Going Underground

Lazy Trader commented on the numbers I posted up yesterday:

Interesting to see the financials only taking 259K, which should really be in the In play volume btw :)

I remember the financials used to be one of my early markets back in the day and the turnover whilst not huge was decent and playable. As usual betfair started to tinker with the markets brought out tradefair and completely killed off the financials. Wonder if the same will happen with their own fixed odds arm due out soon.

I didn’t generate these numbers myself, but I must admit I was a little puzzled about the financials volume all being pre-event, but as it’s an area I don’t go near myself, I left it as it was.

Then we had a comment from UndergroundTrader:

great thanks to you for your write ups. They inspired me to start a blog, where i m going to provide hopefully useful trading experiences over 20 years now in stock and sport markets.

In terms of your considerations about volume: for profitable trading you need volatility and liquidity and marginal price movements preferably without greater gaps.Thats the reason for increasing matching in-play in basketball, tennis and so on. Btw. just four ingredients lead you to a constantly "green" trader: It s all about 1) discipline 2) value picking 3) money management 4)to do the opposite of what human mind and emotions of your own and the other market player want to mislead you (i.e. exaggerations, cutting profits to early, let losses slide.....). Thats the reason why just 5% of the traders (in stock or sports trading) have a positive ROI. The key is "undergroundtrading" in terms of looking under the ground of your mind and emotions as well as the other players.
i ll point out this subject in one of my first upcoming posts.

Some good points about the ingredients needed for successful trading, all of which regular readers of this blog will be familiar with, but it's always good to get another perspective.

Speaking of which, A Punter's Year posted this up yesterday via Betfair Guru, and I thought it was worth including here because again, it makes some very good points:

"The underlying theme of everything we do is market dynamics and risk reward. It's very important to distinguish between price related entry and opinion related entry.

For our entries it doesn't matter for a second who wins the match eventually but what we do need is tight closely fought games.

One of the points I push repeatedly in the chat room is I have as much chance of knowing who's going to win the next game as you do. IF we take that approach we are basically guessing and hoping we got it right and that's not a road I want to go down.

Our approach is based on taking good risk:reward positions over and over again as long as the price and dynamics are right. Over time we will win an awful lot more than we lose, but lose we will... repeatedly in fact. And that's just the price you have to pay to have your money in the market with a chance of a big swing. The losses are tiny and the wins are big and that's how we make our money.

The MOST IMPORTANT thing to implement here is patience and discipline..... I cannot make the opportunities arise, they just happen or they don't. When they do we'll make the appropriate entry, if they don't come then there's no way I'm going to advise anybody to put their money in a spot that I am not prepared to. Over time you will begin to make your own entries but it's vital that they are at the right places."

We don't KNOW who will win, (despite what you might think on reading the forums), and we can't make things happen. Excellent advice. Be patient, and play the numbers when opportunities arise.

Al asks:

Cass, is picking a 75-1 winner today just luck?

Does he not read this blog? - there is no such thing as luck, only ‘random fluctuations of probability’!

75-1 winners come along every day - look at how often 1.01 shots are overturned on Betfair - but whether or not a 75-1 winner is down to a favourable random fluctuation of probability, inside information / fixing, or there is an element of skill, (the infamous ‘edge’), can only be determined in context. How many 75-1 selections has Al made? If it’s a handful, then it’s a promising start, but nowhere near enough data to be confident that this is the outcome of anything but chance. With no edge at all, you would be expected (have a better than evens) to find a 75-1 winner after 53 attempts, but I don’t mean to spoil Al’s day. I’m sure that 75-1 winner was very welcome, but just don’t give up the day job yet.

Historically, the favourite-longshot bias showed that the better value was in betting shorter prices, (this method still showed a loss, but a slower rate of loss than backing outsiders), but I suspect that this may have changed, or at least reduced, with the evolution, or revolution, of betting over the last few years. The advent of Betting Exchanges heralded the arrival of a more sophisticated investor and while there are still plenty of recreational punters for who making money is secondary to entertainment, for the most part I would suggest that bettors are far more savvy than was the case years ago.

Finally, a quick mention again of, not Pete, but Eddie - aka Soccer Dude, who followed up his excellent Correct Score market write-up with a Poisson For Dummies piece which is a good introduction to the subject. I await his ideas on handling the 'too-low' results that Poisson gives for binary numbers, and his views on whether the probabilities are independent or related, i.e. does Team A's probability of scoring 2 goals increase if they are playing a team expected to score 3 goals, versus if they are playing a team expecting to score 1 goal?