Tips And Counterbets

The only profitable non-service in the FTL currently is Emp, and his selections, and there are a few of them, are here (additional punctuation on the Bundelsiga selections provided by Emp, not myself, and note that the Borussia Moenchengladbach bet already lost last night):

Championship
Lay Nottingham Forest v Derby County
Back Bolton Wanderers v Yeovil Town
Back Burnley v Charlton Athletic
Back Brighton and Hove Albion at Ipswich Town
Back Barnsley at Leicester City
Lay Millwall v Leeds United
Back Queens Park Rangers v Middlesborough
Back Reading v Birmingham City
Lay Sheffield Wednesday v Doncaster Rovers
Back Watford v Wigan Athletic

Bundesliga
Back Borussia Moengladbach at Augsburg
Back Freiburg at Borussia Dortmund (!)
Lay Hertha Berlin v Mainz '05
Lay Hoffenheim v Schalke '04
Back Hannover '96 at Bayer Leverkusen (??!)
Back Eintracht Frankfurt v Hamburg
Lay Werder Bremen v Nuremberg

Nothing received from Fedslam or indeed The Football Analyst yet. There were a few selections from the FTL in play last night. Skeeve selected Kidderminster Harriers (v Aldershot Town) but the game ended 0-0.

Football Elite went for Augsburg (v Borussia Moenchengladbach) but that ended in a draw 2-2, as did the XX Draw selection from La Liga of Real Valladolid v Malaga. I'll take the win, but as I have written before, 2-2 draws are too fortuitous to take any pride in.

A few posts ago, I suggested that the better a trader, the closer their long-term average win size was to their average loss size. The discussion continues on the Betfair Forum, although disappointingly not too many people are either willing or able to offer their numbers.

U.A. wrote:

You state that "When you watch enough games, you develop a sense for when the price is wrong". You also state that "I suspect that I cut my winners too short and let my losers run too long".

Why do you think that you can sense a price that is wrong when you place your original bet but not when you place your counterbet? Especially if you conducting a large number of trades on a game. Or do you feel that even though the price is wrong you just can't help but place the counterbet. I find this concept particularly interesting in light of the fact that you don't trade football and that you are referring to markets where there isn't a sudden massive price change. I.e. there shouldn't be the fear of something like a goal which would mean a big price change and consequently a big loss.

It's an interesting question, and my answer was that it's:

Because I am not totally detached when it comes to trading. When I am out of a market, with no exposure, it's relatively easy to identify a price that is wrong and enter the market, and if I enter with a small stake, it is easy to override the emotion of fear and exit at the right time.

What often happens is that in the heat of battle, there's no time to calculate Kelly, so I end up with a higher risk than I am comfortable with. As I mentioned in my rather amusing When Bets Go Wild post of June 2011, I know I'm in too deep when my breathing changes. It's a combination of risk and value, so a larger amount my not trigger the feeling of panic if the value is that much greater. In these circumstances, the overriding emotion is fear, so the tendency is to at least look to reduce the exposure somewhat, even if this is at the cost of giving up some value.

As I wrote in December 2011, [Prospect Theory], quoting from a study by Tversky and Khaneman, who "found that contrary to expected utility theory, people placed different weights on gains and losses and on different ranges of probability. They found that individuals are much more distressed by prospective losses than they are happy by equivalent gains. Some economists have concluded that investors typically consider the loss of $1 dollar twice as painful as the pleasure received from a $1 gain. They also found that individuals will respond differently to equivalent situations depending on whether it is presented in the context of losses or gains."

The last piece is interesting. Depending on where your money is, you see games very differently. If you want a team to score a basket with five seconds left, your thoughts during the time-out tend towards the improbability of it. "They're never going to score", but when you are on the other side of the same game, your mind keeps telling you that there is no way they can fail to score. That time-out gives too much time for thinking, and the cost of giving up a little value but guaranteeing a profit either way can often seem worth it. In a way, this trading out at a less than optimal price is adjusting the risk to a more Kelly like level, but there's a 'peace of mind' factor in play too.

Even though this is a hobby, I don't like to lose, and while I would like to think that I am a cool detached trader, I know that I am not, and giving up a little profit to ensure a less stressful life and smooth out the ups and downs of trading seems to be worth it. In my opinion, to be able to trade optimally, you need to remove emotions from the picture, but that's easier said than done.

And incidentally, price swings can be quite extreme in sports other than football, especially later in a game. The fear of giving up a late, game-changing score, is very much alive and well in many sports.