Draw No Bet

It’s disappointing that the DRAW NO BET market on Barclay's Premier League games is so illiquid. For example, a paltry £84 as I write traded on Stoke City v Portsmouth.

As I have mentioned on here, I maintain Elo based ratings of the teams in my unique, not yet patented, Cassini Ratings And Performance system and at the below odds on Betfair, the following are value:

Aston Villa at 2.54; Stoke City at 1.92; West Ham United at 2.42; Wigan Atletic at 2.3.

Putting into practice my belief that there may be more value in the lower reaches of senior football, I have a few quid on Weymouth (4.0) at home to Rushden and Diamonds (this ‘appears’ to be great value, but I fear I am missing something), Altrincham (2.08) v Woking and the draw (3.55) Kettering Town v Torquay United.

The liquidity in the Blue Square regional leagues is poor. I have a few Mr. Optimistic bets out there, but I would be surprised if more than a few are matched. AFC Wimbledon might be one of them though. They are on a roll right now, and promotion beckons, and after that they are just one promotion away from the league. What a great achievement that would be.

2:56pm Update: I have also been matched on AFC Wimbledon (1.5), Worcester City (1.73), Cambridge United (1.48), Chelmsford (1.45), Altrincham (2.08), Fleetwood (2.48), Crawley Town (1.61), Histon (1.77), Oxford United (2.04) plus the draw at 3.45 in Barrow v Grays Athletic.

Mr. Optimist

Recent postings on the Betfair forum suggest that changes to the Premium Charge could be on the way. No details on that, but during the discussion, a Betfair employee commented in all seriousness that Betfair is not a monopoly and is in competition with the high street bookies.

This seems to me to be a disingenuous statement at best. Betfair is in competition with other exchanges, and is a de facto monopoly. I believe they handle approximately 90% of exchange betting, although I honestly can’t remember where I saw this figure. It certainly sounds about right to me.

They are certainly not in competition with the likes of Ladbrokes, Hills etc. These are traditional bookies who do not want winners. They want customers who, let’s be blunt here, are clueless about value and just want to have a bet. Social gamblers you might call them. As soon as someone starts winning, their business is declined. This happened to me in the early 80s when I had a credit account with Ladbrokes closed after I had won the enormous amount of something like £200.

Betfair are an exchange and shouldn’t care who wins or who loses. They take their commission regardless. Their basic business model is that for every £100 lost by Mr. Loser, they pocket £5 (or so), and Mr. Winner pockets £95. For this model to be sustainable, it obviously requires a steady supply of Mr. Losers.

How do Betfair ensure a steady supply of Mr. Losers? Not that easily apparently. With no high street presence, Betfair’s customers are by definition going to be more sophisticated. They need to be somewhat computer savvy for a start. It doesn’t take any effort to walk into Ladbrokes, pull out £20, and make a bet, but if you want to do the same on Betfair, there are rather more hurdles to overcome first. The typical Betfair customer is not the same as your typical high street bookie customer.

Perhaps at this point we should rename Mr. Loser to Mr. Optimist. (He will become Mr. Loser or Mr. Winner later). No one takes the effort to open and fund an account with Betfair expecting to be a loser. Where did Mr. Optimist come from? I would suggest that while many are recruited as a result of advertising in the media, a fair number sign up as a result of hearing from Mr. Winner about the exciting possibilities Betfair offers. I would further suggest that this source has been somewhat reduced of late, since Mr. Winner is now paying a 20% tax, and for any non-trading bets, he is now sadly better off at the bookies.

One can’t help but wonder if the business model here is flawed. It’s one thing to have customers wander into a bookie week after week throwing their money away, deluding themselves that the occasional win means they are slightly ahead overall, but it is quite another to get a customer to keep transferring funds from his/her bank account when the true (losing) record of their betting history is readily apparent.

Mr. Winner, Mr. Loser and Mr. Optimist are made up names. Any similarity to real people, living or dead, is strictly coincidence. No such persons were harmed in the making of this blog entry.

NBA Half-Time

I was comparing the first half of this NBA season with last year, (I do love my stats), and I am slightly up (2.22%), but one thing I hadn’t realized before today was that I actually lost money after the All-Star break last season. The remainder of the regular season was profitable, but it appears my strategies don’t work so well in the play-offs (where I lost 12.57% of my profits) for some reason.

Fore-warned is fore-armed they say, and the great thing about bad losses is that they are so much easier to improve on. Simply staying out of the play-offs will work in fact!

I've noticed this trend in other sports as well. As a general rule, it is easier for me to make money in lower profile games than in 'big' games.

A Brief History Of Time

Continuing on the subject of physical reactions to wins / losses, and something else I’ve noticed proof of is that time is not a constant.

We all know from our physics lessons that time is relative, and that time slows down the faster we approach the speed of light. (Indeed, it has been suggested that my youthful appearance today is proof of this, since in my younger days I was quite the sprinter…), but I also suspect that time speeds up when I find myself in a high-stress situation.

I need to make a decision fast, but often don’t make it quite fast enough when under stress. I decide to cut my losses on a trade and close my position, but by the time I place the bet, the price has moved. I hesitate to close out at the new price, but decide it is the best decision. So I enter the new bet, and again the price has moved against me.

If my theory is correct, then it explains why people in stressful situations age so quickly.

Incidentally, how frustrating is it that whilst time-travel into the future is theoretically possible, there is no way back to the past to place that guaranteed bet!

Let's Get Physical

My incredibly patient, understanding and quite beautiful girlfriend has to put up with a lot from me, including knowing how to deal with me when my investments don’t go quite according to plan. I hadn’t really given it much thought before, but she commented yesterday that I have different emotional states when losing.

Now, whilst I am getting better at avoiding the big losses, (learning from mistakes of the past), every now and again I still do something that makes me question my sanity.

And as professional as I try to be in my approach, I am still subject to those emotions that drive the market, fear and greed, however much I try to control them. I back teams at too low a price, or I lay teams too high. Losses are part of the business, but there are ‘good’ losses, and there are ‘bad’ losses.

An example of a ‘good’ loss is where I have layed a selection at a price I consider too short, but it goes on to lose. Fair enough. If I’m laying at 1.1, I can expect to lose a fair number of these bets, and I cope with these very positively, even if I do say so myself.

Bad losses I don’t handle quite so well. An example of a ‘bad’ loss is where momentum is heading one way, seemingly irreversibly, and I jump on the bandwagon just as it shudders to a screeching halt and there is that sickening realization that ‘this is not a good move’. Essentially, good and bad losses are defined by whether or not the bet was value at the time it was struck.

So how do I react physically to these different scenarios? Good losses, I’m calm. I don’t mind those (too much).

Bad losses? Well, here it gets a little complicated. As my girlfriend pointed out, sometimes I am banging my desk, shouting out expletives and basically being loud and obnoxious, whereas other times I go very quiet. My worst ever loss, £5,000 on a football match, resulted in my being overwhelmed with tiredness. I literally had to go and take a long nap.

Thinking about this, I’ve realized that I am loud when the setback is sudden (an interception in American Football for example), but where the setback is slow and drawn out, this is where I go quiet (e.g. I’ve backed a team with a good lead, and slowly but surely the other team comes back).

Wins are handled similarly. A win snatched from the jaws of defeat is greeted with loud yelling (is there any other kind?) and on occasion some crazy dancing and gesturing around the living room, whereas a win that I am expecting is treated rather more demurely. Although if the amount is substantial enough, the stupid dancing and arm-waving still happens!

Betfair India

So Slumdog Millionaire is available at 1.53/1, "in line with international betting websites"!

Where? I want some.

The Academy Awards are one of the few non-sporting events that I get involved in. They can be quite lucrative, but I recommend closing out before the event goes in-play. Liquidity thereafter is very poor, and if you are left holding a position, it can be tough on the old ticker.

The article in full:

Indian punters bet big on 'Slumdog' Oscar success: report 21 hours ago

MUMBAI (AFP) — Indian gamblers are staking big money on "Slumdog Millionaire" winning the best picture, best director and best music awards at this year's Oscars, a report said Tuesday.

The Economic Times said that an estimated one billion rupees (20.5 million dollars) was riding on the outcome of the Academy Awards, for which the hit British film with an Indian cast and crew has 10 nominations.

With the exception of casinos and lottery games in some states and despite Indians being among the world's most enthusiastic gamblers, organised betting is illegal in India and largely an underground activity.

"We are accepting bets for three things -- A.R. Rahman (best music category), the movie (best picture category) and Danny Boyle (best director category)," one unnamed Mumbai-based bookmaker was quoted as saying.

Another in the city of Ahmedabad, in neighbouring Gujarat state, said betting on "Slumdog" has been gaining momentum since the end of a recent cricket match between India and Sri Lanka.

"Bets worth (200-300 million rupees) have been accepted in my circle in the past few days."

Odds for "Slumdog" winning best picture are being offered at 1.53/1, in line with international betting websites. Indian bookmakers put Boyle as 1.55/1 to win; and Rahman at 1.25/1, the business daily said.

The Oscars take place on February 22.

http://www.google.com/hostednews/afp/article/ALeqM5jQ3H2ijmvTJaDN6rqijQ_OBaZoqA

Is It Really This Easy?

Some people just can't believe the money to be made on Betfair. With discipline, it is possible to make serious money. Late goals can be worth a fortune, and although I have often been the victim of these, sometimes they can work in my favour. The NBA can be lucrative too...

If you want to be able to generate results similar to those shown above, visit http://www.juicestorm.com/betfairgen/ and fill your boots.

Nice one!

Singing The Blues

It appears that Roman Abramovich reads this blog. As a result of seeing that Chelsea’s failure to beat Hull City on Saturday was the only blemish on my Saturday Premier League investments, he has decided to fire Luiz Felipe Scolari after less than 8 months in the job. Apparently fifth place in the Cassini Ratings And Performace (CRAP) standings is not good enough.

Of course, it is possible that this is just a coincidence, but was Chelsea’s decision to act so ruthlessly driven by Portsmouth’s not so unexpected sacking of Tony Adams? (Portsmouth are ranked above only West Bromwich Albion, Stoke City and Bolton Wanderers).

Possibly Chelsea are so keen to snap up Adams that they realized they had to act fast and get rid of Scolari, but I will not be putting too much on Adams in the Next Chelsea Manager market. In fact, I won’t be putting ANY money on ANYONE in this market, unless my son gives me some inside information as to who they might have in mind.

I’ve written before that these markets are a minefield to anyone who doesn’t have insider knowledge. I stand by that, although I could be tempted to lay Tony Adams at a very generous price. Wait, that doesn’t sound right…

February Football

February football is off to a profitable start, with my ratings producing six winners from seven games in the Premier League yesterday. The only loser was Chelsea who were expected to beat Hull, but at 1.31, I didn’t back them anyway.

Having given my Elo based ratings a few months to settle down, they are still a work in progress, but I am starting to use them with a little more confidence. Early results seem to suggest that the value is when my ratings predict a lay of the home team. Aston Villa, Newcastle United and Fulham all obliged.

For the record, Arsenal and Manchester United are not surprisingly rated to follow suit this afternoon.

I am still researching the best way to use the ratings. For example, I picked the Wigan - Fulham game as a draw based simply on the fact that the two teams were rated so closely (1168 and 1161 respectively), and the draw 'seemed' to be a value bet. I'm looking for something a little more scientific.

Anorak Section

As for the ratings, Manchester United (2456) are far and away the top rated team in the Premier League, ahead of Liverpool (1966), Aston Villa (1788), Arsenal (1721) and Chelsea (1581).

The other top ranked teams in the leagues I track are currently Cardiff City, Leicester City, Darlington, Burton Albion, and AFCs Telford and Wimbledon. In Scotland I have Rangers, St. Johnstone, Raith Rovers and Cowdenbeath.

From table-toppers to table-proppers I have West Bromwich Albion, Charlton Athletic, Cheltenham Town, Chester City (not a good time to be a team starting with ‘Ch’ apparently), Lewes, Solihull Moors, Fisher Athletic, Inverness Caledonian Thistle, Queen of the South, Stranraer and Elgin City.

From now to the end of the season will give me four months to see whether the effort is worthwhile. If it is, then I may start rating some of the overseas leagues as well.

It may be more profitable to use these ratings for promotion / relegation markets – it’s something I’ll be tracking.

Tick-Tock

A respected member of the Betfair Forum (there’s not too many, but this guy is one of them) has suggested another way in which the clock can be ‘beaten’. In essence, the idea is the same as the one I mentioned a couple of posts back, whereby a bet would be submitted but would not reach the market after 5 seconds because of a block.

In the original method, this block would be another bet on Betfair, one that meant that insufficient funds were available for the new bet to be placed. If the desired event occurred during the five seconds, the original (blocker) bet would simply be cancelled (cancellations being instantaneous) and the new bet allowed to hit the market a second or two later, thus beating bets that are submitted after seeing the event.

The newly revealed strategy was illustrated using a tennis match as an example. Player A is serving at 4-5, 30-40. Obviously this is a key point, and just for demonstration purposes, the ‘true’ price on Player B is 1.8. If Player B should win the point, the price will drop to 1.4, so the strategy is to put in a lay at the front of the queue, say 10k at 1.8.

Then while the point is being played you submit 1k bets every second or two at 1.5 using an API. If the bet reaches the market before the point is decided, you will be self-matched.

If the point is won by Player B, the lay is cancelled and some of the bets submitted at 1.5 will hopefully be matched at close to 1.8.

If the point is won by Player A, the lay is not cancelled, as 1.8 is now good value to lay.

And that’s it. Personally, I would be very wary about employing this strategy. Unlike the first strategy where the bet effectively bounced, this system allows bets you submit to hit the market so you are therefore at risk of getting matched at poor value. (You cancel the 1.8 lay and could get matched at your requested 1.5). This risk is probably small in a liquid market, but there is also the problem of trying this in a market where others are doing the same thing and your lay is not that easy to place at the front of the queue. Not to mention that a court-sider could quite feasibly match your 1.8 on seeing Player B win the point before you can cancel it.

Blink, Or You'll Miss It

In his latest post over at http://talkbet.typepad.com/talkbet/ Jon reminded me of one of my earliest ventures into the world of gambling.

He wrote “Yesterday I sent out an email at work as a bit of fun with a list of last nights 6 premier league games. You needed to choose home/draw/away for each one. I spent all of 10 seconds on it yet managed to predict 5 of the 6 outcomes correctly with only Blackburn letting me down at home to Bolton. It makes you wonder if its really worth all the time and effort researching stats and analysing games when you might be better off just going with your first hunch.”

Back in the late 60s at school in Croydon, I used to write out the fixtures from the 22 Division One and Two games (as they were then) each Saturday (as it was then) and anyone interested would put their name at the top of a column and predict the result, home, draw or away. Each line would cost an (old) penny, and the top three winners would receive a payout of 60%-30%-10% after I had deducted my operating cost of 2d. (Since my pocket money at this time was an old 6d, this was quite a tidy sum). Those were the days.

As for Jon’s comment about following your first hunch, he may have a point. A commenter recently asked me if I had read Blink: The Power of Thinking Without Thinking by Malcolm Gladwell. I have indeed.

In the author’s own words “It's a book about rapid cognition, about the kind of thinking that happens in a blink of an eye. When you meet someone for the first time, or walk into a house you are thinking of buying, or read the first few sentences of a book, your mind takes about two seconds to jump to a series of conclusions. Well, "Blink" is a book about those two seconds, because I think those instant conclusions that we reach are really powerful and really important and, occasionally, really good.”

I think he could have included something along the lines of "…when you see a price displayed on a betting exchange during an in-play event, that your mind immediately recognizes as one that should be matched as it represents (for you) value”.

To anyone interested in trading in-play, I strongly recommend this book. The message is to trust that first instinct, because it is usually right. If you watch markets moving day after day, you subconsciously get a feel for what is normal, and when a price is outside of those norms, your subconscious recognizes this before your conscious side has time to analyse it. Don’t sit there thinking about it. Grab it.

Beating The Clock

For anyone using BETDAQ, be aware that it appears that API users can beat the clock there using the method that was used on Betfair a few years back. For those who don’t know, the method was essentially to submit a bet just prior to a potential price-changing event, and to cancel it four seconds later if the event did not occur.

For example a bet would be submitted just as a bowler made his delivery, and if a wicket fell, the bet would not be cancelled. Betfair closed this loophole, but it is being reported that, by using an API, this same method still works on the BETDAQ site.

Also, on Betfair, it appears that the 8 second delay on Spanish games is no longer enough. From the Betfair forum are a number of stories of bets being hovered and large sums of money appearing just prior to the Suspension in several games.

Million Dollar Traders : Traders

I didn't get a chance to write about the last episode of Million Dollar Traders before, but while I await a goal in the Liverpool v Chelsea game I do have a moment. It was quite a dramatic episode, with one firing, and three 'in-sympathy' walk-outs, leaving just three traders. The group ended up slightly down over the period, but ahead of the hedge fund index for the same period. One trader summed up the experience as like "playing chess against the rest of the world" - a sentiment I share and have commented on before myself. The boss man, Lex, showed an astonishing lack of mathematical understanding when he said that in one month he made 0.3%, the next he lost 1%, so overall he was down 0.7%. What? Admittedly with those numbers, he's close, but if I make 50% in one month and then lose 50%, believe me, I am not even.

Monthly Review - January

Time flies like an arrow (sorry, can’t resist it – ‘and fruit flies like bananas’) and it’s hard to believe that February is here already. Despite the Premium Charges which are proving to be a bit of a setback, January was my second best month ever, behind only January of 2008. Of course this means that with Betfair’s 60 week rolling time-frame for calculating how much to steal, I mean deduct, from our accounts, my two best months ever are both currently being included. Roll on March, or perhaps I should say ‘roll off January’.

I’m not sure why January has proven to be such a good month for the past two years, although in the interest of full disclosure I should add that January 2007 was my worst ever month. I don’t consciously do anything different (except in 2007, but I learned my lesson from that), but January certainly seems to be a month of extremes.

February is at the other end of the scale, ranking 9th with a daily average just 26% of January. Why so much lower? Only one NFL game, and the NBA All-Star break means less matches could be two reasons. Valentine’s Day means a forced break in investing (although how fortuitous that this year it falls on the same weekend as the All-Star break.) My February luck is changing already.

As for today’s Superbowl, it’s hard to see the Cardinals amazing run continuing. I fancy their luck to run out against a hard-hitting, experienced Steelers team who have a lot of players who won it all as recently as 2006. If you’re punting on the game, take the Steelers -6.5.

I Don't Like Wednesdays

The Betfair Premium Charge is going from bad to worse. 

Having been hit by a charge in the £400s for the past two weeks, today I was hit by one over £730, which amounts to a whopping 21.2% of my NET profits for the week, not gross - they are taking regular commission plus this bastard Premium Charge. I thought this charge was supposed to max out at 20%?

Anyone got any clever ideas of how to get around this? Other than trying to lose more!

And I really hate that you can have a big win on a Monday, and not know until 9 days later how much you really made. But still no viable alternative, so on we go. Mumbling and grumbling.

Tennis Is No Djok

An ill advised bet on the King of Serbia went awry this morning. A great first set, but then Djokovic was in trouble, finally calling a medical time-out during the third set. By the time I went to cut my losses, the price had moved so far against me that I felt it was value to hold on and hope for the best. Actually, my hope was that although he might drop the third set, the temperature would cool down and the expanding shade would give Djokovic a chance to recover. (130F is hot!) It wasn’t to be. I threw my chair around (as seems to be the way after Djokovic’s matches), and put the result behind me.

Tennis is one of those annoying sports. Sometimes everything goes to plan, and other times, nothing I do is right. This morning was one of those times. The problem is that tennis is not a sort I enjoy watching. My bets are modest (relative to other sports), and I don’t put in the time or effort to study the results and statistics or rate the players like I do on other sports. I think I wrote a few days ago how it is important to do your homework so that you have confidence in your bets, but with tennis I don’t.

Stick with what I'm good at, I know.

Sharp Minds

The subject of whether or not the gambling industry should do more to protect those individuals who are incapable of looking after themselves was a topic that was discussed here earlier this month.

I was reminded of it when I read a post on another blog (the author wishes to remain anonymous to protect the anonymous individuals he was posting about).

The post was titled: How To Open An Account With Betfair and read:

I’ve had a couple people ask me about opening an account with Betfair. Once you click the link below it will open the Betfair home page. I have shown the top part of this page below the link. There are two places to click, one being the top left of the page where it says “Open an Account” or there is also a spot on the right with a green arrow. This will go to a page to enter in your information.

Now seriously, should anyone be allowed to open, fund and operate any kind of account if they are incapable of opening it for themselves? I mean, it's not exactly rocket science. It's hard to imagine anyone but a complete half-wit (or former President) doing anything other than simply go to the web site, click on the link that says "Open An Account" and follow the instructions. I think that anyone who has to be guided through this tricky process would be well advised to forget about it. I would be astonished if one person asked me for help, never mind a couple!

The comment I posted, but which was later removed, was this:

"I'm confused as to why people wouldn't just go to the Betfair site, look up how to open an account and follow the instructions. People who need to ask someone else how to open an account are probably not the sharp minds that will find Betfair profitable."

The reply, exactly as received, was: "You are likely right about that, I cannot approve the comment as it would be an insult to the intelligance of some."

I'm not sure that someone needing help opening an account would have the intelligence to recognise any insult, but anyway, before anyone asks, if you need help opening your Betfair, BETDAQ, WBX or any other betting exchange account, forget it. You'd be better off playing Bingo.

Aging Handicap

I'm a little depressed, not because the gambling gods have been unkind or anything like that, but because I've been reading an excerpt from a cheerful book called "The Thing About Life Is That One Day You'll Be Dead", by David Shields.

I'm now starting to wonder how much longer I have at this trading game. According to the book, my IQ peaked at some time between the ages of 18 and 25, and since then my brain has "started shrinking, losing weight, and filling with fluid". (It doesn't say what fluid, but I suspect that beer is a distinct possibility in my case).

As I have aged, my "response to stimuli (of all kinds) becomes slower and more inaccurate, especially in more complex tasks". My creativity peaked when I was in my 30s, and whilst "everyone has talent at 25, the difficulty is to have it at 50".

And that's just the mental side of things. Apparently when I get older, there will be physical effects too. Wrinkles and hair loss. Imagine! And decreased aerobic power. Shorter notice that you need the loo. Muscles wasting away. It's not good news.

But every cloud has a silver lining. Apparently as one ages, one loses ones odour. Think of the money to be saved on deodorants! And our vocabulary increases as we age.

When the group was selected for the Million Dollar Trader show, I wondered how Simon (by far the oldest) would fare. The answer, as we found out this week, was 'not too well'.

Perhaps by keeping the brain busy with on-the-fly mental computations trading in-play nearly every day, I can postpone the day when my brain really does turn to mush and it's time to give up. I want that million first though.

Trying to work out the Premium Charge has got to have helped. For those on Betfair, they now provide a spreadsheet by the way: https://premiumcharge.betfair.com/PremiumPortal/portal

Half-Time Draw

I was reading a system today called the Half-Time Draw Football Trader.

To summarise the poorly written and fluffed out 13 pages into a couple of lines, the ‘system’ is to back the draw at half-time when an in-play match is tied. The author states that the approximate odds will be around 3.0 (range 2.76 to 3.25) and that the bet should be layed off 10 to 15 minutes later after the price has dropped by a full point.

It certainly sounds easy enough, but there is a noticeable lack of supporting data to back up his claim. He also fails to specify any other qualifying rules as to the kind of in-play games to try this.

Essentially, for this system to be profitable, it needs a goal in less than 50% of matches (or in the event of a goal, for a subsequent ‘get-out-of-jail-free’ equalizer.)

Do 50% of matches which are level at half-time fail to produce a goal before the price drops by a point – or become drawn games later?

Time to start yet another spreadsheet unless anyone has data already to prove that this 'system' is worthless, as I am quite sure it is.

Million Dollar Traders: Profit And Loss

Warning: Plot-Spoiler ahead.

Episode Two yesterday, and as an aside, why is the programme not called Million Pound Traders? An example of the world's second superpower's cultural domination I guess.

I digress. A couple of comments on the show. One was where one of the traders had a position moving fast against him, and the voiceover guy said something to the effect that the trader didn't make the novice mistake of panicing and selling. Where did this piece of wisdom come from? What happened to the idea of cutting losses short and letting winners run?

Anyway, we saw the end of Croydon's finest, Simon, who was hopelessly out of his depth, and ditherer Cleo survived by the skin of her teeth.

There wasn' too much to take from this episode about trading, although the comment was made that if you do your homework before taking a position, then you will have more confidence in it even if it moves against you.

There was also a moment where Simon had no clue how to react to a situation, and it was stated that traders should always have a plan. Very true. How well I remember those 'deer in the headlights' moments in my early days where the brain stops working!

And there was a reference to the psychology section of their training, something I would like to have seen much more of. Knowing how the market will react to different scenarios is arguably the single most important element to making money on the betting exchanges.

Arcade Charade

One of my fellow bloggers, Alastair, over at Bet Your Life Sports Trading has previously commented on the offer from Betfair of up to a free £10 bet if you bet that amount or more on the Arcade in the next few days.

However, read the fine print of the Terms and Conditions, and you read that the £10 credit (win or lose) is added to your Arcade account, and has to be used on one of those games. I'm not sure how many people will be tempted by such an offer, but I would rather put my energy into markets where I might actually have an edge. There is no free money here.

Alastair also commented that he would prefer the £10 credit to be used to offset his Premium Charge. Me too - another £400+ stolen from my account today.

Elo Ratings

Today there are just two English league games, and a chance to focus.

Liverpool v Everton: Liverpool (1.67) are rated at 1956, Everton (7.6) at 1427.

Yeovil Town v Leicester City: Yeovil Town (5.7) are rated at 394, Leicester City (1.76) at 761.

Clearly the favourites are Liverpool and Leicester City, but where do my ratings suggest the value is at? One of my big problems when pricing up matches, is calculating the odds of the draw. When I rate my NFL and NBA teams, I don't have this problem. There IS no draw.

My selection for today is Leicester City. I fancy the Liverpool v Everton game to be tight as derby games often are, so I shall leave that alone.

Update: Well, every dog has his day. Nice call, even if I do say so myself.
Woof!

Stupid Football

That last second winner from Chelsea yesterday may have delighted my son, but it cost me close to £700, and it was quite a relief that I managed to end the day in profit (albeit by just £20.19).

Why do I continue to bet on football? Well, my last losing day on this sport was back on October 11th. After a steady succession of small winning days (median profit a whopping £5.39), the confidence starts coming back, and the memory of the last lightning stike begins to fade.

I really am rather disappointed in myself. I like football, and it is very frustrating that I can't consistently make money at it as I can other sports. I keep ratings of all the teams, and get results like top-rated Wycombe Wanderers (rating 453) losing at home to bottom-rated Grimsby Town (185). Elgin City drawing with Cowdenbeath! I ask you. Where's the logic? It's actually quite interesting re-rating the teams after every game, but it doesn't seem to be paving the road to riches for me yet.

For anyone who's interested, top-rated teams in each division are currently Manchester United(2237), Wolves (1246), Leicester City(761), Wycombe Wanderers(421), Burton Albion(339), Droylsden(167), AFC Wimbledon(153), Celtic(1423), St Johnstone(626), Ayr(369) and Dumbarton(236). The biggest surprise is Droylsden who languish in 14th place, but who have several games in hand. Like I said, this is a work in progress. Still not quite sure how to turn this effort into money!

Make Me A Trader (2)

Back to the first episode of Million Dollar Traders, and just where exactly are these 'ordinary people' supposed to get their edge from? We saw a very limited amount of their training, so we may not have the whole picture, but the limited training revealed consisted of the group being told that there were no hard-and-fast rules, that trading was about generating ideas, that trading psychology tended to favour over-confidence, and a study of technical analysis ("charts are simply a mathematical representation of momentum in the market").

We've probably all been through similar learning curves on Betfair. First we try out different ideas to try and find what suits our style. We learn not to fall in love with positions, and to take a loss if the market moves against us. We use the (limited) charts that Betfair provides to help us see where the market has been, and where it is likely to go. We read books on trading, and we learn everything about the markets / sport that we end up specialising in.

For the most part, we see the group staring a a screen full of numbers and under pressure to make trades. Again, where are they supposed to have an edge over everyone else (far more experienced) in the market? Reading the newspaper (where the 'news' is at least several hours old) hardly seems likely to give anyone an edge, and because of their inexperience, any news on the TV is likely to be digested and understood by more savvy people a lot faster than this group.

At least with sports, we get to see pictures of what's going on. We get to see what team is playing well, who is struggling, which way the momentum is going, injuries, substitutions, weather etc. and as long as we know our stuff, we can turn this to our advantage.

My experience of technical analysis is that it is very useful looking back, but is of limited use in predicting the future, and because the information is out for for anyone to see, it is not going to give me any kind of edge.

It will be interesting to see if any of the group succeed. Right now, they all seem completely lost, and there doesn't appear to be any specialisation at all.

Letting Go

Yesterday, I was following the NBA game between the Cleveland Cavaliers and the Chicago Bulls. Cleveland were pre-game favourites at (I believe) around 1.3, and after a strong start were backed as low as 1.09 for fairly big money (and as anyone who follows the NBA regularly knows, to back a team at this low a price in the first quarter of a game is not far short of crazy). 

36 minutes later and I had a nice profit locked in as a result.

The screenshot above was taken at the end of regulation, with the game set to go into overtime. Now it seems to me that if two teams have played 48 minutes against each other, and there are no issues with players in foul trouble or injuries, then the odds should be pretty much 2.0 on each team, with them possibly favouring any team that has made a big run to tie the game up, or indeed the home team.

In the above game, Chicago was the home team, and neither team was in serious foul trouble. As for injuries, it was Cleveland who were faring worse with West, Ilgauskas and Wallace all missing.

So why the heck were the Cavaliers still rated as 1.5 favourites? It made no sense to me, and my end of regulation lay proved to be profitable, as the Bulls went on to win the game.

It seems that the market sometimes just can't accept that the favourite can lose, and wakes up to the possibility a little too late. I'm not complaining though. I think whatever the pre-game probabilities on two teams are, going into overtime (with the above factors being considered) backing a team at anywhere close to 3.0 has got to be a winner.

Make Me A Trader

Did anyone catch "Million Dollar Traders: Make Me a Trader" on BBC2 last night? Very much influenced by, if not directly copied from, "The Way Of The Turtle", (a book by Curtis Faith detailing the story of Richard Dennis who took 23 ordinary people and trained them to be traders in just two weeks), last night's show took 8 men and women and gives them two months to become successful traders with money provided by a Russian sounding guy straight out of a Bond movie.

The two qualities for a trader that he was looking for were the ability to handle stress, and to be good at maths. It was quite amazing how few people applying could multiply 32 by 32. Anyway, the series looks like it might be interesting, with the first episode already showing much of the emotions and stress that traders on the betting exchange go through as well as some of the mistakes we make.

I've always been good with numbers, something my Mum swears I inherited from my stockbroking grandfather, and losing a few quid on a bad bet is to my mind not something worth stressing over. If I was told I had cancer, or someone close to me was in trouble, then I might find that stressful, but if you can maintain perspective while trading, it makes it a lot easier to make good decisions.

The quote: "If you can keep your head when all about you are losing theirs..." (Rudyard Kipling) is very true.

It also helps to be playing with profits rather than with the mortgage money (scared money never wins).

I was thinking in the shower this morning, (yes, once a week, whether I need one or not), Betfair really is the ultimate video game. I've never been one for games, (friends at work spend hours playing Call of Duty - why? What's the point?), but in many ways the exchanges are one big on-line game. It's me versus an unknown opponent. My opinion versus yours, except in this game the points are real money.

Finally, my little vent yesterday did me the world of good. I bounced back from Monday's loss with my best day in over a year (since Jan 13, 2008 to be precise) and even the Premium Charge is (almost) forgotten.

Good News, Bad News

It's been a while since I vented about Betfair's Premium Charge so bear with me. I'd almost forgotten how annoying this Premium Charge is. This week, while my back is turned, I am robbed of another £500.00, a sum which is especially painful since it follows close on the heels of a £1,400 loss on Monday. (The good news is that next week's charge will be reduced!) To be quite honest, the impact prior to this week has been less than I feared, but this week was quite a hit.

Sadly for an alternative, BETDAQ just doesn't cut it. The liquidity simply isn't there, so I don't have any realistic alternative but to continue, and accept a reduced profit. For all their denials, the fact is that Betfair is a monopoly. There is no other betting exchange that has the range of markets and the liquidity that Betfair offer and like many monopolies before them, they abuse their position in the market, and take advantage of customers that they know can not pick up and move elsewhere. There was much fuming on the forum when the charge was first announced, with many people saying they were leaving, but I suspect that the reality is most people are still there.

The original concept of a betting exchange was really quite brilliant, and like so many brilliant ideas, really quite simple. Model it on the Stock Exchange, match backers and layers and take a percentage commission. I just don't think that the Stock Exchange charges anything like 20% commission based on a formula that isn't verifiable or consistent and which penalises one group of customers over another.

Vent over.

Handicap Betting NBA

As my regular reader already knows, I'm not a big fan of handicap betting. The idea of an imaginary finishing line certainly makes for wild finishes in-play but these markets just seem too much like gambling. It's hard enough to find a winner as it is without complicating things further! Who can really say that backing a team -9.5 is value, but at -10.5 isn't? While I don't mind putting my money on a team to win, I do mind putting it on a team to win by some random number.

I've long suspected that there might be value in laying teams that start as big favourites, but have also suspected that the probability of that team resting top players once they gain a big lead (or just easing up, as is human nature) has been factored into the price. So I've pretty much stayed away from these bets.

However, since the start of the year, I've been tracking the NBA handicaps, and while the sample to date is small, so far my initial suspicion is being borne out.

Of 49 games where the spread was 6.5 or more, the favourite has failed to cover 33 times. Something to follow as the season goes on.

Staying The Course

A few weeks ago, a friend of mine was sat next to a guy on the train who was studying the football page in the Racing Post.

Striking up a conversation, the guy started spilling his heart out about how lately he couldn't buy a winner and had had several consecutive losing weeks.

"I can't do anything right," he complained. "I do all my analysis, Overs/Unders, Home teams, Away teams, Favourites, Underdogs, Cup games, League games - but I just can't buy a winner. Penalties get missed. Goals get disallowed. Last second equalisers go against me. It’s the worst losing streak I’ve ever had."

After listening to this tale of woe for what seemed like an eternity, my friend helpfully suggested "Maybe you should switch to cricket for a while?"

"Cricket?!" the guy said, in a tone of disgust, "What the hell do I know about cricket?!"

OK, so it's an apocryphal story - (and I don't really have a friend).

Nanny - It's Not My Fault!

Back to the subject of the morality of gambling. John the (former) Gambler has posted again, comparing gambling with alcohol and saying about gambling that: "I now think it is bad, and should be controlled, especially on the internet. When you see friends lives deteriorating, it is is very difficult not to draw this conclusion."

When you drink or take drugs to excess, you lose your health. When you gamble to excess, (or invest in a rogue hedge fund), you lose money. Which is worse?

Anyway, the conclusion that I draw is that your friend is the problem, not Betfair.

John goes on to say: "Then the betting exchanges came along. This is good. The average savvy punter can make a few quid on Betfair. Then the exchanges like betfair evolved. Bots, Poker, Casino. The average savvy punter can now lose lots. Not so good."

A savvy punter would never get involved with on-line poker or casino games. Only an idiot will play those games. And before someone says that they only play them for small sums for 'entertainment' I would suggest that they need to get out more as there are far more entertaining ways of spending your money and time.

As I said before, it's up to the individual to control themselves - no one else. It really is quite pathetic when people do not take responsibility for their own actions.

Betfair (for all its faults) provides a wonderful opportunity for the truly 'savvy' punter to make money if they are disciplined - i.e. have self-control. It seems that this lack of discipline in someone's life is what causes them so many problems, be it alcohol, narcotics, sex or gambling.

From a rather selfish point of view, I'm glad that such people do continue to lose their money on Betfair. As John says, for every loser there is a winner. 

It's up to the individual to decide which hat they want to wear.

A man sooner or later discovers that he is the master-gardener of his soul, the director of his life. ~James Allen

Two Swallows

Following up on my post yesterday where I again reiterated my reasons for avoiding the horse-racing markets, I remembered earlier today a story (early 80s I believe) from my youth that may have something to do with it.

I was dating a girl in Banstead, Surrey, who had a friend whose husband worked for a stables in Epsom. One evening, he told me that he'd had word that a horse called Two Swallows was to be backed next time out. I scanned the racing listings over the next few days, and one day there it was. A 20 runner race and the probable SP was 15/1 and I excitedly told everyone at work about it, collecting a vast sum of money from my colleagues (about £20! - remember, this was around 1980) to add to my own tenner. I handed the cash to Mr Ladbroke and sat back to await my big win.

It didn't happen. The stupid thing finished somewhere in the middle of the pack, and I returned to the office with empty pockets.

Two weeks later, and I saw it was running again. I said to myself "I'm not wasting any more money on that stupid creature" and left it alone. That night, I went to pick up my girlfriend from her friend's house, and her husband was there. He greeted me with "Did you back that horse I told you about?"

"Yes, bloody thing cost me £20"

"No, I mean - did you back it today?"

"No - what happened?"

It had won at 33/1. He related that the stable had run it that first time and deliberately held it back to get the price out for next time. After that, it won something like six times in a row, but of course never again at 33/1. I think 6/1 was the best winning price I had on it, but it really was a stellar tip. As I recall, it ran in the Scottish Grand National (it was a grey horse, so it was easy to follow) and I did make some money from it, but I never forgot missing out on the 33/1 that day.

Anyway, the lesson I took from that little story was that racing is very easily fixed, and that unless you have an inside source, you are going to find it very difficult to make money.

Level Playing Fields

When I wore a younger man’s clothes back in the 80s, I worked in the City of London for a merchant bank, and was exposed to the world of options trading. At first sight, it seemed an easy way to make some money, but of course it wasn’t. I soon discovered that theory and practice were two completely different things, and that however much I read and studied, there were always going to be plenty of people in these markets who knew far more than I did about the direction of a company’s stock price. And so I gave it up.

Winding the clock forward twenty years, and how very similar stock options are to bets on a sports event. Whereas a stock option will run for months, the time-frame is reduced for many sports events to a number of minutes. (As I have stated before, I don’t touch the horses or dogs because as in the financial markets, there are people who know far more than I do).

You can buy or sell a stock option the same as you can back or lay a sports selection. At the end of the term, your option and your bet both expire, either worthless or ‘in-the-money’, and during the timeframe you can re-sell your bet, or part of it, or you can add to your position. Information drives the prices of both, but whereas financial information leaks out to a privileged few before becoming public knowledge, an event occurring during a sporting contest is there for all to see at the same time. It is a level playing-field (pun intended).

It seems to me common sense that if one is serious about making money from betting, the very least you need is a fair contest. Why get involved in markets that can potentially be rigged, or where others know far more than you do? Markets such as Big Brother / Next Manager are deadly unless, of course, you are privy to inside information, in which case you have a very big edge and should use Kelly to maximize your advantage (and be prepared for jail if you are breaking the law).

I personally have nothing to do with any markets of this nature, and stick to sports, usually betting in-running. It never ceases to amaze me that people think they can take on the world at, say, trading currencies or betting horses, when they are obviously at such a big disadvantage. I guess it says something for the natural optimism of human beings.

Enjoy Life Responsibly

The subject of the morality of betting has recently been raised by John the Gambler with comments on his own and on Bert Black’s blog.

He wrote:

“Back to the “gambling” front, I am predicting a “paradigm shift” in attitudes to gambling, particularly gambling on the internet. At the moment it is possible to lose an absolute fortune on the internet 24/7/365. I have recent experience of this destroying one friend’s life, and having a very serious impact on another friend’s life, not to mention both families and a wide circle of friends. I feel slightly culpable as I introduced him to Betfair. I thought he was a social gambler who liked the odd fiver on the gee-gees. 18 months later I find out he had discovered Betfair Casino where he had been wagering vast sums, which he had allegedly stolen form my other friend’s company. Consequently both parties are now seriously in debt.”

“For every winner there is a loser. It has definitely changed my attitude to gambling, and sometimes I can be “ahead of the curve” on these things. I don’t believe the story above is a one-off, and as these stories emerge over the months to come, I predict a change in people’s attitudes, and some sort of government legislation.”

Bert Black’s measured response was quite correctly that “this is not a new problem or necessarily a growing one in the UK. It is a very important issue, but regulation already exists and I’d be surprised if much were to change in the short term.”

In my opinion, it is hardly the responsibility of the government to nanny us all and put rules in place to the detriment of the majority, just because a minority can’t control themselves. Let’s be honest, anyone who thinks they can win long-term by playing in an on-line casino has got some serious problems. 

Fair enough, we all make mistakes, but when the losses begin to mount, is it too much to expect that an individual should be responsible enough to stop their activity themselves? Learning from your mistakes seems to me to be an essential part of life. Touch a hot stove once, and you tend not to do it again.

The idea that the government should pass legislation that may benefit a few, but to the detriment of many, seems extreme. Prohibition didn’t work, and in this Internet age, if people want to bet, they will. What kind of legislation would help in this situation anyway? While it is sad that a minority of people can’t enjoy alcohol responsibly, or can’t enjoy an occasional flutter, the problem lies with those individuals. Such people typically have problems coping in other areas of life too. They are the ones that need help.

We should all be responsible for our own actions, whether it relates to diet, exercise, financial investments or whatever, and passing legislation to restrict the rights of the majority to enjoy life responsibly is not the answer.

The Long-Term View

January always seems to be a dramatic month for me. January of 2007 saw my worst ever month, with the reason being a lack of patience following a few days away, and a consequent recklessness to start the year off with a big win. 

It didn’t work. I couldn’t buy a win for love nor money, whereas in 2008, January was one of those months where everything seemed to go perfectly according to plan. I am hoping 2009 will be a repeat of last year.

A few days away from the Internet and betting does allow time for reflection. 

As I have written previously on this blog, I do not believe in setting goals per se, but paradoxically, I am aware that I have a tendency to do this.

One downside of keeping records on a daily basis is that my aversion to a loss is magnified. Over a three day period, I might have two wins of £100 and one loss of £140, and a net total of £60 profit, but it is far more pleasing to me if the three days all reflected profits of £20. It makes no sense I know, and I would probably be better served by totalling up my numbers on a more infrequent basis.

I have become aware that despite my reluctance to admit to it, my daily profit level does affect how I react to a situation. My investment goal for 2009 is to change this.