Trap Bets, Bots And PC

It's usually disappointing to see Brighton and Hove Albion win, and never more so than when their victory marks the final bet of the 2015-16 Lay Last Loser System which finished with an ROI of 21.8% from the 15 bets.

We'll see how it works next season, but with a maximum possible loss of 5 points, it's neither going to break the bank nor make your fortune.

Games commented on James' comment:

I get it, he is calling you old.

Yes, I think he was. Not the first time I've been called old, and often there's a seven letter word following close behind, but James at least spared me that.

Triggered by the topic of Betfair allowing bets where one party risks nothing, Bossman Megarain has this to say on 'trap bets':

I disagree Betfair closes down, anyone naughty.

On many markets, trap bets, are placed, and its frustrating to see how long this practice is tolerated .. I would have thought, a company as 'great' etc, could have found a way, to stop it.

For those unaware .. this is what happens :

Take a run-lines market, which isn't very busy (volume has dropped off a cliff), someone will offer, maybe £35 at 1.70. The lay side is empty, so, a trap bettor will request, £35 at 171.

If you think 1.70 is fair, you might be tempted to lay 1.71, but, its not, its 171.

I heard rumours, in the early days, Betfair ran their own trap Bots.

I sincerely hope, they never did/don't.

I have no idea whether Betfair ran such 'trap Bots' but from my own observations on lean markets, I don't think this was the case, although as James says below, "why shouldn't they"? The problem with banning trap bets is defining exactly what a trap bet is in an illiquid or volatile market. I've seen 1.01 traded on both sides of a binary bet seconds apart. Here's James being anti-antagonistic...:

Running a "fat fingers" bot is a standard algo-trading technique both in sports and financial trading. Not that I think such a trade makes much money these days as most people trade through third-party software. You can easily fat finger trade on Betfair's website but not so with third-party software. It would be hard to do a trade as you mention on a ladder and impossible via a bot.

As I said in a previous comment, fundamental and technical trading are chalk and cheese.

Whilst you might love sport, the rules (and the tedium) there are others who love the numbers for themselves and building abstract trading algorithms with no interest in the underlying activity.

In finance that is what the "rocket scientists" are for, to have no interest in the trading or economics of underlying securities, just the skill to shake-down another trading firm.

Being an algo-trader, you and anyone else who puts their money up as risk is fair game. The exchange was created so that people could trade and that is what traders do.

Being an ex-cycle racer, I have no interest in soccer (there, I said it), cricket, rugby or any other sport (with the exception of hurling). For me it's the fun of out-witting a market without a care for the underlying sport.

Betfair runs all manner of bots to coax money out of naive bettors and botters. Why shouldn't they? The Betfair exchange is a form of dark pool and so they can do as they please with it.

They have shareholders to take care of.

http://www.betfairprotrader.co.uk/2014/08/is-betfair-exchange-form-of-dark-pool.html

PS - If I come across as being antagonistic then it was not intentional.

Megarain Bossman responded to fellow ex-cycle racer James with:

Hi James,

Your comments are not antagonistic .. all debate is welcome.

I understand your arguments, but have never understood how Financial markets can Bust trades, that are clearly a fat finger, but, Betfair, allow Bots to encourage someone to make a very expensive mistake.

If it's a naive user, the trap bet will probably make a severe dent in their bank, and leave a very bad taste .. hardly encouraging future trade.

I am not sure of the number of users who trade via a ladder, as opposed to grid interface -- but, I have traded for many years, and trap bets, can still catch you .. unless you put in specific overrides, which, may encumber other bets you would like to make.

My opinion of Betfair as a company, has steadily eroded over the last 10 years .. I would have thought, running Bots in this manner, would be contrary to best Financial practice .. but, maybe they are not regulated, to the same level as a financial services company .. and can do as they please.

Looking at the turnover figures, since the inception of PC, it would certainly seem, they are running a shrinking business .. which I just shake my head at .. but, clearly, someone is happy.

I'm not sure anyone's opinion of Betfair has improved over the past 10 years, well certainly not that of many customers. The cross-matching implementation was an own-goal, and the implementation of the Premium Charges further damaged their reputation, especially when it became apparent that insiders were well aware of the court-siding going on, but rather than tackle that problem (consistent "winners" taking too much money out of the pot), they decided to allow the practice to continue and, a little short-sightedly in my opinion, make some money off it. The fact that former insiders were heavily invested in court-siding just left an even worse taste. Were Betfair subject to the same scrutiny as some of the financial firms, one can imagine a large fine being imposed and non-court-siding PC payers being compensated, but where's the oversight?

Blatantly Successful

The 'Lay The Last Loser' produced another winner at my old friend Neil Redfearn's Rotherham United on Tuesday night as Brighton and Hove Albion continued their appalling run of form.

Bet 15 sees Brighton play at Blackburn Rovers. Let's hope it's not the final bet. Neil was a neighbour in Caterham during his days at Crystal Palace, and I helped him out with his training one day, a story for another day perhaps.

Successful James was back, correcting my writing:

For 'blatant' read 'successful'.

We are talking from the same page with regards to the penny bets. It's still a zero sum game minus Betfair's commission. No money is being magicked from anywhere other than the Bank of England. Betfair will close down anyone taking advantage. (Apart from themselves, of course).

Trader247 confirmed my hypothesis in a post on his blog some time ago.

Maybe you are getting a little too old and should stick to the form book and leave the algo-trading to the youngsters (i.e. those of us who know who Simon Groom is,) though you might want to catch up a little by trading in your Baird Televisor.

Well that last paragraph was a bit rude I thought! I'm keeping the years at bay just the same as Gary Lineker is - he even copied my goatee:

Lineker, 55, has quietly separated from his wife Danielle, a Welsh former lingerie model, 19 years his junior.

19 years! That kind of an age difference is always going to end in tears...

Pennies To Nothing

In a blatant and unabashed attempt to promote his latest best seller Programming for Betfair and doubtless increase the hit count on his Betfair Pro Trader blog, James posted a comment on my penny post yesterday.

As you confirmed elsewhere, you placed your £200 as an offer to be taken on the Betfair order book. Being 1p lays they are unlikely to be attempts at balancing someone's book. Actually, I recommend in my book (Programming for Betfair - available in all good Amazons) that people use 1p bets to test new bots, but only sparingly. Do it too much and Betfair will close your account. Do it once and the bot is tested.

Although a 1p bet appears to be risk free I am sure that Betfair notes the fractions of a penny in actual risk. Do this trick thousands of times and it all gets added together to create a real risk, but your account will be closed in addition to any loss incurred being taken.

Another sub £2 bet I employ is for bot baiting, placing 10p or 50p between large spreads to see where Betfair's and other bots are interested in taking volume. This gives me an idea of the current price range they are willing to trade at. Fundamental and technical trading are two different worlds. What appears to be odd behaviour to a fundamentalist such as yourself is perfectly rational to the technicians working in the same market.

A little light bot reading... http://www.betfairprotrader.co.uk/search/label/bots

PS I await my fee.

The part of this that I have a problem with is the middle paragraph: "Although a 1p bet appears to be risk free I am sure that Betfair notes the fractions of a penny in actual risk. Do this trick thousands of times and it all gets added together to create a real risk".

I don't think this is correct, or maybe I have misunderstood James. How does this become a real risk? How does it ever get added together?

From the settlement screenshot above, it is evident that the four components of my £200 bet were settled as four individual bets. 

Any fractions are not accumulated anywhere, they are lost because each bet is a unique bet with a unique reference number, settled independently, and thus three of the bets won me precisely nothing. 

In the unlikely event that my bet had lost, my loss would have been 3p, with the layer (presumably the same bot was responsible for all three bets) benefiting by this amount. 

My problem is not with penny bets, or bets of any size for that matter, (the same strategy will allow a 49p back at 1.01 to be taken with no risk to the layer).

My problem is that Betfair matches a bet where one party has nothing to lose, but a wager is defined as:

An agreement under which each bettor pledges a certain amount to the other depending on the outcome of an unsettled matter

By definition, you can't have a bet where one party is risking nothing! Perhaps Betfair do take action and closes accounts trying this, but this has been an issue for a long time and continues to be so. It might be cost effective for Betfair to make a small code change and put in an "if no risk then no bet" check rather than chase people after the fact.

PS I await my fee. When I receive it, I shall be only to happy to split it with James. There may be a small wait.

Programming for Betfair, a guide to creating applications for direct access to Betfair's exchange. A useful guide for those wishing to implement an algorithmic trading set up.

No previous programming experience is necessary to build the applications in the book. After completing the programming exercises the reader will have a powerful tool for gathering prices for database creation, strategy building and algorithmic trade placement using bots. Beginner programmers and experienced programmers have informed me that the book is easy to understand and that it has assisted them in creating algorithmic trading platforms.

Battle Cries And Champagne

I may have written about this before, but it continues to be very annoying that Betfair allow someone to potentially make a profit with no risk. I put my standard £200 bet on Alabama last night to win straight up asking for 1.45 pre-game and was robbed:

  

Why someone is allowed to lay 1p (or any p) for zero risk is beyond me. If I'm not sure that I have mentioned it here before, I am sure that I have spoken to Betfair about it. Unfortunately whoever was on the other end of the Betfair Chat at 1am didn't have a clue what my problem was, and I gave up. 3p is of course neither here nor there, but had the whole £200 been taken in 20,000 individual bets of 1p to win nothing, I would be a little more upset about it. How hard can it be to have a check in the code saying if risk = zero, reject the bet and lock the perpetrators account?

The Alabama -7.5 bet recommended here yesterday traded at 1.1 but came up short with Clemson scoring a late touchdown and making the final score 45 - 40 to Alabama. A 'bad beat' but fortunately I only had 1p matched... 

The bill for James getting my daily hit total over the 2,000 mark, if only for one glorious day, has been received:

Invoice: Consultancy for increased web hits £1000. Payable within 7 days. --- Let's hope that you are not about to get what I got a few years ago. A Melbourne IP address that would hit me not 1000 times a day but 50,000 times a day. It wasn't a DDoS attack and did not prevent people from viewing my pages. However, it did skew my stats so much that I decided to block the IP address. I presume it was someone who took exception to my being the contrarian that I am.

50,000 hits a day - I'd be caught up with Full Time Betting in just a few weeks! (I've provided the link as good etiquette mandates, but please don't click on it or I'll never catch up). Sadly the daily hit count yesterday returned to its 30 day average, but it was fun while it lasted. Perhaps I should start being contrarian myself?

Good to see an update from former commenter Matthew Trenhaile - the Crazed Alchemist, explaining his sudden disappearance after his blog showed much promise when it was launched in July last year. His quality writing will be missed, but I wish him well in his new job.

The news is all about David Bowie right now, a South London legend and his matinee performance at Croydon's Fairfield Halls on June 24th 1973 (Ziggy Stardust Tour) was the first concert I attended as a very young boy - one of those firsts in life that we all record as we come of age. I also saw him at Wembley, both at Live Aid in 1984 and on the Glass Spider Tour, almost exactly 14 years later, but he'd gone off a bit by then - or perhaps my coming of age enthusiasm had become a going of age apathy.

Roadies And Hits

The Green Bay Packers comfortably completed a profitable, if fortuitous, sweep for road teams in the NFL Wild Card games, and it's now onto the Divisional Round where road teams unsurprisingly fare less well, but at least one has won every season since 2005. This was the first time in NFL history that all four road teams won in a single round. 

This is the round where the higher seeded home teams all benefit from a well deserved week off, but over the past ten years, there's always been at least one road winner (above). As is almost always the case, all four home teams are favoured this year, with the Carolina Panthers the most vulnerable at 1.689.

Backing the road team to cover the spread since 2005 has generated an ROI of 22% from the 40 matches.

In the College version of American Football, tonight sees the National Championship game between favourites Alabama (-6.5) and Clemson. This is only the second season of College Football play-offs, so there's next to no historical data to guide us, but Alabama have the experience having played in both seasons, and the -7.5 line on Betfair looks value at ~2.36. Alabama are going for their fourth title in the last seven seasons while Clemson last won the championship in 1981. 

The Clemson coach (Dabo Swinney) is an Alabama alumni and former Alabama assistant coach which is an interesting twist. 

He's also not a very nice man. His planned attendance at an anti-LGBT fundraiser was only cancelled after a public outcry, and he has been accused of promoting a Christian agenda with the team:

“At Clemson, God is everywhere. The team’s chaplain leads a Bible study for coaches every Monday and Thursday. Another three times a week, the staff gathers for devotionals. Nearly every player shows up at a voluntary chapel service the night before each game.”

Good grief. It's debatable how "voluntary" this attendance is of course. Alabama's Nick Saban is not much better, with his "devout Catholic beliefs" permeating the football program. At least the latter doesn't, to the best of my knowledge, thank God for the wins (or blame him for the losses, which would seem only logical, yet never happens). But then there's not a lot of logic with religion.

Now, what is going on with this blog? Having topped 1,000 hits for the first time ever on Thursday, the total 

shot up to 1,821 on Saturday and exponentially increased to a scarcely believable 3,707 hits yesterday. James' 2,000 target has been smashed! My Leeds reader mentioned yesterday continued his path through the blog, but to more than double the previous record total just 24 hours later is quite amazing and means I have now beaten Full Time Betting blog's six year average daily hit rate (1,324) twice in two days - not that this is a competition or anything.      

Three For The Road

Road team Seattle Seahawks prevailed at Minnesota 10-9 after the home team missed a late and short field goal to essentially win the game, so for the second game in a row, I got very lucky. The Minnesota Vikings led 9-0 going into the fourth quarter. I'm not sure how low they traded, but I'm guess in the 1.teens.

The last roadie of the Wild Card round play imminently, and this is the only game of the weekend where the home team is favoured, albeit by just one measly point.

On the subject of home and away, much has been written this season about the decline in home advantage seen in the English Premier League, although for readers of this blog, this will not be news.

In this rather impressive article over at Betting Expert, I wrote in August 2014 that:

One other trend worth drawing attention to is that of Away teams.

Historically, since 1947, Away teams have won 25% of matches. Home teams have won 49% and Draws the remaining 26%.

But averages can be deceiving. In the days of Division One, Away teams won 24% of matches.

Since the Premier League was formed, they have won 27%, and have steadily chipped away at the long established home advantage.

The last three seasons have seen an average Away win percentage of 30.3%. This is actually quite remarkable because it is a number not seen in a single season since 1947. Away teams over this three year period have averaged 1.22 goals per game, a number not seen since England won the World Cup.

Here are the win percentages over time – notice how the Away win averages are steadily gaining over the years, and in the last three seasons in particular:

More on the EPL later in the season, but several of you may have seen that all seven Serie A games today ended as Away wins. 

Again, if you read this blog you will know that Aways in Serie A are following the EPL trend with the last four seasons (including this one) ranked the top four this millennium. However, all seven in one day is quite a longshot. Update: 2,526-1 using Pinnacle Sports prices from the Football Data.co.uk site. 

Green With Envy

Having exceeded four figures on the hit count just once in the entire history of the blog (last Thursday), two days later (yesterday) the previous record is smashed with a total of 1,821. James' 2,000 target wasn't far off at all.

Initial suspicions that there are a lot of Wacky Races fans out there proved to be unfounded, with the massive leap mostly thanks to a reader in Leeds who spent much of his Saturday gaining new knowledge and picking up ideas that will serve him well in his investing future.

Still way behind Full Time Betting blog though, whose:

page counter shows 2892689 unique page views since 2010

That's an average (mean) daily hit total of at least 1,324, a number I have beaten just once in almost eight years! Perhaps I should rename this humble effort "Green With Envy All Over"? Full Time Betting blog must have a Full Time Marketing team.

Before we get back to more serious matters, James left a comment asking:

How can you mention Blue Peter without also mentioning Simon Groom's big pair of double entendres?

#1 - https://www.youtube.com/watch?v=gfZcpLxBUKk

#2 - https://www.youtube.com/watch?v=mO3xMvLoQzs (first part only)

James must be younger than myself since I'd never heard of Simon Groom.

So, back to the real business of this blog and this weekend sees the NFL Playoffs begin with the four Wild Card games. The line-ups this year are a little unusual in that the away (road) team is favoured in three of the four matches and the Washington Redskins are only one point favourites to beat the Green Bay Packers. Road teams have won at least one game every season since 2007 bar 2012 and were 14-18 straight up going into this weekend.

Yesterday in the AFC, away Kansas City Chiefs covered the -3 spread by a mere 27 points winning at the Houston Texans 30-0, while in the second game the away Pittsburgh Steelers led by 15-0 and traded at 1.03 before trailing 15-16 late to the Cincinnati Bengals, who in turn then traded at 1.05. I'd already updated my spreadsheet with the loss when the Bengals self destructed with idiotic penalties allowing the Steelers to win 18-16.  

Today's roadies are the Seattle Seahawks (-4.5) and the Green Bay Packers (+1).

Lulu The Elephant

At the risk of this all getting very silly, no - on second thoughts it's already got very silly, here are James' observations on covering his short, fat, hairy legs (well he's one mentioning Morecambe and Wise), children's TV shows and comedy duos:

Leg coverings other than jeans were available. Cords? Chinos?

I never counted how many times Dick and Mutley won a race. Obviously, your numbers obsession started small as a child. I was always into sports figures.

Analysing my contrariness further; I watched Blue Peter, whilst most people at school watched Magpie, I was for Swapshop, whist everyone else watched TisWas and for Morecambe and Wise, whilst everyone else watched The Two Ronnies.

Further to finance related movies, I feel a post relating to finance movies is about to appear on my blog. I'll give you a mention as the initiant. Let's see if we can get you to 2000 views per day. It does nothing for my stats but I'm in a giving mood.

I'm not too sure about cords - I had a corduroy pillow once - heard they were making headlines... , but corduroy trousers, no.

I went back to my parents house and retrieved my Excel spreadsheet from 1969 from my old bedroom. Here are the results from the 34 Wacky Races with points awards F1 style - 9, 6, 3:

Blue Peter? Give that man a badge. Who can ever forget the Lulu the Elephant episode? If you've not seen it before, it's worth a look, and if you have seen it before, it's worth another look.

Morecambe and Wise v Two Ronnies? Tough call - both very funny, and Mr Corbett CBE a Crystal Palace fan. I remember when the club organised a "Bring a Pal to the Palace" campaign back in 1977, he turned up in the Main Stand with Mr Barker.

As for the post on finance related movies, here's the link despite James' falling short on his target of 2,000 hits by a meagre 1,341 yesterday. Can't trust anyone these days.

Wacky Races

A record breaking day for the blog yesterday, with four figures exceeded for the first time in its long and illustrious history.

Once again, James makes it easy to post frequently with another comment, this time on yesterday's post about short-sellers (and "don't pass" craps bettors). James has this to say:

I always preferred Dick Dastardly to Penelope Pitstop, an establishment lacky if ever there was one.

I've always been against the crowd. Never one to follow the herd. Never to wear a pair of jeans when all around me did. A long hair when others are close cropped. A skinhead amongst New Romantic bouffants.

You only get one shot at life. I never wait for the ideal bet when there are plenty of lays to be had in the meantime.

The Big Short was a good read. I look forward to watching the film.

Another one to watch is Margin Call. A more apt film for these times rather than the dated (although still watchable) Wall Street, a film for when making money was easy rather than the leveraged naked short, rigged, insider traded, clusteryouknowwhat we have today.

Sleep well!

Perhaps we shouldn't read too much into James walking around in his underpants, looking for easy lays while seeing himself as Dick Dastardly, who was something of a loser crossing the finish the line just five times (twice in last place) and never making it to the podium.

We would perhaps be more concerned if James had identified with Southern Belle Penelope Pitstop, although she was at least a four time winner (of the 34 races).

Let's hope that James puts his jeans on before going to see The Big Short.

I haven't yet seen Margin Call, but reading the reviews and James' trusted opinion, I need to check it out.
 

Men Without Bowels

As another day ends with the FTSE down close to 2%, James' opinion on the current state of the markets and economy in reply to my last post is worth sharing:

Each day that passes makes me feel more so that the mega rich and powerful are locking down their wealth so that it cannot trickle anywhere; be that down or side-ways.

If that means rigging markets so firms like Nevsky Capital can no longer run their algorithms then so be it.

For firms like Nevsky Capital to make money as they used to will require a change in the entire system to allow price discovery to enter the markets, once again. However, I think the powers that be would rather shed blood than money.

The same with Betfair, which has built a near monopoly and knows it can charge anything because customers have nowhere else to go. As in the financial world, only a regime change can alter Betfair's business model.

It's an odd twilight world that we find ourselves in now. A dominating one-sided broadcasting corporation, newsprint that sings the EU line and avoids tipping the boat (recently that included not reporting horrific goings on in Cologne until it trickled out through alternate media).

I'm short everything except bullion.

For those of us of a certain age, and retirement not too far away, it's certainly not the best time for market uncertainty. The short [stock] seller always seems to me a little like the "don't pass" line bettor at the craps table, who:

is usually the quiet guy or gal who tends to keep to themselves and avoid eye contact with all the other “right-way” shooters.

Most bettors prefer to play the "pass" line bet, so the "don't pass" individual is somewhat despised by the rest of the table (although in my experience, 'despised' is far too strong a word for it, with most reaction being limited to the boo-hiss directed at the pantomime villain).

I don't think the terminology helps here either, with "pass" betting considered "right-way" and "don't pass" betting as "wrong-way", not to mention that "don't" is, by definition, negative!

The "don't pass" bet is actually a better value bet than the pass line, but it's not so popular in casinos. Most people are there to primarily have fun (there are no professional Craps players), and prefer the camaraderie of being part of a group betting against the house over reducing their long-term losses by a small percentage. No one is there for the long-term anyway.

Short sellers in the financial markets are also seen as being negative. Michael Lewis' excellent book The Big Short, (now a film), explains clearly how a small group of people made a fortune out of betting against the US economy. Telling your friends and neighbours that you are betting on them defaulting on their mortgages isn't likely to make you popular, even though it was an excellent bet.

Here is Fred Schwed Jr.'s take on it in 1940:

But how about those short-selling fellows? Now we are getting close to home. At the very moment when we were buying that stock, hopefully and constructively, looking forward and upward toward better things, those fellows, men without bowels, were selling it, and they didn't even have it to sell! They were looking downward and for worse things. They thought it would go down and they helped it to go down. How unnatural! How perverse! How cynical! Why should society tolerate such men any more than those who burn down houses for the insurance? 

"Democracy has not enabled us to challenge the power of elite wealth, entrenched privilege and an economic system that serves those interests almost exclusively"

Never Say Nevsky

"It ain't what you don't know that gets you into trouble. It's what you know for sure that just ain't so" - Mark Twain

The news this morning that North Korea has successfully exploded a nuclear bomb overnight is another event unlikely to benefit stock prices in the West as they open this morning. My spreadsheet is already a sea of red for 2016, and doesn't need any more market-rattling news. 

For those readers who keep their eyes on markets other than sports betting, the news yesterday that the "iconic $1.5 billion Nevsky Capital is calling it quits" might have raised some eyebrows:

"What is surprising, is that unlike some "one hit wonder" hedge fund wannabe, Nevsky is actually a brand name in the hedge fund community".

So why exactly have they decided to refund investors' money and close the Nevsky Fund?  In summary:

The decision to stop managing the Fund, after just over fifteen years, has been a very difficult one. This decision has been driven by a growing recent awareness that certain features of the current market environment, which we believe might persist for a considerable period of time, are inconsistent with the achievement of our goal of producing satisfactory risk adjusted absolute returns for you, our clients.

The full 'letter' makes for interesting, if unsettling, reading. It's rare to see anyone recognise that conditions have changed and that a successful strategy, in this case one that has 'worked brilliantly for twenty years', no longer works.

In summary, all of the above factors now mean that it is more difficult than ever before for us to accurately forecast macroeconomic and corporate variables. This pushes up our cost of capital and substantially increases the risk of us suffering substantial capital loss on individual positions either because of a forecast error or simply because we could be caught up in an erroneous market trend, which could then persist for far longer than we could take the pain. This has made what we enjoy most – the thrill of analysing economic data releases and company accounts – no longer enjoyable. It is therefore time to accept that what we have done has worked brilliantly for twenty years but does not work anymore and move on. We are confident our process will eventually work again – for the laws of economics will never be repealed – but for now they are suspended and may be for some time; an indefinite period involving indeterminate levels of risk during which we think it would be wrong for us to be the stewards of your money.

While the above all refers to the financial markets and the global economy, there are take-aways for those of us looking to find our edges in the sports betting markets. I don't think anyone would argue that the Betfair exchange of ten to fifteen years ago is anything like the Betfair exchange of today. The Premium Charge has, as intended, made it less worthwhile for previously successful traders to continue, while the court-siders have spread far and wide, both geographically and across all sports with liquidity. Nevsky say they "are confident our process will eventually work again" and while I do agree with this to some extent when it comes to sports betting, I doubt that the halcyon days of sports trading will ever return.    

Benford Decade

It's traditional at this time of the year to write some kind on annual wrap-up, but much of what I wrote a year ago is still relevant, in fact now even more so. I wrote last year:

One of the terms economists talk about is 'utility' and it's a fact that the more money you accrue, the less valuable each pound you win becomes. When you need to gross double what you end up with, and what you end up with is worth less than it used to be to you, it's hardly surprising that enthusiasm wanes. There is no viable option to Betfair, and none on the horizon. The golden days are over, and as Mark says, it's very much a question of grinding things out.

The Mark referenced is Mark Iverson who was a prominent blogger and trader from 2007 to 2014. As for enthusiasm waning, and grinding things out, that continues to be true as evidenced perhaps by the lowest number of blog posts since I started this in 2008. Just 162 with four of the last five months in single digits. Nevertheless, the hits keep coming, (average 448 per day over the last three months) although the more content that is out there, the more casual hits there will be. Another sign of waning enthusiasm is that in the first nine years of trading, I was idle for just 291 days. In 2015, the number of idle days was 63, almost exactly double the previous average.

For those interested in Benford numbers - and who isn't? - the numbers after 10 full years are below - with the actual and expected percentage totals:

I had to wait a while for the Championship qualifier for the Lay Last Loser System this season, conceived after a post on the Betfair Forum earlier this season (I can't locate it now) suggested that laying the last team to lose their unbeaten record in each of the lower divisions was a profitable strategy over that teams next few games.

Brighton and Hove Albion finally lost a game on the 19th December, 0:3 at home to Middlesbrough, and have so far failed to win their next three matches. As a Crystal Palace fan, it's an added bonus to see lays of Brighton adding to the profits on this system.

The above results includes the Premier League and continues laying teams until they win again. Prices are based on the Pinnacle Sports prices courtesy of Football Data and adjusted for the lay price based on the over-round.

Still The Best

Fizzer commented on yesterday's post:

Merry Christmas Cassini,

Just saw your latest update. I was about to send you a note saying how much I was missing your blog, still the best Sports Trading blog on the internet, but that I was having a BLU Christmas without you.

All the best - looking for the trend to continue tonight.

"Still the best Sports Trading blog on the internet". That's quite a compliment, but not an undeserved one in my, admittedly biased, opinion. As for the lack of recent updates, unfortunately I have been dealing with a few family issues, but for now at least, all is again well.

Despite the lack of recent posts, my hit numbers soared on Wednesday to a new record (938) for some unknown reason.

My excitement was somewhat dampened upon reading on the Full Time Betting blog:

Merry Christmas to all my readers old and new ( page counter shows 2892689 unique page views since 2010) so huge thanks to my mum who is clearly just refreshing the page 24/7.

Nearly 3 million! Puts my 1.1 million total since March 2008 in perspective.

It's also good to know that at least one reader (Fizzer) is following along on the BLUnders this season. We ended up with two selections last night, but took a small loss as they split, taking the record for the season to:

We go again tonight in Oklahoma City.

Cricket man Bossman megarain stopped by again to comment:

Merry Xmas.

It's likely we generally agree in the subject of hard work, and don't want to argue .. so, why am I arguing ?

Reading the Trading Bases book, its clear his strategy is modelled, whereas other sports clearly have data-mined advantages.

Each sport, is unique - not least, becos betting mkts/liquidity are different.

Anyway .. Have a Happy New Year .. and wish u all the best etc.

I would argue that no one is arguing here. Each sport is unique, and markets and liquidity are all unique too. Hard (or smart) work is an important ingredient, but you also need an edge to be profitable long-term.

Work Smart, Not Hard

Bossman megarain (possibly not his real name) has some thoughts on hard work versus an edge, concluding that you need both to be successful long-term. At least he didn't disagree with my assertion that any amount of 'hard work' can overcome a negative expected value (EV). Bossman writes:

I have no real wish to be a contrarian, aside from the joy it brings, to merely argue with others, but, I can sorta understand the advice Golden Fleece is giving.

Clearly, right-minded souls, will understand you need positive EV, on multiple outcomes, to base an (even, short-term strategy), which, given variance, even then, might not be profitable.

But, if you know there is no edge, you can work-around (and this is where the hard-work comes in).

I haven't looked at the offending post on the Betfair forum, not having been there in years, but .. providing the poster is genuine, which, is sometimes a stretch, then ..

By knowing you have no edge, you have done the 'homework', and maybe offer odds, which have positive EV, even if they reside, maybe in the 3rd Back or lay column, away from the market.

It maybe a long wait, and its time-consuming/hard work, to continually monitor/update positions .. but, it would be +EV.

As long as you have the knowledge, what an edge is .. and have the hard-work ethic, I think you can clearly still make (good) money in exchange betting. Logically, it has to be .. or, we would not be paying PC.

One of many amusing lines in my latest reading “Where Are The Customers’ Yachts?” which seems relevant to this discussion is this one:

“There have always been a considerable number of pathetic people who busy themselves examining the last thousand numbers which have appeared on a roulette wheel, in search of some repeating pattern. Sadly enough, they have usually found it.”

However much ‘hard work’ the roulette analyst puts in, they can never (long-term) beat the negative EV. Even if we allow for the possibility that a wheel might be imperfect, and a certain number or numbers offer a positive EV, this edge would certainly not be long lasting.

If you are making a long-term profit from betting on sports, you have an edge even if you do not realise it, unless you’re that one-in-a-million Lottery winner.

But what is ‘working hard’ though, when it comes to sports betting? It certainly shouldn’t be used to describe the activity of poring through gigabytes of data looking for patterns. Even if there were any edges to be found that way, someone or some entity with far greater resources than yourself would have found it first.

It seems to me that you need to work smart, rather than hard, to find an edge. You need to question conventional wisdom, look at assumptions from a fresh perspective and generate logic driven ideas for why the market, i.e. other punters, might not be correct.

Speaking of which, the BLUnders system continues to be profitable this season with the one Xmas Day selection - the Xmas night battle of Los Angeles between the Clippers and the Lakers - the most comfortable winner of the season so far, by a massive 29 points. Merry Xmas to us!   

At the risk of jinxing the current six game winning run, there is another qualifier in action tonight. 

With the Bundesliga now on their mid-season winter break, it's a good opportunity for an update on these systems also. As some of you will know, I have included the 2. Bundesliga this season and overall the two leagues combined are up 2.35 points from 89 selections, an ROI% of 2.64%. 

The less prolific Bundeslayawayga system combined over the two leagues is up 1.25 points from 22 selections, an ROI% of 5.68%. 

Delusions And Laws

Among much sensible advice from Ben Carlson, author of the book "A Wealth of Common Sense: Why Simplicity Trumps Complexity in Any Investment Plan" is this:

But there are also a large number of investors who are delusional, because they’re making the assumption that they’ll be the ones who can pull it off, when in fact only a very small number of people can. There’s a seemingly endless supply of investors out there who try again and again to outsmart the markets, but only end up outsmarting themselves.

The Urban Dictionary definition of "delusional" -"Someone who is not thinking clearly, or thinks something will happen that, in all likelihood, will not" - is perhaps a little kinder than some other definitions of the word, but the point is that investors expectations are often not realistic.

James left this comment on my last post:

It is interesting that many people who enter into sports trading do so to cut their teeth before entering financial trading. Some openly make it seem that financial trading is a man's game and their playing at being a sports trader is just child's play afore the main event. Can it all be ego?

You would think the daily reported financial scandals would make them wary of this "Man's World" that is financial trading but no, their one-man operation is the equal of any corporate/mafia concern.

You would also think their meagre bankrolls would be better suited to the capacity of sports trading where they are up against similarly sized bankrolls but they prefer to be kicked around in the multi-trillion "Man's Game". One chip against many deep stacks.

By my definition you are a "manual fundamental trader".

Yesterday's post referenced Joe Peta moving from Wall Street to sports trading, and Sammy moving in the opposite direction, but I really have no idea where most people start their speculating or where they end up. Sports trading is still a relatively new creation, but while there are similarities, the nature of sports markets is so different from the financial markets that I'm not sure it really offers much as an introduction.

As James alludes to with his reference to 'financial scandals', outsiders are never going to have an edge over those on the inside. Same with sports trading in events where someone is several seconds ahead of you. This is where the delusion comes in - how can your 'one-man operation' have any edge? Anyway, I've banged on enough about this in the past so I'll save my energy, but it really is nonsensical if you think logically about it. The problem is that people WANT to believe they can somehow be long-term winners, but wanting something very much doesn't make it true.

Another example of wishful thinking is this awful advice, posted by a Golden Fleece on the Betfair Forum:

An edge is helpful but not a necessity as hard work and discipline can overcome this.

Fortunately others are more clued in, with racingguru noting that:

You not only need an edge, you need to work to maintain it

and dlarssonf writing:

If you have no edge ( getting value ) you will not win long term, no matter how good your discipline is or how hard you work

The laws of probability don't suspend themselves because you want them to, which is probably why they are called 'laws'. 

Empty Guerdon

While I am not averse to the use of double-entendres in my blog post titles, any connection made between the subject of my 22 November post “Under-Taker” and my father’s current state of health, was quite unintentional.

Such a link would have been in extraordinarily poor taste, even for me, and James read more into that title than I had intended, but no harm done other than that I feel far less special as my blog is now merely a one-of-three for him, demoted from a one-of-two. I feel like Mrs. 7th Day Adventist whose husband has just announced that a new “sister-wife” has joined the family. I’ll get over it.

James’ comment was:

I am sorry to hear about your Pop and hope for improvement in his situation.

Also, I am sorry for flirting elsewhere but the double meaning of the title of your previous post meant that I didn't want to pry into your circumstances.

I think my "exclusive" reading list of three blogs has pretty much covered the spectrum of sports trading; theoretician, manual trader, algo-trader.

The good wishes are appreciated, but it’s probably no longer accurate to describe myself as a trader – manual or other. I learned long ago that I have no edge in financial trading, and while I clearly did have an edge in trading certain sports and events in-play for several years, opportunities today are few and far between. 

The trading landscape has changed. Some were efficient from the start, while others took longer to mature, but the competition has its act together pretty much everywhere these days, and while it is certainly possible to make money on any single event, the forces against which you are competing are likely too strong in the long term, especially if you are also fighting against the Premium Charge. The result is that most people spend an awful lot of time losing their money, at best, slowly, and for most of us, time is money. Bottom line is, it’s no longer worth it.

For financial investments, once reality set in that I have no edge, I have followed the simple advice to invest at least 10% of income in a diverse collection of low fee mutual funds and investment trusts and leave it alone. Although it was an appealing thought that somehow I could know more about the true value of a stock, commodity, currency or whatever than the thousands of professionals trading those markets every day, it was somewhat naïve. In my defence, it should be pointed out that the proliferation of books about how to beat the markets, how to trade like a professional etc. didn’t help, but as Fred Schwed Jr wrote:

“Probably no reader has ever been so rude as to enquire of a professional writer on financial matters why the writer, who clearly knows so much about money, is not rich. Nevertheless, many a reader probably thinks quietly about this.”

For sports trading, there is no parallel to investing long term, but punting (betting on an outcome pre-game, and letting it run) does at least share the benefit of saving that precious commodity of time. Waking up to an increased balance on your account and it’s easy to feel that you “have achieved life’s loveliest guerdon – making some money without doing any work”, which is another line from Fred Schwed Jr’s excellent 1940 book “Where Are The Customers’ Yachts?”. Of course, the real work of identifying an edge has already been put in, while placing the bet itself is the easy part.

Many of you reading this are undoubtedly familiar with Steve M (above) of Daily25. Initially famous for his large, at least by most people’s standards, stakes and unwavering commitment to following his strategies through both good times and bad, Aussie Steve has recently started to produce a weekly video update and is now achieving notoriety for the hairiness of his chest. If you’re into that sort of thing, I’d recommend checking out one of the earlier episodes as a number of complaints have resulted in Steve dressing rather more conservatively in his latest production. The concern for Steve appears to be that his ratings will plunge in sync with his neckline. Anyway, the weekly video is very watchable, with Steve coming across as a very straight forward and pleasant young man, although looks can of course be deceiving, (especially when it comes to Australians).

There are a couple of reasons why I mention Steve, and one is that this week he recommends a book called “Trading Bases” by Joe Peta and with the same book resident on my bookshelf, I can concur that it is a good read. The writer is a former Wall Street trader who made the move to betting on baseball.

The second reason is that Steve mentions a ‘fund’ based approach to betting. This is something that I have moved towards myself this year, with a number of systems across different sports being applied. I don’t believe Steve trades anything in-play – Australia has rules in place that make this very difficult – so his approach is by necessity similar to the one I am moving towards. Steve’s source for selections is from a number of tipsters, interestingly even when he doesn’t agree with their selections as he reveals in this week’s vlog. My selections come from my own research, with some of the systems shared here free of charge. While all the systems I use have a positive expectancy in the long term, the short-term can often be tricky, but by having several selection streams running in parallel, the profit line should be smoother.

Back to Wall Street, and I see that Betfair Tennis Trader Sammy has seen the writing on the wall for tennis trading. As I have written on many occasions, this link being one example, the chances of being profitable over the long-term trading court-sider infested sports are slim at best. Sammy's next project makes me wonder if the lesson has been learned though, as he writes:

You might wonder what my next adventure is? I've decided to try to learn a new game. And that's the stock exchange game. I've been grinding the Stockholm exchange roughly the last 2 months. My goal is to be break even for the first 6 months and anything better is just a bonus. It's a totally different beast the stock exchange compared to the sports exchange. But it's a lot of fun and I'm learning a lot of new things. We will see how it goes. =)

Good luck with that, but it's not a totally different beast in my opinion. As with tennis, Sammy will soon find out that there are plenty of people more knowledgeable, or at least with more current information, than him about the value of stocks traded on the Stockholm Exchange.

I'm not even sure why I am mentioning Wall Street and stocks this morning. Last week, in particular yesterday, wasn't a pleasant experience with Wall Street's worst week since August. As bad as the numbers were, it was arguably preferable to looking at Steve's chest though...

SLOvers

Sent as an email rather than as a comment was this idea from Phil:

BLUnders seems great... what about SLOvers?

Hi Cassini

Love the blog. Thought I'd just raise what (to me) is an obvious question. If BLUnders works, then assuming that bookmakers correctly price 50% of games to hit the over and 50% to hit the under, does betting overs when teams have no spread (pk) make money?

Love the input. An exchange of ideas is what this blog should really be all about. Limiting selections to games where the spread is zero means a very small sample size, somewhere around 24 bets a season.

Above are the results from the 2010 season on, one good season for Phil's SLOvers, but no evidence that there is any edge with this strategy.

If we expand the range of selections to include matches where the spread ranges from 0 to 2.5 points, the numbers for the last five years look like this:

Again, one good season, but the Over / Under ratio over these five full seasons plus 2015 is pretty close to 50:50 and we are looking for trends, not single season blips.

And Then There Were Three

My lack of posts in the past few weeks has unsurprisingly meant Betfair Pro Trader's eyes wandering, resulting in another blog being added to his previously exclusive list of two. Given James' fine taste in blogs, Trader247 is another one worth checking out, especially if you have an interest in bots.

My excuse for the lack of posts is that my father was re-admitted to hospital almost two weeks ago, and there has been a lot going on with blogging well down the list of priorities.

With trading opportunities limited, the quick and easy daily bets are proving their worth. I know at least one other person is now following the BLUnder System, and it has been on something of a roll this season with a record (including last night's win) of:

An unsustainable ROI% of course, boosted by a current winning run of six, but no one following will be complaining.

The Bundeslayga has also added a little of the past couple of weekends, with a more sustainable ROI on the season of 10.9%

Under Taker

Gratifying that at least a couple of people have had their interest in NBA betting piqued by my recent observations on the effect of big spreads on Totals betting.

bossman megarain (possibly not his real name) commented on Spread The Word:

Very interesting post, involving a lot of data analysis/research.

I rarely bet on basketball, (which is probably a mistake), but was fascinated by the book 'Gaming the Game', which, as you are probably aware, largely recounts the tale, of a bent basketball ref, shaving points on games, he had bet on.

In trades across many sports, 'mug' punters want to see action, and many 'Mr Unders' type betting strategies will be profitable, as it seems the lines are inflated, to account for this public need.

Keep up the good work.

Whether or not rarely betting on basketball is a mistake rather depends on whether your betting would be profitable in the long-term.

The book Bossman references, "Gaming The Game" is about the 2006-07 scandal involving NBA referee Tim Donaghy and professional gambler Jimmy Battista.

The suggestion that Unders betting strategies might be profitable because mug punters like to see scoring is one that has been mooted before. While Unders is the preferred long-term strategy, I'm not convinced it is because of the 'mug' punters.

Across the major US sports, Unders wins more than 50% of the time (excluding Pushes) in every sport, but only in the NHL would blindly backing it be a profitable strategy. Since the start of the 2013 season, Unders are hitting at 52.34%, which at Pinnacle Sports' 1.952 represents a 72.62 point profit from 3,749 bets, an ROI of 1.94%.

In Canada, the Canadian Football League from 2013 on has an even better ROI of 3.72%, but from just 321 bets. Only three more games to play this season with the Division Finals today, and the Grey Cup Final next week. In the NFL, last week was a big week for Unders with 10 wins from 13 (two Pushes).

Incidentally, another winner (2.1 on Betfair) for the BLUnder System last night as the Miami Heat and (still winless) Philadelphia 76ers played out a 187 point game. The Sixers led by 17 points at one stage, so this loss won't do anything for their confidence! The BLUnder ROI moves up to 23.8% on the season after 15 selections.