Imagining Edges

I knew I had heard of Swearbox (see previous post) before this week. He’s the author of The Expat Punter blog, which I believe I used to have on my blog roll, (and has now been re-added), but which may well have been dropped after three months of inactivity as he speculates. Here is a link to the post he wrote in response to mine, but it's a long one so I'll just pick out some of the highlights.

Cassini writes: “I am puzzled why it is not possible for him to build up from a small bank once again. The original bank was blown due to a lack of discipline, i.e. not following the system correctly, but if there is an edge, then a fresh bank and correctly proportioned stakes would see the bank build up once more.”

Quite simply I don’t have a significant enough amount of extra cash to just dump into an account and start again. Not sure whether I ever will but I remain optimistic and in the meantime I’m exploring some avenues that will take a fair while to assess to see if they are worth pursuing over the longer term.

I’ve long banged on about having a reasonable bank if you are in any way serious about punting for a living. £40-50k is be the figure I would come up with….anything less and it’s just a hobby. I’ve funded my Betfair account on several occasions since the crash in 2005 but I know that it’s just play money and ultimately it ends up in someone else’s account. I think my mindset is to blame again as I find myself so desperate to build the bank up quickly I end up getting involved in all sorts of nonsense, particularly when it comes to football bets. There’s so much cheating going on especially in South America. And another beef I have is the absolute dirge that Betfair serves up on their in play markets. Unbelievable crap like the Serbian Women’s Potato Picking League 3rd Division (you get my drift)…this garbage has no place on any exchange market, in play or otherwise. But I’m off on a tangent now so back to the topic…

Swearbox and O'Dwyer could be one and the same. For the umpteenth time, if you have an edge, you do not need a large bank. You can build up slowly from a relatively small deposit, but you need to be disciplined about it.

Swearbox mentions South America, and indeed, here is an example why, with his current mindset, he will only lose. It always amazes me how people get involved in the most obscure matches. Of course, there is nothing wrong with betting on Argentinian Second Division matches if that is one of your leagues of expertise, but it is senseless to get involved in games simply because they happen to be the only ones going on at that time. Where is the discipline? Simply because you CAN bet on a Serbian Women’s Potato Picking League 3rd Division game doesn't mean you have to. Turn the PC off. It's like complaining that the TV show you are watching is rubbish. Who's making you watch it? Turn the TV off and read a book. You are in control, or you should be. Betfair can be very tempting, with few hours in the day where there is nothing in-play to seduce you, but to have any chance at making a long-term profit, you need to be very selective about your betting. Swearbox had a post bemoaning Betfair’s suspension of an in-play game after they lost their primary feed. The game in question was Defensa y Justicia v Ferro Carril Oeste, two teams that most readers will never have heard of, although some men of a certain age may have heard of the latter, who were a decent team around the time of the Falklands Conflict, winning a couple of league titles in Argentina. Regardless, my point is that the likelihood of Swearbox having any edge whatsoever in a game such as this is zero to none, so the best he can hope for is to lose slowly by breaking even and losing the commission. Not a winning strategy.

There was another post that caught my eye because of the title “Done 80% Of My Bank Today” from a year ago – the game in question? Panama v El Salvador. Bad enough, but then he writes “Following the football I progressed (or should that be regressed?) to Aussie racing and all four picks have lost…”. I would say that ‘regressed’ would be the more accurate term of the two, but even that is too polite. Desperately chasing losses in the next available market is futile, and losing 80% of a betting bank in one day suggests that more than a minor tweak of the bank management strategy is needed.

The situation I now find myself in means that any money I do put into my betting bank that grows beyond a few quid into something a little more substantial ends up getting taken out again. In other words I simply have to sweep some out to help pay for bills and what not so the betting bank never really gets a chance to build up to much. I agree wholeheartedly with the point that I could start off from scratch and build up slowly but that would require an initial sum of money that I can absolutely do without and in the area that I live jobs that pay enough to facilitate this are few and far between.

Deposit whatever money you can afford to lose into your account, and leave it alone. Let it grow. My hands are tired of writing that you can't be betting with money that is ear-marked for another purpose.

Cassini again: “Without knowing the details of Swearbox’s horse-racing edge, I have doubts that even if there was a genuine edge there for a time, that in this sport such an edge could be expected to last for too long. If the edge was mathematical, it would be found out sooner or later, or too many members in the syndicate would drive the edge down to zero or negative, and if the edge was knowledge based, then this is clearly a weakness. Swearbox states that “my info was emailed every day and there was a set strategy to follow” but it is this total reliance on others which makes the decision to go full-time even more risky than having a self-developed edge, or preferably edges. It’s easy with hindsight to say that Swearbox should have waited until he had built up more funds, or given the system longer, but there are other factors that go into making a decision of this kind that only Swearbox knows in full.”

I’m not really sure that we had an edge to speak of. Do such things exist over the longer term? As I pointed out in my earlier post my info came direct via email. A team of private handicappers assessed the races each day and came up with a list of horses that they considered value lays at the price. What they based their decisions on I don’t know though my spreadsheets show some really solid long term profitable performances so they had to be doing something right.

As Cassini says it’s all very well having an edge but if your staking plan is no good it’s next to useless. I think our staking strategy was very good and if I were to go back to the period when I was punting full time (2003, 2004, 2005) I would only change one thing and that would be NOT to bet every day even though there would be info every day.

This is gambling after all and there is always the danger of a day when all the horses marked as lays will win and it happened twice in quick succession back in 2005 and ultimately led to an end to my pro punting. Yes we had stop losses but if you hit a bad day where 75% or more of the results went against you it would cost you a weeks profits. If you believe in fate those two days were always just sitting there waiting to happen and ready to bust your bank. By tweaking the system slightly and maybe limiting bets to two or three times a week you would be lessening the chances of being in front of your pc when those fateful days came around and therefore in better shape to avoid those guaranteed losses. But that’s all in the past and hindsight is a wonderful thing.

If there was no edge, the 'winning' run was false, down to progressive staking, and then it is indeed only a matter of time until probability catches up with you. Whether or not this is what happened here I don't know, but either the edge went away, or 'luck' ran out. It's hard to understand how a system with an edge could result in such big losses in a short while if the "staking strategy was very good". I would suggest that it really wasn't.

I also do not understand the logic of a stop loss or of limiting bets IF your system has an edge. If you have an edge, you want as many opportunities as possible. You don't know which of your individual bets will generate the profits, but you know that (for example) for every 100 units you bet, you will get back 113.5 (excluding commission). Stake sensibly, and take advantage of every opportunity. Some days you may have no bets, other days you may have twenty, and you need to be able to maximise all those opportunities however they fall.

And yes, edges do most definitely exist over the longer term, although they may not last for ever. Check out "Betfair Premium Charges". These players are not on a 'lucky' run.