Spitting In A Thunderstorm

I mentioned yesterday that the Texas Rangers had come back from a three run deficit in the tenth innings versus the Los Angeles Angels of Anaheim The Book (Playing The Percentages In Baseball) had the probability of a team winning from this position as .047, (close to 1.05) while laying at 1.03 gives an implied probability of  0.029. Making the lay even better value in my opinion at the time was the fact that there had been 17 runs scored already in the game. What I didn't know at the time was that the Texas Rangers hadn't come back to win from this position (three down in extra innings) since 1975 - although admittedly they probably haven't found themselves in that unusual position too often.

I was reading a Wall Street Journal article by Dallas Mavericks owner Mark Cuban, and while he was actually talking about the financial markets, I see similarities with the betting exchanges. (On this subject, some of you may want to read the post Why Betfair trading is like Online Stock Trading). Traders are oft derided on the forums for being parasites, with the counter-argument that they add liquidity. Mark Cuban's response was excellent.

WSJ: What do you say to the argument that high-speed traders provide liquidity to markets and narrow spreads? The argument is that those benefits outweigh the negative side effects that you’re talking about. If the HFTs are pushed out of the market, they say, regular investors will wind up paying more to buy and sell stocks.

MC: That’s a bogus argument. By definition they can’t go into an equity unless there already is liquidity. To say they’re adding liquidity is like saying spitting in a thunderstorm is adding liquidity.

The article in full is titled High-Frequency Traders Are The Ultimate Hackers.

I pulled Nigel Paul's Lay, Back and Think of Winning from the bookshelf the other day, and it appears I have been making hard work of what is apparently guaranteed, and relatively simple. From the introduction:

Lay, Back and Think of Winning is an accessible and invaluable guide that teaches you how to make money on the betting exchanges. That in itself is a sound enough reason to make this manual yours. How many books can guarantee that, if you follow the advice within their pages, you can see a return on your investment of £14.99 in an instant - and then swiftly progress to daily profit up to or in excess of £100?

Guarantee! It's that easy! In an instant! A lot has changed since 2005, not least of which is the fact that the author is obsessed with horse-racing, with just a cursory mention of other sports. Of course, all this was written long before the introduction of the Premium Charge, so the £100 a day target is probably a little harder to achieve for those looking to win with a high strike rate.

How much is realistic these days? As I wrote a year and a bit ago when the ASHE figures came out:

It’s always fun playing with these numbers, and that £538 per week figure for us men, works out an annual salary (gross) of £27,976 which according to The Salary Calculator nets out at £21,385, or £411.26 per week. 

If you are a full-time trader and trade seven days a week, then to match Mr. Median, you need to make close to £60 a day - £58.76 to be precise, or if you’re that rarity in the trading world, i.e. female, you can be Ms. Median by making just £49.14 a day. Life is so much easier as a woman, as I keep telling Mrs. Cassini.

How easy an individual finds it to make an average of around £60 a day will, of course, vary, but I doubt that anyone serious about sports investing would find this unachievable.

It's only of academic interest anyway. If you are full-time trading, then it's a benchmark to measure yourself against, and not much else, and if trading is just a hobby and you already have a full-time job, then any profit at all is just icing on the cake.

Unfortunately that benchmark is changing. Hard to believe that the first Premium Charge was introduced back in September 2008, and already 47 monthly figures since then have come and gone. Seems like only yesterday. 

And finally - 

"Late money on the betting exchanges is found to be the most accurate prediction of true outcome probabilities and the greater the late odds movement in an entrant, the higher its probability of winning." - Discuss.