Nonsense Scientia

Via Full Time Betting Blog on my blogroll, I was led to Scientia Trading and Mel, who also posts on Twitter as @scientiatrader. 

The post is titled "Food for thought", which had me salivating, but not for long. Readers are warned that Mel has produced four webinars to date, although cautions us that:

What I will say is the videos are loooooong! And I mean long.(2 hours anyone?) Mel does go on a little bit sometimes (sorry!) but I assure you its well worth staying with them as there are some utterly fascinating pieces of information in there.

At the time of writing I have yet to get more than three minutes into them. Something for the weekend perhaps. The About Scientia Trading page contains lots of mumbo-jumbo phrases, for example:

When I made a decision to fully understand and internalize the trading fundamentals of some of the worlds most successful traders it was one of the most difficult and challenging journeys I have ever faced.

Given that Mel appears to be closer to starting out in adult life than some of us, that might not be quite as dramatic a statement as it initially sounds.

He writes that he is now having consistent results with a strategy:

...with a 50-60% win rate and one in which the average risk to reward ratio is 1:1.8 (1.8R).

The strategy appears to be betting on a goal late in a game, but there's a small problem with that sentence.

This risk to reward ratio implies an average price of 2.8, i.e. a win probability of 35.7% for his bets, so anyone achieving a 50-60% win rate at that price would clearly, and rapidly, be on the way to a fortune and keeping very quiet about it.

The trouble is, it's not that easy. You can't have a 50-60% win rate at around 2.8. 

Ignoring over-rounds and commission, bets at 2.8 will win 35.7% of the time, winning 1.8 units each time, and losing 1 unit 64.3% of the time. Net gain zero units. It's how probability works.

If Mel wants a 50-60% win rate, he'll need to be betting at prices between 1.667 to 2.0, well short of the 2.8 he talks about in the second half of his throwaway sentence. 

This ignores commission of course, which is not an insignificant cost when trading on Betfair. 

So the strategy of betting on a late goal in a game can only be profitable long-term if you are able to judge the probability better than the market, i.e. other individuals. I very much doubt that any one individual can do this consistently. If they can, they should probably offer their services to the football industry. 

Prices at any particular time in a game generally reflect the true probabilities. If the market does have a weakness at 80 minutes plus for some strange reason, it will soon correct, especially if people are shouting about it! 

Recording winners twice in your records might help the spreadsheet, but the bank won't benefit:

The other thing that jumped out at me from a cursory read is the idea of having a maximum of four selections per day. As readers of this blog will know, I'm of the opinion that value is hard to find, and that it doesn't come along x number of bets per time period. You may have no bets, you may have many bets. It makes absolutely no sense to ignore a value bet simply because you've already found a certain number that hour, day, week, month, whatever. If Mel has this huge edge, it would be folly to shutdown for the day at four selections. 

When I posed this question on Twitter, I was referred to Webinar 2, which, as my old friend Matthew Trenhaile put it:

I'll enlighten you all later if I get there.  

Completely unrelated, but the Betfair Forum isn't known for its sharp minds. In a thread titled "Does a football betting system that works exist?", we have this genius posting:

On what planet would a system generating ROI of 20% be 'not worth the time and effort'? 

A later post reveals that this return is from the grand total of 106 bets, so not yet anything to get excited about, and the fact that the 'inventor extraordinaire' is happy to give his system away means he knows it's rubbish.  Either that, or he is even more crazy than I first thought.