Playing The Percentages

Just as I was struggling for something to say, Mouldhouse helps me out with a comment...

It's a bit pernickity (if that's even how you spell it) but I was always taught that the level of accuracy should fit the context, as far as mathematics is concerned.

For example, if you had 10,000 matches in a sample, and 3,667 of them had ended in a draw, the statistic "I have a 36.67% strike rate" would be more than acceptable.

If you've got a sample size of 30, let us say, and 11 of them have ended in draws (or indeed now a sample of 31, and 12 have ended in draws, congrats, btw) then that level of accuracy really isn't justified; simply because the statistical significance - indeed, if that is the case, the probability that the results have been obtained by pure fluke and the system overall is a losing one is still 13.71% (assuming that all draws have hit at a price of 3.45, a big assumption I grant you!). Or indeed, more suited to this context, about one in 7.

Point being that strike rates to 2 d.p. over samples only just large enough to apply large-number estimates to is a bit of a misnomer - if my stabs above were correct, last night's result would make a difference of some 3%ish on the "advertised" strike rate, which is very volatile for one iteration.

The main purpose is not to be a total a$%ehole by pointing this out but hopefully to point out to some who may well risk their hard-earned following any of the posted picks that there might be a lot more luck involved than they would hope. I suppose its a downside of having a blog that posts picks without a concrete record, although I note gold-all-over has been updated after you nearly set a world record for getting bored of a blog :)

Incidentally, the strong draw picks posted on Gold-A-O have a nearly 1 in 3 chance of having been generated by pure fluke so far - but it says more about small sample sizes than anything else. I look forward to your witty riposte. I should also echo those who've praised it as the best betting blog on the internet - how you keep finding new subject matter that is actually interesting is beyond my comprehension, and isn't something I could do!

Not pernickety at all. I actually was never taught that, or certainly don't remember being taught that, the 'level of accuracy should fit the context', but it makes perfect sense to me and I shall endeavour, moving forward, to keep my decimal places appropriate.

The percentages quoted are actually those from the 2010-11 season, not just those since the start of the calendar year, which is some 1,364 matches.

Of those, 128 qualified as strong draws, of which 43 finished drawn - 33.59375% - (the other 85 lost to 90' goals!) with the average draw price being 3.432352941... (sorry, I just couldn't resist).

Yes, certainly not a big sample, and I hope no one is stupid enough to follow my picks without doing their own research as well, and being aware that these numbers are from this season only. The problem with a system finding winners at 3.4 is that long runs are inevitable - currently 8 of the last 9 have lost - but then along comes runs of 4 winners in 5, or 3 in 4 which more than compensate.

Gold All Over has a couple of problems. One is that blogger doesn't allow (at least to my knowledge) the display of tables, so the data looks really untidy. It's also time consuming, and I have enough trouble finding time to keep one betting blog going, never mind two, so while the idea isn't necessarily dead, don't expect too much unless I can work out a tidy format for it.

Anyway, I appreciate the advice on the number of decimal places to use.

Jamie commented on my thought that playing poker for matchsticks is useless.

Perhaps a little bit different, but I've found kind of the same thing with playing the poker application on my phone.

I play quite a fair bit online and in casino tournaments, and have had a moderate amount of success. But I've found when I play the (free) poker app on my phone, I make a lot of decisions that I would never make when playing for decent stakes.

I also found that when playing "free" poker online to sharpen my skills - I played a lot differently when the stakes were low or non-existent, and it was starting to mess up the skills I had honed by playing for proper stakes. I now don't play at all unless it is for decent stakes, because that's where I believe my best performances are.

I also trade pre-post horses, and have found the same thing... trading for minimum stakes is OK to learn the system or the software, but can be detrimental to your overall success once you know what you are doing.

Keep up the great work on the blog

With poker, such a big part of the game is 'reading' your opponent, and being sure that the hands are clean (i.e. no collusion between players) that I have never seen the appeal of playing online. I shouldn't say never, because I have tried it years ago for entertainment, but I soon tired of it, and when Betfair came along, that was a lot more entertaining.

Vera Late

Yesterday:

Getafe v Atletico Bibao tonight is a weak draw pick. If the game is tied at 80' though, with the way my luck is running, a lay of the current correct score might be a smart play!

1-1 at 84' and imagine my surprise when Getafe broke the tie when Moral scored his third goal of the match. Yes, really. "Gosh darn it", I said to myself. Had I heeded my own advice? Is the Pope Italian? But 10 minutes later, all was good in the world. Vera scored in the 94' and for once the (very) late goal went in my favour. There's a Moral to this story.

Drawing Blanks

Peter Nordsted's Drawmaster picks this past weekend went 0/3 (he dipped into League One with no EPL matches on the schedule) as Bournemouth v Southampton, Colchester v MK Dons and Rochdale v Exeter all ended as away wins. His strike rate on these selections is still an impressive 34.83%, which is slightly ahead of my 'strong draws' at 33.59%.

I mentioned before that I would be reducing stakes on Football Elite's selections as they tend to be weaker as we hit March and April time - football's silly season - and that decision has paid off already this weekend.

Getafe v Athletic Bilbao tonight is a weak draw pick. In La Liga, these are hitting at 36.67%, although across all five Major Leagues the rate is a less impressive, though still profitable, 31.49%. If the game is tied at 80' though, with the way my luck is running, a lay of the current correct score might be a smart play! 

As much as I bemoan the irritation of late goals robbing me of rightful winners, I do still think that (selectively of course) backing the draw offers value. The more people who buy into the Lay The Draw system the better, but these people aren't really laying the draw as a result - they are simply hoping for a goal and a trading profit. Who lays the draw as a result? It's really saying "Well, I think someone will win, but I don't know who" which makes no sense to me.

Bundesawaylayga

Any readers who have been with me for a while now will be familiar with the consistently profitable strategy of laying odds-on favourites in the Bundesliga. 

To date this season, we have, by my records, had 85 qualifiers, of which 40 have been winning lays, and a pre-commission ROI of 16.02%. Not too shabby, but extending the system to include the away team would have added another 17 selections, and eight more winners. 

With less than one pick a week on average, this isn't the most exciting of systems, but as has been mentioned recently, sports investing shouldn't be exciting. As you might expect, the away lays have been mostly Bayern Munich and Borussia Dortmund (with eight each) with a single (and losing) lay for Bayer Leverkusen. Bayern Munich have produced five of the winning lays.

Matchsticks

These late goals are beginning to get annoying. The third of my strong draw picks was St Pauli v Stuttgart and at 88' with the score at 1-1, things were looking up, but once again, a late goal took another win away. So overall on the strong draws, I had one winner, two losses to 88' and 90' goals and a Parma v Napoli selection that actually wasn't close, although I could always blame the red-card! The strong draw strike rate is still a profitable 33.59% for the season.

Two losers for Football Elite today as neither Levante or Real Sociedad could win. I did make a little on the Manchester City v Reading game at least, with the Over 2.5 goals price looking far too short at 1.74. I traded out at 2.42 after 20 minutes, but of course, needn't have bothered!

I wrote earlier in the week about the in-form and not-in-form teams from the leagues I track and here's how they got on this weekend:

Hotties:
Nuremberg (Won 2-1 at Wolfsburg 3.25)
Olympique Lyonnais (Won 2-0 at Sochaux 2.12)
Hannover '96 (Lost 0-4 at Koln 2.9)

Not-So-Hotties: [opponents price]
Hoffenheim (Won 1-0 v Borussia Dortmund [1.73])
Chievo Verona (Lost 0-1 v Fiorentina [2.88])
Palermo (Lost 0-1 at Genoa [1.95])

Greed All Over is re-branding - I made it clear that I wasn't serious about the large cheque (a smaller one would have been fine), but I think the author is looking to create his own identity.

As is often the case, after I'd posted about paper trading recently, I thought of something else I could have written - that paper trading is a bit like playing poker for matchsticks. A martingale type staking system is very easy on paper, not quite so easy in practice.

The Marmite Blog

I am still awaiting the large cheque from Greed All Over to compensate me for infringing on my blog name, but he did have this to say:

Well a mention on Cassini's blog and added to his blogroll at least, sadly means I'll have to try write something interesting now.

Guess I can hardly deny the blog title hasn't been slightly influenced by the great (sic) man's blog but hey what can you do when you're looking for a snappy trading slogan as a title and it's already been taken. The title was also influenced by reading John O'Dwyer's recent descent from hero to zero within a few weeks ranging from denial to almost begging for cash on the Betfair forum. Just goes to show greed always catches up with you eventually.

Can't be many betting bloggers out there that haven't come across Cassini's blog . He does seem to have become very much a marmite blogger that you either love or hate, although I imagine his tongue's firmly in his cheek in a lot of what he posts.

Marmite? For a start, I have always been more of a Bovril man, but can there seriously be anyone out there who doesn't love this blog? OK, maybe Anonymous is upset at losing his forum, but it was after several warnings to keep things civil, and there's always one as my old Mum says and John O'Dwyer may not like my advice, although it's hardly my fault that he isn't ready to accept it at this time. Perhaps at some point in the future, he will look back and think "You know, that Cassini really gave me some good advice. I should really give him a small (or large) percentage of my profits achieved from disciplined betting with stakes proportionate to my true betting bank".

As for 'tongue-in-cheek', I don't even know what that means. I'm an IT nerd, with an unhealthy fascination with numbers, and the ability to spot a typo before turning to the page it's on (almost) which has led to the suggestion that I may be borderline autistic - but at the incredibly high-functioning part of the autistic spectrum of course. So readers can rest assured that my tongue remains centrally positioned just behind both of my teeth at all times.

Bundeslategoals

Another 90' goal today scuppered one of my two strong draw picks of the day, but similar goals for Kaiserslautern and Schalke '04 gave me winners there, and overall these things balance out. The strong draw at 3.6 was Wolfsburg v Nuremberg. For the record, the second draw is Cesena v Juventus at a tasty 3.9.

Mully asks:

Have you seen this link: http://greedallover.blogspot.com
Just found it in the O'Dwyer blog roll.

Indeed I have. I saw it a couple of days ago, and while imitation is the sincerest form of flattery, I shall be consulting with my lawyers next week and issuing a cease and desist order shortly although I may accept a large cash payment instead. Pending receipt of the large payment, I have added the blog to my blog roll.

Mats asks:

Could you explain a little more about how you go about looking for value?

I have two main approaches to this. One is by maintaining ratings and looking for prices that are out of line with the markets, and the other, more profitable method, is to trade sports in-running and look for opportunities where the price has been driven too far. Here's a timely post from the Winner Is Winner blog that suggests the author has noticed the same things that I have in the NBA markets. It's not very eloquently written to be honest, but here is the key part:

NBA markets. Mug markets for mugs or are they more like mug markets for pros to make money? In my opinion mug market for pros. For proper mugs no market is good to make money I suspect anyway.

When bigger games come on the stage mug markets turn into pros market such as tennis and football - very competitive and in all honesty hardly you will find anything wrong with odds. And that is the only case when I find hard to make money in NBA markets. Apart from those games trading NBA is a must of course if you can handle night hours. I guess anybody who trades successfully other sports such as tennis football, cricket and others high volume markets could come and make money from the very first day in NBA markets. Piss easy and I mean it. Not so sure that "NBA only" trader could do the opposition.

Basically what the writer is saying, I think, is that while it is very hard to find value in tennis and football, less popular sports like NBA (and I would add the NFL), do offer plenty of value opportunities. With tennis you are up against court-siders, with football you are up against a lot of competition, but in the the NBA and NFL, you can often find big money at silly prices, and 1.0xs are turned over almost every night. A ten point lead can vanish fast, and momentum is everything.

While I wouldn't say that it is "piss easy", if you put in the effort to learn how the NFL and NBA markets move, and learn the rules of the game, this can be very lucrative. And be aware that the college versions of these games have different rules!

In the NFL, every opening touchdown sees the price on the scoring team drop too low. Greed to be on a winner before the reality sets in and fear means the market rebounds a few points. However, as I mentioned a couple of posts ago, when these games are play-offs, or the only game in town, the competition among traders makes it that much harder to find value. April is the one month of the year where overall I am negative, having suffered a losing month in three of the last four years. What happens in April? NBA play-offs. Tricks that work well in the regular season don't work so well in play-offs.

Why is Manchester United v Arsenal Suspended? More problems? Off to BETDAQ I guess.

Discipline Essential

I'm sure I'm not alone among bloggers in that I enjoy receiving sensible comments, and the quality has certainly improved since I blocked Anonymous ones a few months ago. While the counter let's me know how many people are visiting each day, when someone takes the time to comment, it not only tells me that someone found a post worthy of taking the time to comment, but it also gives me a topic for the next post - something that doesn't always come easy for a blog that isn't all about daily profits and losses.

Before I get to the comment, but on a related subject, I fear for O'Dwyer, whom I wrote about a few days ago in my O'Dwyer Straits post. Although the post has now been deleted, he allegedly (see comments) admitted to having borrowed his £200 betting bank. Not the way to go. Money for betting should be your own, and money that you can afford to lose. If either of those tenets is not true, then the fear / desperation element means that you are not going to be making clear and logical decisions. Essentially, you need to have your act together before you are going to make any money long-term from betting / trading, and there's no hurry. Sports betting isn't going to go anywhere. Anyway, I mentioned that because it segues nicely into a comment from Gary on my Thursday woes post, and he wrote:

I've been following your blog (along with hundreds more I'm sure) for a few months now and always find it great reading. Funny, insightful, random, great obscure titbits, keeps us all interested(I think!,-me anyway).

One thing I've wanted to ask you about regards that greatest of attributes required to succeed at this trading/gambling game - DISCIPLINE...!

Have you always had the required discipline / patience when trading, which may be part of your make-up in general, or did you have to learn it along the way?

I've withdrawn my funds from Betfair yesterday as I feel the dreaded loss of control creeping in again (after a fairly successful couple of months trading) - not a huge amount but enough that, although I don't need the money at this time I also don't want to blow it all as I, and I'm sure many others have done before.

Anyways, if you had to learn the art of self discipline are there any good books / courses advice you could recommend?

I'm sure it's something that can be taught but My God it's hard.............Keep up the great blog - & take Thursdays off!..

So the question really is this - is discipline an innate personality trait, or is it something that can be learned? I think it is something that can be learned, at least by most people, but like many mental skills, it is something that comes easier to some more than others. A minority of people just don't want to learn discipline. They are your problem gamblers who are in it for the thrill, betting with money they can't afford to lose, and quite possibly have issues in other areas of their lives too.

Discipline is essential to being profitable long-term. What do I mean by discipline? It's simply the ability to wait until the odds are in your favour and staking a sensible amount. The most frequent trigger for losing discipline, (chasing or going on tilt), appears to be that of a 'bad' loss, and by 'bad' I mean a loss that was on a bet that you knew wasn't good value but you took it anyway (a gamble) or a loss that was a value bet, but you bet too much (greed). A bad loss might also be a bet you had on a market that you know nothing about, perhaps from boredom.

A good loss is a sensibly staked amount on a value bet. No one is going to win every bet, and losses are inevitable. They are acceptable, and shouldn't lead to a loss of discipline. Alcohol needs to be avoided when making any kind of financial decision, and that includes betting. And don't bet when the emotional balance of your mind is disturbed or you are distracted. It may sound silly, but if you've just had an argument with someone, or broken up with a girlfriend, lost your job, suffered a bereavement or you have any number of other issues that are occupying your mind, you shouldn't be betting. If you have kids that want some of your time, don't be trying to entertain them as you bet. You end up doing two things badly.

This is the theory anyway. Gary asks "Have you always had the required discipline / patience when trading, which may be part of your make-up in general, or did you have to learn it along the way?"

Tough question, but I'll try to answer it as honestly as I can. Have I always had the required discipline / patience? No, and I still on occasion bet on things that I have no business betting on, but having said that, I have never been totally reckless with my betting. Truth is, I don't like losing money. If I'm involved in a venture that is losing me money, I pull the plug on it. I'm sure I have written in previous posts about my betting career pre-exchanges, but it basically consisted of a few 'fun' bets, always with money I could afford to lose, and trying out various systems, some profitable, others not so, but all these bets were for entertainment. I never had any serious thought that it was more than fun, and hopefully not too expensive fun.

But when Betfair came along (they were the site I first tried in 2004), I saw betting as something that could be seriously profitable, although again as I have written before, it's not something that I would seriously consider going full-time on, at least not at the expense of giving up a 'proper' job.

Have I made some of the mistakes I said to avoid earlier? Yes - I have lost four figures betting after a few beers. The good news? That was on Aug 31, 2006, and I haven't combined alcohol with betting since. Lesson learned, a good loss in a way. And not drinking so much is good for your health too (so I am told).

Betting while distracted? Yes, lost four figures doing that too, but again, not an issue these days. I no longer try to combine trading with socialising or work.

Betting on markets I know nothing about? Yep - done that too, and occasionally I still do this, although I justify it as a Premium Charge reduction strategy!

Chasing after a loss? While I don't like to admit that I have done this, numbers don't lie and in early 2007 I was guilty of this. My biggest loss ever was on New Year's Day (£5k+), and by May 12th, I was even further down on the year. Interestingly enough, this period coincided with a major (positive) change in my life, so perhaps going on tilt wasn't solely to blame, but betting while emotionally disturbed was. Either way, it wasn't a good five months, and I didn't recover those losses until August. Again though, I learned from this, the point being that we all make mistakes which is fine. The problem is when we fail to learn from our mistakes.

I would be lying if I said that after a 'bad' loss, I don't feel a twinge that tells me to immediately recover the loss. It's there, but you can learn to control it. Get some perspective on a loss. Slice it down into how many days it will take you at your current daily average to recover that loss. Look back on previous disasters. It never seems so bad after looking at the big picture.

I still do make mistakes. Tonight I completely forgot about a £300 bet on the Koln v Hannover game, and never traded out. That was a new one for me, and I need to open a new 'senility' category for those mistakes. The truth was I switched over to the more interesting Brescia v Internazionale game, and just plain forgot about the Germany bet. Old age is a bitch.

I do find record-keeping essential for discipline. Numbers don't lie, as I said earlier, and it's easy for me to see where I go wrong, with the latest example in my post on Thursday betting. I didn't always keep records, but when I realised (albeit after more than a year - slow learner) that it was possible to make decent money, I realised that I needed to if I was to be serious about it.

I'll probably think of more things to write about on this subject later. Profitable betting long-term is really rather boring, or should be, and the more successful at it are, in my opinion, reasonably well educated people who understand that an ROI in the low single digits is good, and who can keep their emotions in check. But betting attracts many who are in it for the thrill, who have no concept of value, and are, without meaning to sound snobby, if not a little less well educated, at least mathematically challenged.

Good luck trying to teach discipline and patience there, but being cynical for a moment - would we want to? When we win on the exchanges, where is the money coming from? It's sometimes easy to forget that on the other end of the money we take out of the exchanges, there is someone losing it. I just hope they're losing money that they can afford to lose, unlike O'Dwyer who needs to take a step back and evaluate his situation.

As for Gary's decision to withdraw his funds from Betfair as he feels "the dreaded loss of control creeping in again", I question where this "loss of control" comes from. If it's after a loss, in other words chasing, then the inability to control this is one of the ten symptoms of problem gambling. If it's after a win, get a grip man! Do you spend all your wages on pay day? Does cash burn a hole in your pocket if you don't spend it?

The Ten Symptoms Of Problem Gambling

Preoccupation. The subject has frequent thoughts about gambling experiences, whether past, future, or fantasy.

Tolerance. As with drug tolerance, the subject requires larger or more frequent wagers to experience the same "rush".

Withdrawal. Restlessness or irritability associated with attempts to cease or reduce gambling.

Escape. The subject gambles to improve mood or escape problems.

Chasing. The subject tries to win back gambling losses with more gambling.

Lying. The subject tries to hide the extent of his or her gambling by lying to family, friends, or therapists.

Loss of control. The person has unsuccessfully attempted to reduce gambling.

Illegal acts. The person has broken the law in order to obtain gambling money or recover gambling losses. This may include acts of theft, embezzlement, fraud, or forgery.

Risked significant relationship. The person gambles despite risking or losing a relationship, job, or other significant opportunity.

Bailout. The person turns to family, friends, or another third party for financial assistance as a result of gambling.

Discipline is the bridge between goals and accomplishment - Jim Rohn

Thursday's The Worst Day

I have had fourteen losing days this year, and I just worked out that six of them have come on a Thursday. Given that there have only been ten Thursdays so far in 2011, that's a pretty high strike rate. A four figure loss yesterday means that the Premium Charge may well not be a problem for a second week, only this time avoided by a method that I would rather not use.

Looking back a year, and it's a similar pattern. I lost on nine of the first eighteen Thursdays of 2010, including two painful losses of over £2k. Not good.

Why are Thursdays so bad? Is it just a statistical oddity or is there more to it?

One reason must be the general lack of sport in general, with little football, and some losses on sports that I clearly don't have an edge on. Super League Rugby for one. That's been a loser so far this season.

In the US, college basketball goes crazy at this time of year, with conference tournaments and then 'March Madness' (aka the NCAA Tournament which starts next Tuesday), and 'madness' was certainly an apt name for it for one of the big losses I mentioned earlier. If I remember it rightly, it was a case of betting too much in an illiquid market.

I suspect that the main reason is that there is little NBA action on Thursdays, with just two or three games most weeks, two of which are televised nationwide serially.

Does form go out of the window when the world is watching? It might be interesting to look back on the results. My loss last night was on the Phoenix Suns who ALWAYS beat the Denver Nuggets at home, well, at least they did for twelve games in a row until my money was on them. Having not lost at home to the Nuggets since April of 2004, they waited until my money was on board before, not just losing, but getting thrashed. And no, that wasn't why I backed the Suns, but I was pleased to have that statistic on my side at the time.

The games chosen are selected because they are likely to be competitive. Good for trading in theory, but with just the one game (or two), I run into the same problems I have with play-off games - too many traders concentrated on one game or two, meaning value is harder to find than on quieter games. While I tell myself that I'm not taking poor value, the numbers are telling me that might not be an accurate statement.

When I get some time, I shall look at this in more detail.

Monday ain't a fun day
Tuesday's a goof day
Wednesdays are frenzy
Thursday's the worst day
Friday is great
'Cause I can hardly wait until the weekend - Here Comes The Weekend - Dave Edmunds

Fallacious

It's quite incredible that anyone claiming to be a 'betting expert' would waste their time, and the time of others, on promoting a scam like this one, sent to me by matt@betfairtradingexpert.com :

Subject: A Good Little Earner

I hope lady luck has been shining on you since we last spoke :-)

I have just discovered a brilliant new roulette software program, that will help give you an edge over the casinos.

Although it's extremely simple and easy to use, it's very powerful, and a 'must have' tool for any online roulette player like yourself.

You can find out more about here:

http://www.betfairtradingexpert.com/recommendedbetting.php?site=RouletteSniper

It's really cool and allows to you track multiple potential bets at the same time. It then gives you an alert when your system bet comes up, and tells you what amount to bet with.

That might not sound too impressive, but think about this...

Lets say you had a system where you only bet when a particular dozen hasn't come in, for say...10 times.

Now, it can be pretty time consuming waiting for this to happen, but the real pain is the all the bets you end up missing!

Lets say you are monitoring the first dozen of numbers 1 to 12.

Now, while you have your eyes glued waiting for that particular dozen to miss 10 times, you don't spot all the other dozens and column bets that have not spun
in for 10, 12 or even 15 times+ themselves!

Without help from a powerful tracking tool like this, it's virtually impossible to keep track of all these potential bets.

And it gets even better...

It doesn't just track dozens and columns bets!

You tell it what bets you want it to track and how many spins it needs to miss, and the software will alert you when a potential bet comes up automatically.

You could be tracking... odds/evens, high/low, black/red, dozens/columns, lines, corners, splits plus more ...all at the same time, with minimum effort!

Imagine the edge this is going to give you, not to mention the amount of time it will save you!

Amazingly, this thing is dirt cheap and I was really surprised when I saw how much it was. Most players will probably make back what it costs during their first session using it.

Wow! It all seems too good to be true, although on closer inspection it doesn't surprise me at all that it is dirt cheap. I tried imagining the 'edge this will give me', and it is always negative. Has Matt never heard of Gambler's fallacy, (or the Monte Carlo fallacy, or fallacy of the maturity of chances)? One presumes he's really a little sharper than that, in which case he does himself no favours whatsoever by trying to sell such rubbish to the less well-informed. And why are these scams always so poorly written?

Pruning The Bank

Simon commented the other day that in light of what happened with Sporting Options, he wouldn’t recommend keeping a large amount of money in Betfair.

Sporting Options, as many of you will know, was a betting exchange founded in 2000 by a couple of former BZW (one of my former employers) options traders, who went bust in late 2004 owing £3.5 million to 5,342 individuals, with a few owed in excess of £100k. Betfair stepped in and anyone owed £1,000 or less was repaid in full (or at least credited with that amount in the form of a Betfair account) while larger debtors 20% with the possibility of earning back more in the form of ‘commission rebates’.

For a time, it appeared that Sporting Options were matching bets worth up to 15% of those matched at Betfair, but allegedly the turnover was being financed by the owners of Sporting Options, who were using their own funds to create the liquidity.

At the time of Sporting Option’s collapse, Betfair issued a statement reassuring clients their deposits are safe. "Our client funds are held on trust in ring-fenced client accounts with the Royal Bank of Scotland and are completely segregated from company funds ... Under no circumstances could third parties have a claim on Betfair clients' money.”

Most exchanges take this approach although one notable exception is “BackAndLay, whose Chief Executive Ian Davies stated that no funds, whether in the hands of an operator or a trustee, are 100% safe, and that the customer simply has to make a judgement call about whether or not to trust the entity they are lodging funds with."

So while there might not be the same concern with maintaining a five figure balance with a FTSE 250 company with 3 million clients and a turnover in excess of £50m/week as there should have been with a small company based in Burgess Hill, it is probably not the best place to park a fairly large some of money, and yes, ’large’ is a relative term. Because I don’t need the cash on a day-to-day basis though, I tend to only withdraw funds when I have a ‘luxury’ expense to fund – a holiday for example, and I tend not to have too many of those.

And that’s how a betting bank should be. A betting bank shouldn’t be treated like a savings account, something that you dip into on a frequent basis to ‘pay a few bills’ - it should be money set aside that you will never need and can leave alone to grow. You don’t plant a seed and then keep digging it up if you want to grow a plant. You leave it alone. Once it has grown, it’s perfectly acceptable to do a little pruning, but let the thing grow first.

Paper Trading

Some good news at last. The Total Charges are at 20.07%, so no Premium Charge this week at least. Now if only I can keep the losers coming!

Mark commented on my list of reading material:

Thanks for posting this information up. I have read some of the books on your list and have now added the rest to my Amazon wish list. One other book that is popular and recommended by quite a few other bloggers is ‘Trading the Zone’ by Mark Douglas.

I believe that you are quite correct about there being no substitute for experience. I would also like to add my own personal view (that I will probably get shot down for) that paper trading is of little value as a learning tool.

I believe that there is no real benefit to be gained from paper trading, apart from showing the very basic mechanics of how a method works. I for one prefer not to paper trade but to use minimum stakes.

The reason for my aversion to paper trading is that it does not affect our emotional state. I could paper trade and loose half my virtual bank of one million pounds and I would not be affected at all by the experience, but if I had a bank of just ten pounds sterling and lost half of it during my testing, I would be exposed to mild versions of the emotions that go along with the trading for more substantial sums.

Also when trading using minimum stakes we have to physically put trades on and lay them off, which can highlight potential problems with trading software etc that virtual trading can not.

My personal opinion of paper trading is similar to Mark - it's useless. It's like writing a computer program and testing it by printing the code out and reviewing it. Or playing poker with matchsticks.

Yes, when you're working out the idea initially, paper may have limited value, but the only way to really test a system is in practice, and cost isn't an issue. On Betfair you don't even have to bet the official minimum stake. If you want to bet with 10p then you can. if it starts to look good, up the stakes.

Like running a computer program for the first time, operating a system 'live' can uncover all kinds of problems. (I'm speaking for most programmers here, not myself of course - all my programs from my developer days ran perfectly first time. I think.) With betting systems, you can run into the logistical problem of not being able to get the price on paper. For systems where the stake varies depending on previous results, you find outcomes not determined before the next bet is due. Your life gets in the way and you can't place the bet. And more, and as Mark says, if your system uses a progressive staking system, even playing with small amounts can soon make you realise that theoretical bets are one thing, but putting larger bets down after losing soon becomes a show-stopper. What's the worst that can happen with trading for real? You lose a few (less than) minimum stakes. That's a small price to pay to learn that your system is flawed.

Sports Trading Bibliography

I was asked the other day for suggestions about books that might help a fellow IT professional (Bernard) get up to speed on the exchanges a little faster than usual, and since he didn’t leave an e-mail address, I shall put some ideas out here.

When I began sports trading in 2004, I read the same Betfair specific books as everyone else – Lay, Back and Think Of Winning by Nigel Paul was I believe the first, soon followed by Game, Set And Matched by Iain Fletcher. Neither are going to make you rich any time soon, but they are easy reads for an introduction to the exchanges.

I also read Racing Post's The Definitive Guide To Betting Exchanges edited by Paul Kealy and Winning On Bettfair For Dummies. These are all basic stuff though, and unless you are a complete novice, you’ll probably not get too much out of them.

I read a number of financial trading books which helped, notably:

Trade Your Way to Financial Freedom by Van K Tharp

Financial Freedom Through Electronic Day Trading by Van K Tharp

The Way Of The Warrior-Trader by Richard McCall

Way Of The Turtle by Curtis M Faith

High Probability Trading by Marcel Link

Trading For A Living by Dr. Alexander Elder

Binary Betting by John Piper

Other non-sporting suggestions are:

Fooled By Randomness by Nassim Nicholas Taleb

Reminiscences Of A Stock Operator by Edwin Lefevre (Jesse Livermore)

Sports Specific:

Mathletics: How Gamblers, Managers, and Sports Enthusiasts Use Mathematics in Baseball, Basketball, and Football by Wayne L Winston

Profitable Football Betting by Paul Steele

The Complete Book Of Sports Betting by Jack Moore

Moneyball by Michael Lewis

The Logic of Sports Betting by Ed Miller and Matthew Davidow

Interception by Ed Miller and Matthew Davidow

Just a few suggestions from my collection, and develop at least a basic understanding of probability. Probability for Dummies by Deborah Rumsey PhD is as good a place to start as any.

With a background in IT, Bernard is well placed to be successful and while the books above are helpful in that they set the mind working, (you need your own ideas), but there is no substitute for experience.

It never was my thinking that made the big money for me. It always was my sitting. Got that? My sitting tight! It is no trick at all to be right on the market. You always find lots of early bulls in bull markets and early bears in bear markets. I've known many men who were right at exactly the right time, and began buying or selling stocks when prices were at the very level which should show the greatest profit. And their experience invariably matched mine--that is, they made no real money out of it. Men who can both be right and sit tight are uncommon" - Jesse Livermore

Note: This post was updated on May 13th, 2024 to include two new books by Ed Miller and Matthew Davidow

O'Dwyer Straits - Money For Nothing?

The 'weekend' finished with a nice winner for Football Elite, as Deportivo La Coruna beat Real Sociedad 2-1. When Sociedad pulled it back to a one goal game, I was thinking 'here we go again', and waiting for the 90' penalty, but Deportivo held on.

The ratings are updated, and Everton are rather surprisingly in fourth place right now with Manchester City, Tottenham Hotspur and Liverpool all within six points. In last place, and looking value at 2.06 for relegation, are Blackpool. The Best Football Trader mentions Blackburn Rovers as a candidate for relegation , and they are certainly in the mix with games to come versus Arsenal and the two Manchesters and in fact, every game is against a team with something to play for although Bolton Wanderers (currently the form team in the EPL) might have given up by the time they meet! My bottom six, from the bottom up by rating, are currently Blackpool, West Bromwich Albion, Wigan Athletic, Birmingham City, Blackburn Rovers and Wolverhampton Wanderers.

The form team across all the major leagues right now is Nuremberg, who have exceeded expectations in their last six games. Olympique Lyonnais have managed this in their last five, and Hannover '96 in their last four. On the flip-side, Hoffenheim, Chievo Verona and Palermo have all underperformed in four consecutive matches.

John O'Dwyer is trying to get back on his feet over at Betfair Profit & Loss but he seems to be all over the place. On February 18th, he wrote

"I am back on Betfair now and have £450 in my account, so I'll continue with the updates as previous, and see if I can build it into something more manageable."

Fair enough. It is certainly possible to build a large bank from a small deposit, but on March 4th, he wrote

"I've not had a bet for around a week, so it would be pointless providing a screen-shot of any profit or loss. I withdrew a lot of it a week ago to pay for a few bills. I have now however got £200 in my account".

So the statement that he had "£450 in my account" is very misleading. While technically, the balance may have shown £450, if that money is earmarked for debts or living expenses, it shouldn't be in a betting account. If there is one golden rule for gambling, it must be "Don't bet with money that you can't afford to lose". Anyway, so even £200 is enough to build on, so long as you have an edge and time. You're not going to turn it into six figures in a week, but over a longer period, this is certainly achievable. But now, we find out that John isn't "looking to build it into something more manageable", he is looking to "do this full-time" - by which I presume means he is expecting to make an income from trading. You can trade full-time on a bank of any size - you just won't make a very good income for a while. As I have said before, your betting bank should be money you don't need, and left alone and allowed to build. If you need the money for other things, it's not going to happen.

I guess everyone with a betting account is an optimist to some degree, but a healthy dose of realism with that optimism is necessary. When we first learn about betting and probabilities, if it's at a young age, most of us, if we are honest, probably entertain thoughts of becoming full-time gamblers. I know I did. Somehow the laws of probability wouldn't apply to me. The long losing runs were things that happened to other people, but of course that's nonsense. Go to any casino on any day and see how often 'evens' chances lose consecutively. In the long run, if you are not getting value, then you will lose steadily, and most of us learn that sooner or later. Turning £200 into a large enough bank to generate a living wage is possible, but not in five minutes.

If there is a second golden rule of gambling, it is "Be patient". We have the option of doing nothing, an option that I suspect many people don't take full advantage of, myself included. The temptation for a 'fun' bet, while watching for example the Barcelona v Arsenal game, can be hard to resist, but like the occasional visit to a casino, it's for entertainment, rather than making money. Having said that, when I'm in a casino, I do play the games that offer bets that are closest to value, my favourite being craps, and similarly playing the liquid markets on a game like tonight's mean that I shouldn't go too far wrong. Famous last words.

"So knock me down, tear me up but I will bare it all broken just to fill my cup" - The Decemberists

Facts

It's been a strange week. A big win on Monday and modest win on Tuesday got things off to a good start, and I was in full PC reduction mode, before losses on Wednesday and Thursday took away that concern. Then a weekend full of work meant little trading for the last two days. When all is said and done, I doubt that the PC will be an issue this week, although I've thought that before only to see it still there.

The weekend highlight on the football betting was Football Elite's selection of Hannover 96 v Bayern Munich. I layed Bayern Munich to get the draw on my side, but in the end Hannover ran out easy 3-1 winners. Unfortunately it was downhill from there with other picks Lorient (D 0-0), Freiburg (L 1-3) and Hercules (L 1-2) all going down. No draws for either myself or the Drawmaster. Auxerre came close for me but a goal in the 86' lost me that one, and on Friday night of course, a 90' goal took away a draw in the Lecce v AS Roma game.

I did have a nice win on the England v South Africa cricket game, although due to work commitments I had to watch the drama unfold on cricinfo after backing SA initially and greening up at 1.2 because... "I had to go to work". I was sorely tempted to let the bet run, but in the end I made the right call even if at the time I may have been giving up a little value. I've been in similar positions before, and when I let the bet run, it has a habit of losing! 

Another 1.01 'gubbing' which the Betfair forum get so excited about. Something that happens every (approximately) 1 in 101 of the time doesn't seem to me something to get too excited about, but I was reading about the Israeli lottery the other day where apparently a draw late last year produced the same numbers as the draw three weeks prior to that - and drawn in exactly reverse order! The odds on this were calculated at 1 in four trillion. 1.01 looks rather tame in comparison. The numbers were 13, 14, 26, 32, 33 and 36 (strong number 2) if anyone fancies a three-peat any time soon.

Finally, a goodbye to Rob's long running blog Gambling Cos Building's Up The Spout which is going into hibernation. A strange time of year to hibernate unless Rob is southern hemisphere, but he always was a little different! Just look at the name of the blog.

"If you don't look facts in the face, they have a way of stabbing you in the back". - Winston S Churchill.

Back To Back In London

With the Borussia Dortmund v Koln game producing a scoreless first quarter, I locked in a profit on the Over/Under, and a smaller profit on the Match Odds market after laying pre-game at 1.33 and trading out at 1.44 when a Dortmund goal started to look inevitable. It finally came just before Half-time but by then the Nets v Raptors game was under-way. In the end, my expectation of a low scoring game (Dortmund v Koln) was correct, and I should have left it alone.

Lecce v AS Roma was looking good for the draw until a 90' penalty, for the second consecutive week in Serie A I might add, scuppered a win. Overall a profit, but a winner at 3.5 would have made it an excellent night rather than a so-so night.

Strong draws for this weekend are Auxerre v Paris St Germain, Real Mallorca v Valencia, Borussia Moenchengladbach v Hoffenheim and Juventus v AC Milan.

Weaker draws are Newcastle United v Everton, Liverpool v Manchester United and Wolverhampton Wanderers v Tottenham Hotspur strangely all from the EPL.

For home value picks, which stank last week, I like Birmingham City (2.48) v West Bromwich Albion, Nuremberg (1.92) v St Pauli and Chievo (2.42) v Parma.

For the record, Peter Nordsted's Drawmaster picks are West Ham v Stoke Draw @ 3.20, Newcastle v Everton (3.20) and Fulham v Blackburn (3.40).

The London NBA game saw the Raptors trade at 1.7 after opening at around 2.32. Not a huge swing by NBA standards, and the same two teams go at it again tomorrow.

Expekter Winner - Or Two

And just like that, we have a winner. Expekter was the first to work out that Murray leads 2-1 in sets, with Roddick winning the third set on a tie-break with the last two points being aces, and then serving four aces to lead the fourth set 1-0. Easy!

On to more serious matters now, and two matches to focus on tonight. Borussia Dortmund v Koln and Lecce v AS Roma.

The ratings have Borussia Dortmund to win by two goals, and priced at 1.39. On Betfair they are currently priced at 1.34/1.35. My model clearly expects less goals than the market does, with the over prices looking very generous, which tells me I am missing something! A lay of Dortmund and a back of Unders looks to be the opening play here, and when the NBA game in London starts, I'll be trading out and concentrating on that.

In Serie A, Lecce v AS Roma has strong draw written all over it, with a cautionary note that Over looks value to me, (not a good sign for a draw), and Serie A is by far the worst performing 'strong draw' league at just over 27% (versus 35% across all five top leagues).

For anyone who rarely watches the sport, today is a good opportunity to see why, to my mind at least, the NBA is the best game for trading. The latest example of how you can't go far wrong laying at short prices was last night when the Miami Heat had a commanding 24 point lead v Orlando Magic and lost. Tonight's game between New Jersey and Toronto may not feature two of the best teams in the league, but for trading, who cares?

Ace Puzzle (Repeat)

On the last day of 2010, I posted this little puzzle up for your entertainment, and Dave asked recently what the answer was. Since no one has been able to work it out yet, or at least posted the answer here, I thought I would re-post it, and reveal all after the weekend - one that may see little trading for me as I again have to work all day Saturday and Sunday! The joys of working in IT. Little trading might actually be good. I seem to be all over the place this month, winning four figures in one market and dropping slightly bigger four figures in another. Good for the PC, not so good for my stress level.

Here's the post again:

Courtesy of "Betting The Odds - The Hidden Mathematics Of Sport" by Rob Eastway and John Haigh, comes this little puzzle - a doddle for sharp-minded readers I'm sure.

You are at home with the TV in the background and the sound turned down. You notice that Andy Roddick is in the middle of a match with Andy Murray and Roddick is serving. He serves an ace, and goes on to serve five more consecutive aces.

At this point you turn the sound up, to hear that Murray currently leads the match. What is the match score at this point - in sets and games?

Clippered Wings

My day got off to a disappointing start this morning with my back of the Houston Rockets (when superstar Blake Griffin picked up his fifth foul) not working out and going on to lose me a fair amount. It's a very thin line between success and failure. One minute Houston are a point down with the ball and fail to score, and seconds later they foul a three-point shooter and instead of leading by one, are down by four. Late in the game, those breaks will kill you.

Anyway, aware that my mood was not its usual bright and cheery self, Mrs. Cassini asked me "What makes you feel better after a loss", and for me, in a word, it's "perspective". Losing 700 is annoying, I can't deny that, but in the whole scheme of things, it's really irrelevant. The stock market makes or loses me more than that amount most days, and as a percentage of my account balance, 700 it's in the 2.5% range - I know, I keep far too much in there for reasons previously explained.

Life is good. Those close to me have their health, there's food on the table, so what the hell annoyed me so much? I really think it was the manner in which the bet lost. Houston SHOULD have taken the lead, and SHOULD have won. But they didn't. It happens. I still think it was a value bet, but some losses, one almost takes personally. I'm still up over a thousand on the week, and while I would rather have had three days of solid profits, the end result is the same, and maybe I should pat myself on the back for the PC reducing element of the loss.

Getting upset about one losing bet is just silly. The time to get upset is if it becomes apparent that my ability to find an edge is gone, which may well happen one day. I'm not getting any younger. I mentioned earlier, and stress isn't good for you. The top things you can do to maintain your health are, I have it on good authority, don't smoke, don't drink too much, don't be a fat bastard, exercise, eat more vegetables and fruits, and maintain a positive attitude.

And on that note, let me tell you about the good news on the Premium Charge…

My Goodness

I just checked the Premium Charge portal for this week, and somehow my Total Charges percentage has dropped to 19.91 from 19.96 last week. I could have done with the Academy Awards taking place a few hours earlier! So with the end of February, my profits for the first two months of the year are just 1.6% off last year's total and I can't complain about that.

Football Elite started the month off with a loser yesterday as Espanyol threw away a lead at home to Mallorca and followed that today with Real Sociedad, who gave up a relatively (77') late goal. Not a good start to the month after a strong February, and as has been commented on elsewhere, this part of the season is not particularly strong for FE so it may be time to reduce the stakes.

With the Arsenal v Leyton Orient game not offering a lot in the way of value, I watched Schalke '04 win at Bayern Munich to show that the Bundeslayga system also works in cup matches, although a sample of one is perhaps a little small to draw any firm conclusions from.

St. Patrick's Day came early and luckily for me I stayed well out of the way with Ireland being matched at 400 on Betfair in-play. "England traded at 1.01 for £2.7 million, 1.02 for £2.18 million and plenty of other huge sums at prohibitively short prices".

My goodness, my Guinness, as the advert used to say.

Conservative Betting

The weekend football investments finished up with another late goal, this one going against me as it took away a winner in Stoke City. The home 'value' picks were anything but this weekend, with three of the four picks drawing and one (Hoffenheim) losing, but fortunately I found three more draws from the four strong draw picks - Arles-Avignon v Brest at 3.2 and Racing Santander v Villareal at 3.45 and Kaiserslautern v Hamburg at 3.6. I've added another filter which is off to a good start. My draws eclipsed Peter Nordsted's Drawmaster tips as he went 0 for 3.

Football Elite had just the one pick this week, and that was also a winner at 2.44 as Cagliari beat Lazio 1-0. I think I'll leave the 'home value' picks in Matt's capable hands while I focus on my draws. Backing the draw may not be exciting, but if you're serious about making money from trading, excitement shouldn't be something you look for. Sadly for some, it's a high that some people find hard to handle.

I've gone back and forth on whether or not to post the following, but it seems to me a cautionary tale of how some of us know the rules to follow to be successful, yet are unable to resist the thrill of a gamble. It may help someone, but probably not, as the type of person it could help is not the type of person who would want, or accept the advice. To put it bluntly, to my mind anyway, this person is not someone equipped with the attributes required to be a long-term winner. It's also a cautionary lesson on being careful what you write in the digital age, because it stays around for a long time as I was reading just the other day.

So here's a post from the Betfair Forum written on 11.June.2007:

I am on the verge of increasing my bank to 2,000. Am I teetering on pro shores?

Considering this has been my full time job these past few months, I feel it's about time I give this a serious shot.

What is the size of bank needed to earn the average wage in your opinion?

My aim is a simple one.

Is to try and earn as much as I can per day by taking as little risks as possible. No set target. It's going to take patience, monumental discipline, time and the will to not get carried away with potential boredom. I have done this with success for a month before, only to lose discipline after a month by venturing back into the gambling world again - betting on the dreaded over 2.5 goals bets, to name but one

Severely lowering the gambling aspect is the way forward for me. I know this because when I lose it's because of greed and reaching for excitement levels that conservative betting doesn't bring.

*Greed

*Discipline

*Boredom

3 big factors that have lead me to the poor house many times in the past.

When I revert back to betting on 1.08 odds (for example) when my head is telling me the certain event is more or less over, I do well again. It's low excitement betting but given me results. It's only when I get greedy, become bored and start taking chances again, it all goes wrong.

Gambling is fine if that is your aim. But you cannot earn a living from gambling, I know that much for certain. We all know you have to have some plan in order to try and do this. It's not feasible for me to gamble to try and earn a living. Trading also involves gambling. My aim is to eliminate risks.

Getting past the 3 words above is the key to mine and many peoples success on here. Easier said then done for many, I know.

The post attracted a lot of comment, mostly cautionary, and it's interesting that almost four years later they were to be proven right. The author of the original post wrote this earlier this month:

Basically, I've messed up big style. I have won consistently on Betfair in the past, making around 27k in total from February to September last year and was even lucky enough to go to Flushing Meadows in New York and Wimbledon for the tennis, but in the last month it has gone very wrong because I have taken far too many risks. And because of this I have lost my bank and now have no funds left to work with. :-(

I am writing this to ask if anyone out there would be so kind as to lend me some funds to start again so I can build it up slowly into the numbers I made last year. I am very confident, and if you could do this, I will not only pay you back, but I will give you a massive slice of any profit I make in future on Betfair - which I expect to do.

I know this is asking a lot as you do not know me, but I will totally make it worth your while in future if anyone could do this.

If anyone wishes to invest, for a small commission I can make the arrangements, but I suspect that an ad. titled "Successful Gambler Seeks Money" is unlikely to attract too many investors.

Having been used to playing with thousands, I somehow doubt that the reality of playing with a much smaller bank will provide the thrill that appears to override the desire to be profitable. Making money from sports is not, or shouldn't be, a high, any more than going to work is a high (unless you're a professional stuntman I guess). Sports investing should be about as exciting as financial investing, and while short-term fluctuations as a percentage of a small starting bank can be relatively huge, but as your bank reaches bigger numbers, most people find their profits are not scalable and need to be realistic about their expectations.

Always One

I'm not sure that the BBC meant the above comment to be taken literally, but the Academy Awards are a good opportunity to earn some Premium Charge credits, if not to win a huge amount. Upsets are relatively rare, and because many films are represented in multiple categories, you can often glean some insight into what films are being favoured early on. For example, when the Sound Mixing award goes to Inception, and this film is a leading contender in the Sound Editing category, it doesn't take a genius to figure out that as form goes, this is as reliable as it gets. 

Similarly, when The King's Speech Director Tom Hooper wins Best Director as the second favourite, the price of The King's Speech (backed in November) for Best Picture is likely to shorten. It dropped from about 1.35 to 1.18 on the 'news', a link I mentioned after last year's awards. Colin Firth won Leading Actor, and even at 1.02 managed to bring the price on Best Picture down to 1.1. 

It's not that easy of course, but the chances are good that you can at worst break even and get those all important losers on your side for the PC. When all was said and done, I showed a net loss of £12.38 (thanks to a £681 loss on True Grit in the Cinematography category - note to self "you know nothing about Cinematography") - but the boost to the PC Total Charges means this was a good loss. There's always one shocker! It was Sound Editing a couple of years ago.

One of the things I like about this style of betting is that the events come thick and fast, and there is little time for self-pity after a loss because the next category is right there. Contrast the above loss on Cinematography with a similar loss on football, and the latter would discombobulate me for days.