While I was away earlier this month, I had an email from my old friend Tony, aka Fizzer, who wrote:
Some really good stuff on your blog this year, and it looks like your love of blogging has been revitalised with 100 posts already in 2017, compared to 135 in total last year.Tony seems to be tracking my numbers closer than I am since I had no idea my blogging was so relatively prolific this year compared with last. The 'some really good stuff' comment is especially appreciated. As any blogger knows, it's not always easy coming up with a post, but I'm under no obligation to post every day, and I don't worry too much if I miss a few days while awaiting inspiration.
I really like the coverage you have been giving on the pitfalls of in-game trading and spending money with 'trading touts'. Some of your blogging during the Australian Open about the futility of tennis trading was about as subtle as Alex's behaviour modification treatment in A Clockwork Orange, but if it saved some of your readers from losing money then it was well worthwhile.
I'm a rare Betfair user and, as you know, a baseball 'bet and forget' man but last Friday night, with nothing interesting for me in the baseball games, I found myself following the Everton v Watford game and, convinced that Everton would, at the very least, score in their final home game I had some small lay bets on 0-0 and 0-1 on Betfair, interested in following the market.
When Everton scored both bets were winners so the £9.50 profit on these bets is secured but looking at the screen a few minutes later (attached) I'm being offered a cash out for £6.23. I'm sure you have seen this before but it seems nonsensical to me. Even if you allowed for the fact that the model still has to price 0-0 and 0-1 at 1000, then 1 penny stake on each of them would be enough to level the book and cash out a profit at £9.48.
It suggests to me that the Betfair cash out model is very sub-optimal and, in addition to any concerns that cashing out is not a good option anyway, the cash out calculation is not being done using available exchange prices. Any thoughts?
This month is also the first with a daily hit average of over 1,000 so it appears I am doing something right.
Tony suggests that my pitfalls of trading posts during the Australian Open were not exactly subtle. That was for a reason, which is that in an environment where most readers are looking for conformation that 'it can be done', and 'we're all winners', even though just a cursory examination of the logic would soon dispel those illusions, the only way to help people is to be blunt about it. Even so, people believe what they want to believe.
Psychologists call this Belief Perseverance:
People tend to hold on to their beliefs even when it appears that they shouldn’t. Belief perseverance is the tendency to cling to one’s initial belief even after receiving new information that contradicts or disconfirms the basis of that belief.On saving people wasting their money on 'trading touts', I fear this is a losing battle. It's not helped by official Betfair Twitter accounts promoting garbage like this:
Depending on the racecourse and the popularity of the event, certain races will be featured on TV
As traders, TV pictures are important to us as they can give us a warning of what might happen in the market. Failing that, they often help us understand why things have already happened in the market.So the claim here is that TV pictures are both useful for predicting the future in a market AND explaining what just happened in a market? It has to be one or the other!
If TV is helpful for explaining the past, then I'm not sure understanding why a market move just happened is of any use to the home-trader at all, other than to hopefully help them understand why they are now looking at a loss, and prove to them that they are engaged in an ultimately futile exercise. Someone is ahead of you.
As for the claim that TV is helpful for predicting the market, well sorry to burst the bubble, but TV pictures are useless for trading. This is a false claim.
Betfair, TV broadcasters and others may want you to believe that TV time is real-time, but it's not. It's not even close.
TV pictures are, by all accounts, several seconds at least behind real-time, and you don't need to be Hercule Poirot to know that on any given day, on any given course, there are likely 20 plus track-siders present who are thus several seconds ahead of you.
You are not going to obtain any information from your TV that hasn't already been seen, evaluated, and acted upon, by others before you.
If you, and I think quite logically you can, assume that these full-timers are not donating their money to the market each day, i.e. they are net winners, how can you, sitting at home, seriously think that you can overcome this disadvantage over the long-term and make a profit?
It's a zero sum game, and as the Warren Buffett quote from yesterday puts it:
"If you've been playing poker for half an hour and you still don't know who the patsy is, you're the patsy."No guide in the world is going to be able to help you overcome this disadvantage. You are always working with stale information, which would be a level playing field if everyone else was too, but you're competing in markets where others have more current information than you.
It's frankly delusional to think you can be competitive under such conditions.
How subtle was that?
As for the Cash Out feature on Betfair, also available on other sites, I can say that I have never used it. I'm aware that the calculation uses the current odds, (or so Betfair claim):
Betfair do the math to offer you a value in real time of your current bets based on the live market prices.Thus in an illiquid market you will already be getting awful value.
The screenshot above from Tony is a great example of how useless this feature is to any clued up trader.
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