Thursday, 5 October 2017

Simplicity, Consistency and Speed

Tony Stephens chimed in on the Fundamental Analysis v Technical Analysis debate. He writes:

If you take James' criteria you have satisfied one element in the short price fav "system" in that you are looking at market price data. You are then using historical win, draw, loss data to work out if that historic price was correct or not. For me this is weighted towards fundamental rather than technical. You are not considering any other elements of the market structure to fully qualify for the technical status ;-)
Let's review this comment. The "short price fav system" does indeed look at market price data, i.e. it looks for favourites with an implied win probability of two-thirds or greater, 1.50 or shorter in Betfair terms. That's all it does, simplicity at its most extreme. 

Where Tony is mistaken is that there is no further analysis. I don't look at any win, draw (there are rarely any draws in modern baseball), or loss data, nor do I work out if historical prices were correct (I know they weren't, or I wouldn't be following this system). 

So there is nothing fundamental here at all. The only reason I even look to see what team is playing, is because it's hard to place a bet without knowing that key piece of information.

If I were to look at the entrants and then make decisions based on the pitcher, the quarterback, the weather, the point guard, team form etc., now that would be fundamental analysis. 

I don't agree that because the system concerns itself with just one technical element, it means that the technical element it does use (i.e. market price) defies the laws of nature and becomes fundamental.

Somewhat related, and perhaps coincidentally, perhaps not, but @Statsbet asked via Twitter:
Have you ever thought of adding fundamental analysis to the technical to improve selections, e.g. for the National League, using Skeeve fundamentals applied to trend technical?
Of course the idea has crossed my mind, but as I responded, in my opinion:
the benefits of a technical approach are consistency and speed, and you lose those if you start adding a fundamental filter.

1 comment:

Tony Stephens said...

Yes you have already calculated the historic prices were not correct as your system is looking at historic win / loss % v historic implied probabilities. So you continue to do this or you wouldn't know when to stop following it. If the current market structure was such that there was £5bn available to back and less than a £1k available to lay your system could still be telling you to back. Would technical data not relate more to what's actually happening in the current market, in terms of prices and volumes etc, and what chance of success you might have when similar market structures have occurred previously?