. However draws could have been more prevelant this season (the Premiership is 30% for example) or you could have had more winners than might be expected.

Cassini when I look for a rational argument for backing the draw from you I can't find any. So far all you have said is it's 'easy to back' and 'unfashionable'. To me this sounds like just the sort of guff you call other system sellers and bloggers out for. It's really disappointing.

If you think for a minute about how markets are formed your 'unfashionable' argument collapses. 1X2 markets are formed from Asian Handicaps, which have the draw in them, so the draw is not infact unfashionable atall. Also if you are saying the draw price is out 5% that means the 0-0, 1-1 and 2-2 are out too, aswell as the U1.5.

Being a cynic, what's to stop me using the same sales pitch and setting up my own draw system? Hey the draw is easy to back and I'm a counter-trender. All you have to do it seems is pick the biggest draw percentage games, with a few bigger prices thrown in for luck, get out a prayer mat and hope for some positive variance for a couple of seasons! Charge £20pm per client - TYVM.

Cassini the reason I am having a pop like this is if you go to FB Elite or wherever it's basically done on trust. The guy is saying to you 'I have a private method of gaining an edge, trust me here is my record'. You either buy into it or you don't. But what you appear to be saying is 'buy my system because the markets are wrong', yet I've never seen any evidence from you to back this statement up. Which is irritating.

WhyAlwaysMe said...

A couple more things.

I've been over the Prospectus and it shows an estimated profit of some 71 units for a previous period. But what I noticed is that a lot of profit came from U2.5, which if you are backing the draw is a correlated bet. Really you are double counting, if the draw comes in the U2.5 will come in most of the time.

Also your table is quite misleading. You occupy the first three places but your system as a whole is in loss! Either you are competing or you're not, how can it be right to split them up in this way? If you want to split them you could do it outside of the table.