Stats Chart Well

Some more constructive comments to talk about.

Dave has some interesting ideas, and not just the erroneous attribution to Sir Winston Churchill of the phrase "Lies, damn lies and statistics"!

He suggests that there is an argument not only for looking at statistics by division, but taking that a step further and breaking the season into three periods – early, middle and late.

This idea certainly has merit. Early season form is unreliable because close season changes, both managerial and playing staff, take time to bed in, and new teams to a division are something of an unknown quantity. Would Burnley have beaten Manchester United in January? Many late season matches can be harder to call if one or both teams have nothing to play for, (especially in Italy), so there’s an argument for restricting investments to games where both teams have an incentive.

Dave suggests that the early and late periods produce more goals than the middle period, which if true would suggest that not only unders, but also the draw would be more likely in that middle period. Food for thought, and another mini-project in the works!

Anonymous is confused about my 2 goal predicted wins, and I, in turn, am confused by his reasoning for turning a profit of 84 into a loss.

I'm a bit confused by your returns on bets on 2-0 and 3-1. 100 units returning 184 suggests, to me, a profit of 84? Not sure if that's what you mean or not. But, if so, then the investments presumably aren't profitable as you would make 84 and lose 100 (assuming level stakes) by covering 2-0 and 3-1.

A return of 184 to a stake of 100 means that for every 100 points staked you receive back 184 points, i.e. a profit of 84 points. Both the 2-0 and 3-1 scores would have been very profitable in the Premier League last season.

He goes on:

Of course, you also make no mention of other two goal scorelines which I find a little strange. From previous posts last season, I assume you would also be covering the "unquoted" or has that conveniently been left out because there were no 4-2s or 5-3s? (i don't know if that was the case or not)

It’s not really that strange. If you have ever looked at the Correct Score market on Betfair, you will know that 2-0 and 3-1 are the only correct two goal scores that can be backed. If a win is by 4-2, 5-3 etc., then yes, technically the prediction was correct, but from a betting perspective these fall into the less lucrative Any Unquoted bracket. Such results are included in the overall wins total along with the 1-0 and 3-0 wins etc.

Another Anonymous comments that

“A team expected to win by two goals can, on average, be expected to win 80% of their games (give or take not very much). 73% isn't a particularly good hit-rate (albeit that your results are relatively short-term).”

I suspect that Anonymous means “teams expected to win by 2 goals or more”, because the average price on the +2 selections was way higher than the 1.25 that would be expected if the probability is 80%. (Some examples from 27.Feb; Birmingham v Wigan was 2.0, Chelsea v Manchester City was 1.44).

My +3 and +4 selections are not included in the +2 results. When you factor this in, the 72.73% strike rate becomes very good requiring 1.38 as an average price to be profitable, albeit from a limited sample size.

He does however make a good point regarding the problem of supremacy margins having no "in-betweens" - supremacies of 0.5 to 1.49 are all being rounded to a +1 expectancy which is clearly not good. If the numbers were 0.49 and 1.5, they would be much different. It’s something I will be looking at this summer, as the spreadsheet evolves.

A major flaw in the way you approach things is that you seem to have no "in betweens". i.e. your methodology works on the simple basis that a team is expected to lose by two, lose by one, draw, win by one, win by two, win by three etc.

With a little work, you could achieve better results if you found a way to incorporate more precise expected (average if you like) supremacy margins a la the spread betting firms.

Incidentally, can anyone spot the relevance of the picture in this post?

Curly Q

I have a disappointed reader, and we can't be having that. Curly wrote:

I appreciate you taking the time to answer comments left but I do feel somewhat let down by the reply.

My question was number 3. Knowing 34.28% of matches predicted to win by 2 goals did so doesn't really tell us a lot about how successful it is. If the average price obtained was 3.0 after commission then it would be slightly profitable; 2.7 and it would be unprofitable.

I appreciate that you may not have complete figures but it would be interesting to know them if you do.

Here's the best I can do. As I mentioned before, the statistics I kept became more detailed as the season continued, so these numbers are very approximate, with some assumptions being made that may not be true.

In the Premier League, 23.03% of the predicted 2 goal wins finished 2-0. 11.52% won 3-1. The correct score on 2-0 usually paid around 8.0 and on 3-1 about 16.0.

The average price for a home win is hard to say. The nature of the rankings means that when a 2 goal home win is predicted, the match odds price will typically be odds-on. I realised fairly early on, when I saw that the strike rate exceeded expectations, that just backing the win wasn't the most profitable way to play these, which is when I started recalling the results in more detail.

Again I emphasise that these numbers are approximate but in the Premier League, 100 points staked on the 2-0 score would have returned 184, as would 100 on the 3-1 score.

In the other top Leagues, the respective (rounded) returns would have been:

Scottish Premier: 116, 115
Serie A: 114, 182
La Liga: 112, 135
Ligue 1: 107, 214
Bundesliga 1: 76, 114

It will be interesting to see how these games perform next season with more accurate record keeping.

From a second comment, albeit an Anonymous one, it appears there may be a little confusion for some people regarding the purpose of comparing the results of the Elo ratings predictions with the actual results from last season.

He writes:

"39% of games in Scottish Second Division are won by the home team - 50.79% are home wins in the Premier League"

Are won? Were won last season? Were won over the last few season?

Short-term / long-term again my friend.

"Ligue 1 and Scottish Third Division - 57% of matches finish Under. 55% Over in the Conference National and Bundesliga 1."

Another sweeping statement. Presumably based on one season?

These "individual personalities" of different leagues cannot be assumed to be correct on the evidence of such a small sample size. It is certainly correct that the Bundesliga is a high scoring league but that is a fact which can't be proved over one season.

As I thought I had made clear, my observations are from last season and were given to highlight the differences between leagues / divisions and as justification for my decision to look at each league / division individually.

They are not sweeping statements at all. They are the facts from last season.

I’m also not assuming that any league’s “individual personality” is ‘correct’. What does that even mean? How can something of this nature be correct? It is what it is. Different leagues will have different properties and those properties will almost certainly change over time.

Short-term / long-term is a relative term. I could collect league statistics going back to 1888 if I wanted to, but as the data I am comparing it too is from just last season, it seems reasonable to compare like with like.

I am also not interested in trying to "prove" anything - least of all that the Bundesliga 1 is a high scoring league. If next season the Bundesliga 1 is a low scoring league, that’s fine. I really don't care. It’s the relationship with the Elo ratings over that time which is important to me.

What I am interested in is finding any patterns or correlations between the predicted and actual results over a period of time. For now, that period of time is one season. That may be short-term, but it's all I have for now and Roma wasn't built in a day, as we say in Italy.

Elo Strugglers In 2010-11

Close season changes can obviously make a big difference, but the ratings at the end of the 2009-10 suggest that Wigan Athletic, Blackpool and West Bromwich Albion will be the three teams relegated from the Premier League in 2011. The next weakest teams are Bolton Wanderers, West Ham United and Newcastle United.

Because the ratings still need more time to settle down in regard to inter-division comparisons, the rest of the strugglers in England exclude the promoted teams. After a dozen or so games, the fate of these will be clearer but for what it's worth, in the Championship, Coventry City, Preston North End and Scunthorpe United are the expected strugglers.

In League One it's rather surprising that the three lowest rated survivors are Oldham Athletic, Milton Keynes Dons and Bristol Rovers.

League Two is tight, with not much separating Barnet, Lincoln City, Accrington Stanley, Cheltenham Town and Crewe Alexandra in the fight to stay in the League.

The Conference National strugglers will be Hayes and Yeading United, Gateshead, Histon and Eastbourne Borough, who all finish rated lower than relegated Forest Green Rovers.

These observations are for interest purposes only. It's still far too early to tell what will happen during the summer, which clubs have money to spend etc.

Value Plays

In between catching up and reviewing the Elo ratings, I have been able to find time to lose more money on the NBA Play-Offs. Laying the Lakers at 1.28 when up by 4 with about two minutes left was a value play that unfortunately didn’t deliver. The price moved out to 1.5 when the Celtics gained possession, but at that point greed kicked in and a basket would have had me sitting very pretty. Unfortunately for me, the Celtics turned the ball over and I had to go into damage control mode. Disappointing to lose, but the disappointment was tempered by the fact that it was a value play and the only approach at times like these is to be phlegmatic.

The baseball continues to be slow with thin liquidity on most markets. Forget trading the over / under markets. I forget what game it was at the weekend, but after 5 ½ innings with the away team ahead, the total was one short of the over. 1.3 looked value for the over, and I took it, but cautious fellow that I am, when a few more outs went by with no run, I looked to trade out. No chance. As it turned out, the total went over comfortably, and as I write this I remember it was the Los Angeles Angels who scored another four in the top of the seventh and all was well.

One other note from baseball at the weekend was that I was able to lay at 1.06 in the third inning of a 5-3 game. Value? I would say so. The trailing team came back to win in extra innings. One advantage of a thinly traded market is that it is surprisingly often that you can lay at silly prices. A one or two run lead in baseball with two thirds of the game to play is like a goal or two lead in ice-hockey in the first period. A good start, but assuming two evenly matched sides, not value at anything like 1.06.

The World Cup of course starts on Friday and Matt at Football Elite is covering the event which will provide some added interest. He sent out his ante-post picks yesterday along with a detailed explanation of the thinking behind them, which is always interesting to read even if one doesn’t necessarily agree with all of the conclusions.

It appears that the Sports Betting Professor has finally realized that he has received no money from me, as the e-mails with his picks have ceased. Unfortunately his e-mails trying to sell me horse racing, football (soccer), craps and just general crap systems haven’t. I saw no evidence of any edge in his picks, so they will not be missed.

Quality Or Quantity

It is suggested that I should not be splitting my data into divisions because that makes me guilty of creating many insignificantly sized data samples.

I take the point, but as Talkbet observed and as I have made reference to before myself, each division and league has its own 'personality'. When doing analysis on these results, it doesn't logically make sense to me to lump the Premier League findings in with say, the amateur and part-time teams from the Scottish Third Division.

I fully expect there to be differences. I would be concerned if there weren't in fact.

League One averaged 2.22 goals a game last year - Bundesliga 1 averaged 2.83.

39% of games in Scottish Second Division are won by the home team - 50.79% are home wins in the Premier League.

Away wins: 24% in La Liga, 35% in the Scottish Second Division.

Ligue 1 and Scottish Third Division - 57% of matches finish Under. 55% Over in the Conference National and Bundesliga 1.

If we simply total up all the stats and work on averages alone, yes, we have a large collection of data, but it's my opinion that we miss potential nuggets.

After another season or two, each division will have data samples that are significantly sized, but until then, to me it makes more sense to use the limited data with caution than to throw everything in together and miss the opportunities that the individual personalities of the leagues provide.

Anonymous then goes on to say:

The advice you give re: overs in different divisions also shows you to be guilty - unknowingly I believe - of data mining to suit your own needs.

Let no one reading this consider for a moment that I am giving any advice. I am simply pointing out some preliminary observations that I found worthy of note.

Thanks for the comment 'vital statistix'. Offering food for thought is one of the aims of this blog. As for Anonymous - as critical as he may be, and sometimes the criticism is positive, what is most illuminating is that he keeps returning to this blog and not only reading it, but also taking the time to post. A form of flattery, and he does make for good posting material.

Data Mining

Three good comments on my early Elo observations.

1)

Your draw hit rate seems purely in line with expected % of draws. Fluctuations from League to league are obviously to be expected in the relative short-term and short-medium term.

Whatever your short-medium term results I don't see how you can expect such a model to be profitable in the long-term if you're not actually pricing up matches yourself and are simply going on the way you use your ELO model (seemingly with scant regard for team news etc.)

Overall this is somewhat true in that the strike rate is not hugely better than expected, but it is better and my focus was primarily on the Premier League, where, for whatever reason, the draw hit rate far exceeded expectations. 25.26% of Premier League games resulted in draws, yet the Elo ratings had a hit rate of 38.67%. The other leagues where the hit rate was significantly higher was the Scottish First Division, Ligue 1 and Bundesliga 1. I use the word 'significantly' not in the statistical meaning of the word, although they might well be. I need to refresh my statistics skills. Also note that only the Conference National was more than a percentage point below the expected percentage.

Whether the success in this league is down to the quality of the league, a statistical anomaly that will regress to the mean next season, or simply that higher, more spaced out, ratings perform better, I really don't know.

2)

Have you thought of fleshing out you data but using the historic odds on say football-data.co.uk instead of the fairly meaningless percentages?

Yes, but to do this retoactively will be a lengthy task that I doubt that I'll have time for. Also a lot of my plays were on the correct score markets for matches where a selection was expected to win by 2 or more goals, and I'm not sure the correct score prices are available anywhere.

3)

How do these strike rates compare to average prices you did(/could) have obtained?

Looking at the overall results, I think I was lucky that I concentrated on the Premier League, because the results here were very good. The draws I have already mentioned, and these were profitable. Also promising were the winners by 2 goals fared extremely well with 34.28% winning by the 2-0 or 3-1 scorelines. 26.67% of the 3 goal games finished 3-0, also profitable.

Because this was the first season for keeping these records, and the process of what data to collect evolved as the season progressed, I do not have all the data I need for a full analysis though. My Elo based live betting was non-existent after February when I lost the latest data, and the all-important odds are approximate at best. I also made the (in hindsight) mistake of including cup games between same division sides. Although I doubt they skewed the numbers too much, there's certainly that possibility.

There are other observations that could be significant. For example, in the Premier League, a league where 47% of matches finish Under 2.5 goals, my expected draws finished under 63.27% of the time. If not statistically significant, it's certainly something to watch for next season.

If Over 2.5 is your thing, back the away selections in Leagues One and Two - 63.63%. But not in Serie A where 58.62% of such selections finish Under 2.5.

Why do 21.41% of draw selections in the Premier League finish 0-0, but the favoured score in the Championship is 1-1 (18.45%), while in League One 0-0, 1-1 and 2-2 each occur (10.1% each).

I'll continue to pore over this data during the summer, and keep even better records next season. Given that one only needs a small edge in the football markets to do very well, I'm confident that these ratings are a good first step towards that aim.

Elo Overall

The ratings were applied across a total of 3,763 matches. Only the later season matches in Europe (a total of 34) were included, so while these are included in the overall totals, they are excluded as an individual league on account of the low sample size.

Across all leagues, the overall strike rate, i.e. the final margin was exactly as predicted, was 25.91%, with the leagues ranging from a high of 29.4% in Ligue 1 to a low of 21.27% in the Conference National.

For matches where the predicted result was correct, but not necessarily the margin, the overall win rate was 45.97%, ranging from a high of 53.16% in the Premier League to a low of 36.94% in the Scottish Second Division.

Looking at draw selections, they hit overall at 27.87%, with the best league being the Premier League at 38.67% and the worst being the Scottish Third Division at just 21.63%.

When the ratings have an expected winner, the more cautious might choose to lay the opposed team. The best leagues for this strategy are La Liga and Serie A with just 9.56% and 9.79% respectively of selections actually losing. The worst? Scottish Third Division at 19.3%. Of the five top leagues, the Bundesliga is the poorest at 16.67% with no less than 29% of expected one goal winners losing. A finding that echoes Talkbet's observations.

Already, there's a trend developing suggesting the lower leagues should be dropped, but that's looking at the numbers from a backing perspective. There's more than one way to look at these numbers.

Caught Up

Talkbet posted an article last month reviewing his first complete season for his Powerstats app, which appears to be somewhat similar, if a little more sophisticated, to my Elo ratings. He commented that different leagues have their own personalities, and having recently completed the time consuming task of catching up the results to the end of the season after my data loss in February, I can confirm Talkbet’s observations.

I maintained ratings for the top five divisions in England, the four Scottish leagues, as well as the top leagues in Italy, Spain, Germany and France. For cup and European matches, points moved from league to league. The starting points were necessarily somewhat arbitrary, but were based on the UEFA coefficients, which seemed as good a starting point as any.

I also started recording the Under / Over 2.5 goal markets midway through the season to see if there was any evident trend.

It’s been a while since I wrote about the ratings, so for any newcomers the story is this. I keep a spreadsheet (backed up on a frequent basis now) which contains the current ratings for all teams in the aforementioned leagues. For each match I enter the ratings for each team and a formula calculates the margin of victory required for the two teams’ ratings to stay closest to their current values. It’s a work in progress, but in certain areas, for example predicting the draw in the Premier League, it performed remarkably well.

The results are promising; no Holy Grail for sure, but something solid to work on. The next few posts will reveal some of the successes and failures of the ratings, overall and by league, and also those teams whose ratings did not reflect their final league positions.

Piaget

I was reminded earlier today of my comment from a couple of days ago that "low-priced" was a relative term. The future Mrs C commented that an estimate was value because "it was lower than others". As I am prone to do, I launched into a detailed betting related explanation of why, logically, the fact that A was better value than B did not mean that A was actually value. Her eyes soon glazed over and she retreated to the kitchen for another cup of coffee, while I tried to remember the name of the experiment which showed that kids, when presented with two beakers of water, always picked the taller one as containing more, even when shown that both beakers were exactly the same.

I found the details. Courtesy of the excellent, but sadly now inactive, TraderPsychology blog.

This illustration (see above) shows a famous experiment performed by the Swiss Philosopher and Child Developmental Psychologist, Jean Piaget. In the 1950s, he performed his famous Conservation experiment. Here, two equal amounts of water are presented to a child. Then, the contents of one glass is poured into a tall, thin glass. The child is asked which glass holds more water. If the child is five-years old or less, it will typically point to the taller glass.. It will do this consistently, even as you pour the water back and forth to demonstrate that it is absolutely equal. Here, the child is basing its judgment solely on the height of the water in the glass.

I've had this discussion with people about share prices. To the novice, all share prices are viewed as equal, and a share available for 40p must be better value than a share in another company available for 90p. While this may be true, the logic is clearly false. I suspect that many investors on the betting exchanges make a similar error when they see a price of 1.1 and think it's low. It might well be low, but it could well also be value to back, i.e. relatively high.

Not to open up the old debate on value at odds-on again, well, maybe a little, but 2.0 (evens) can, just like any other price, be low or high. As Piaget's experiment shows, there are other factors than the number (height) itself that need to be considered before forming an opinion.

Epsom Downs And A Decade Of Exchanges

A rather good weekend for Ryan Moore at Epsom, to say the least. For as long as I can remember, The Derby has been a race I have had an interest in. My parents' local station, Reedham, was (still is) on the Tattenham Corner line, and when I was old enough, I would ride the six stops down the line, walk across Epsom Downs, pick a spot by the outside rails about a furlong out, hang out for several hours with friends and beer and watch the race for free. Troy's 1979 win in the 200th race and the ill-fated Shergar's widest margin win two years later were a couple of the highlights of those years.

I stopped going when they started fencing off and charging admission to the areas I used to frequent for free. It's that Premium Charge thing again. Had it never been free in the first place, I would have been OK with it, but when a new charge is applied, it hurts far more. My kids have now taken to attending the Derby each year - they must have more money than I have!

Oaks Day 2000 (June 9th) was the original launch day for Betfair, with about £3,462 matched on the Oaks itself. Ten years on, and over £2.6 million matched on the Oaks. It's fair to say that the arrival of Betfair and the other copycat exchanges have revolutionised betting. Not only do we now have wafer thin margins to help us, but the ability to lay, trade and bet in-running. With such an arsenal at our disposal, it's not surprising that so many people sign up expecting the winnings to follow.

It's a zero sum game though. For every £100 that Anonymous loses, Mr. Winner takes £95 and Betfair take their £5 of commission. Still not perfect perhaps, but a hell of a lot better than 10 years ago when we were up against 110%+ books and paying 9% in betting tax. It's hard to believe that this was still being deducted as recently as 2001. Perhaps ten years on and we'll be finding it hard to believe that there were ever such prices as 11/4 or 100/30?

Sounds Simple

Brian Bee asked:

Will you be doing a post explaining how you approach trading on the American sports? Do you simply lay a low priced team that you think will lengthen?

If by "simply lay a low priced team that you think will lengthen" you mean "back or lay at a price that is value" the answer is yes, but despite what Anonymous might think, there is nothing simple about it.

Plus, it's important to understand that whether a team is “low priced” or “high priced” is relative. If the probability of an event is .95 and the price is 1.1, then 1.1 is high priced and a value back. If the probability is .8, then 1.1 is low priced and a value lay.

I can’t speak for all traders, since we all have our own styles, but when trading, any sport or event, and it makes no difference if it is a US sport, an Australian sport, or a Jovian sport for that matter, I look for a price that is ‘wrong’. Since most of the markets are short-term, the problem of the price moving sideways is not usually encountered, so I take a position (my entry point) when I am confident that the price will at some point move in my favour. The exit point is when I feel that any value is exhausted.

The ‘buy low, sell high’ axiom has been known to traders for centuries, and while at first sight it appears to be a solid piece of investment advice, it is actually just noise. Let’s be polite and call it ‘stating the obvious'. Something along the lines of the recent “stay hydrated” advice us lesser traders were recently given.

The key is, of course, market timing, and all traders and all sports markets are different. The only advice I would presume to offer is to tell you to put in the time to study how the markets you are interested in move. Understanding ‘buy low, sell high’ is the easy part. Even Anonymous seems to have mastered that much, but learning ‘how’ is the hard part, and putting in the time to learn is crucial.

My apprenticeship on the exchanges was a little under two years during which time my balance waxed and waned as I tried different methods.

Doubtless many people have found an edge a lot sooner than the 21 months it took me, but a lot more either take longer than two years or never find one. And then of course edges can disappear, so you need to have more than one string to your bow, especially if you are full-time, or your best sports are seasonal.

Be aware that if you have uncovered an edge, it’s unlikely that you are the only one to do so, or will remain the only one. The popular markets, horse racing and football for example, are big ponds, and most of us are small fish. It seemed to me that in the big ponds I would soon get wiped out, so I focused my attentions in the smaller ponds. Even the small ponds can be dangerous waters at times, but a little specialised knowledge, both of the sport and the market, goes a long way.

Bandying Blogs

I'm back after a long weekend away. Batteries recharged and not too much missed, at least from a betting perspective. I was a little concerned that the team I've supported for over 40 years might go to the wall, but it appears that a dramatic eleventh hour deal was reached.

I had a quick look through some of the blogs on the blog roll, and see that Mudflaps at Betting For a Living handed in his intention to resign only to have his resignation refused, so now he's back. Good. The blogging world needs more forty-something bald and impatient old gits (his words, not mine) even if he is a Sheffield United fan! He's just completed his first month of full-time trading on the horses and has racked up a very impressive profit in excess of £3,000. Well, I'm impressed, as I'm sure Anonymous will be. 

When Mudflaps posed the question "Who really cares how much money I win or lose everyday?", and the post received 18 comments, I was a little shocked to see that not one was from Anonymous saying "Me". Not one! I guess he's not read the post yet.

John the Gambler appears to now require a Username and Password to view his stories, so I shall have to live out my life never knowing how much he won on last weekend's golf.

Rob at Gambling 'Cos Building's Up The Spout posted a screenshot as evidence that he is making 'bugger all', and initially the screenshot looks highly credible with not the slightest hint, anywhere, of any numbers being manually edited, (see above). However, note the parantheses around the Horse Racing and Total figures. Rob is clearly unaware that Betfair show negatives with a minus sign, not parentheses! But how could he know this when he just keeps on winning?

For the sharp minds out there who are wondering how I could possibly know how Betfair show negatives, that's a fair question. As with all traders, my success rate is, of course, 100%, and the explanation is that in September 2005, my Mum called me to say that she'd had a dream that SKA Neftyanik would beat Sandviken in the FIB (Bandy) Champions Cup final, and would I put a couple of quid on them for her because Ladbrokes were uncomfortable laying such a large sum. Being a good son, I obliged. Sadly they lost, but the silver lining was that I got to see what a loss looks like! Incidentally, have Betfair stopped offering these games or is it the off-season? Now that Great Britain is a Federation of International Bandy member, I have high hopes for trading this sport. Actually, an ante-post back of Sweden and Russia to win the World Championships would have given you the winner 29 out of 30 times, though probably not with a profit!

But I digress. The truth is that the more Rob attempts to show he's making 'bugger all', the more we know he is raking in consistent profits. I'm expecting his blog to soon require a Username and Password as it seems consistent winners don't like too much attention.

Foe what it's worth, and being serious for a moment, my own May was an average one as far as Mays go. May is still my second worst month, and the profits were down 12% on last year, but then I wasn't trading for four days so overall not too shabby.

Looking ahead to June, and if I am anywhere close to last year's total I will be very happy. June 2009 was my 4th best month ever by daily average, one of those months where everything I did seemed to work out. The NBA play-offs should go longer than the five games of last season, and the NRL is in mid-season with some close matches in prospect and no team losing fewer than three games to date. Looking at my numbers from last season, it appears the liquidity on baseball improved in June, (possibly on non-NBA days) and it would be nice if this was to repeat.

And then there's the small matter of the World Cup to enjoy, probably more from a spectator viewpoint than for any serious investing. Four years ago I lost all of £31.96 on the tournament. The tickets for the quarter-final cost me a little more!

Exiting Times

There were a few questions / comments from my most recent post:

SU does indeed mean Straight Up, at least in this context.

I think there’s some confusion about the game I was writing about when I wrote “The Lakers are too short at 1.27 SU against the Suns. Lay, with a view to trade. I do think the Lakers will win, but they will trade higher.”

This was written for Game 5, already in the history books, with the Lakers very lucky to prevail by 2 points courtesy of a tip in at the buzzer.

Paul and Anonymous may be looking at Game 6 tomorrow, where the price is currently around evens.

Anonymous said...

I read comments all the time from you so called "traders" like the one you made here - expect them to win but will trade higher etc. etc. It seems that all traders get the higher price without fail. Am I correct?

If there is anyone out there, be they punter or ‘so called trader’, who claims to get these calls right ‘without fail’, a healthy dose of skepticism would be in order, but one can be reasonably confident that any traders who have been around for a while get these calls right more often than wrong.

For Brian Bee who asked “how many ticks higher would you aim for?” it’s hard to give a definitive answer since every game has its own personality, and the pat answer is that I aim for as many ticks as possible and trade out when (and if) it is value to do so.

When I started out, one of my strategies when laying low odds pre-game was that if the price hit my lay price * 1.5, I would reduce my exposure by approximately 50% . The other 50% was layed off at the lay * 1.75 mark, and then I might look to green up at lay * 2, but while this sounded good in theory, in practice, it wasn’t that straightforward. I liked the idea of having a pre-determined exit point, but soon found that when it comes to in-play trading, any rules tend to go out of the window. Every game is different.

You have to adjust for events that are unfolding as the game goes on. For example, in last night’s game, a key player for the Lakers (Kobe Bryant) picked up two fouls early on, something that made me a little more confident in my position given that Bryant then had to sit on the bench for a fair while.

Other times I will wait for a momentum change or a time-out when the prices settle down before trading out, and other times I will take a loss. It’s (relatively) easy to lock in a profit for the sake of locking in a profit, but if you are not exiting at a value price, then you are costing yourself money in the long run.

Sometimes the value price means closing out at a loss. It happens. As I said at the beginning of this post, no one gets calls right 100% of the time and while the concept of value in sports is subjective, if your account balance is not steadily increasing, then you aren’t finding it.

For anyone looking for an example of how my initial exit strategy would work, in last night’s game, where the lay was at 1.27, my lay of 100 units saw me exposed to the tune of 27. I would have been looking to lay off 14 at around 1.4, the other 13 at 1.48 and green up at 1.54. It’s always a little annoying to see the initial lay end up a winner, but in this case it would have worked out well. The Lakers hit 1.6 but went no higher (at least not that I noticed).

I spent some time a couple of years back reviewing charts of basketball price movements for Peter Nordsted, and laying pre-match at short prices was clearly a profitable strategy. How to maximize those profits, i.e. where you choose to make your exit point, is a personal preference. We all have different levels of risk tolerance.

Laykers, Tiger And Spin

The Lakers are too short at 1.27 SU against the Suns. Lay, with a view to trade. I do think the Lakers will win, but they will trade higher.

A paper by economist Jennifer Brown has reached the not-too surprising conclusion that playing in a tournament with Tiger Woods reduces the performance of golfers by a full stroke. Hardly a huge margin over a four day tournament, and in fact had I been asked to guess a figure, I would have gone higher.

A more interesting study might have been the performance of players in the same group as Tiger, especially on the final day, but that is yet to be done so far as I know.

Brown calls this an "adverse superstar effect" - in the face of a superior opponent, pro golfers have less incentive to compete.

And finally, an interesting way to spin a loss. From the SBP's mail earlier today:

We had a bunch of plays on Wednesday and we ended up losing a couple units, but we're still moving in the right direction in the MLB.

To be fair, his results overall recently ARE moving in the right direction. Just not on Wednesday!

Letchworth Betjeman

Rob the Builder's blog is usually a good read, but he really has gone too far with his latest post.

He writes:

In the meantime I'll console myself that I've developed a fairly unique betting blog. Many blogs come and go when the task of winning is found to be harder than planned. Other blogs are written by the habitually successful. I've developed a fairly longstanding blog, yet have made bugger all for many months! The stubbornness of the Yorkshireman I suppose.

Am I the only one to notice that he produces not one shred of evidence to back up this claim to make 'bugger all'? The last screenshot he included on March 1st clearly shows a profit on the day, and anyway, as we all know, these screenshots can be easily faked.

It seems to me that these modest claims of 'under-achievement' only go to show that he's really a winner like the rest of us. Don't be taken in by this pretence of Rob being an honest guy regaling his ups and downs in the world of betting, even if his words are at times almost pornographic. This, from 19th February could have been ripped straight from the pages of Playboy:

And often I seem to have an ‘out-of-body’ experience when following women’s tennis. Part of my brain is telling me to lay low, but the instinct to back my selection is too powerful. By the time I finally regain control of my body, the odds have swung against me and I take a disgruntled all-red.

Disgusting.

Lazy Lakers

A nice win tipped for the Suns last night at 2.48, a very generous price against a team as moody as the Lakers. On their day, they are the best team in the NBA, but they have a habit of going to sleep and did so again last night with the Phoenix bench essentially winning the game for the Suns in the fourth quarter.

As I wrote yesterday, this win makes game 5 very interesting. The Suns have the momentum and with a win can close out the series at home in game 6. If the Lakers keep going as if the series is a “slam-dunk” they will lose.

Unfortunately, I shall be away for that game and a potential game 7 for investment purposes.

I was trading the game on BETDAQ (liquidity sporadic, but occasionally there was value) where they suddenly suspended the game for site maintenance. Unlike Betfair, who don’t turn games in-play when there is scheduled maintenance, BETDAQ do, something to be aware of unless you suddenly want to find yourself exposed.

Suns Coming Up

The Boston Celtics -5.5 was another loss yesterday for the SBP yesterday which makes six consecutive losses and, of course, back-to-back ‘system’ losses.

I took a loss on the game myself thinking that the Magic showed signs of giving up in game three which I thought might continue into game four. It didn't happen. Helped by some dubious calls (the NBA doesn’t like sweeps because it costs them money!), they prevailed after overtime.

Rick did actually acknowledge the run of losses today in his e-mail, better late than never I suppose.

The Celtics and Lakers will both win their series, (and not just because the NBA wants a final with these teams in it) but if Phoenix can get a win tonight, it will make things very interesting. The Lakers still have home court advantage, but they can be sloppy. The line tonight is Suns -1.5 are 2.48 (or -1 on BETDAQ). Worth a few bob in my opinion, but I'll see how the game goes before going in too big. If Bynum is out for the Lakers, as rumoured, that would be another plus.

The Betfair play-off basketball markets are a little odd. The over/under for the Suns v Lakers game four in a couple of hours is 221.5. Fair enough, but then Betfair add markets a full 10 points either side of this number so that the under 231.5 is at 1.33. Maybe it generates more interest but lines are usually set at where the expected result will be, and if the prices show that the line is off, then the line moves by a point or whatever and a new market is added.

Not too much going on right now, and I'll be taking a few days off at the end of the week to get some hiking in with the (almost) Mrs. Cassini, so the blog will go quiet for a while. I went out for a run yesterday, GPS and watch recording speed and distance (got to love those numbers) and it turned out to be a run at a blistering pace. Unfortunately, by that I don't mean that it was an exceptionally fast run, but rather that I ended up with a big blister on my heel. I still have a few days to recover before the trip.

This time of year seems like as good a time as any to get away from trading, although I'll miss a few basketball and ice-hockey games, but there's always something going on in the world of sports so it's a case of choosing your poison.

Baseball's still slow right now with poor liquidity in-running, and so is the ice hockey. Occasionally BETDAQ have some decent liquidity on these ice-hockey games, but other times there's literally nothing. Strange.

Credit where credit is due, and th SBP's baseball picks did improve last week, going 16-11 for a gain of 392.37 to a level stake of 100. For the season his record is 67-74 for a loss of 815.89.

I had another winning week, but I'm still holding the Premium Charge at bay for now with my total charges at 20.47%.

With so little going on, I have been trying to catch the Elo ratings up to the end of the season. I'm up to the end of March for the major leagues, but it's all very time consuming. Kind of interesting though. I'll have some observations in due course, and try to make some comparisons with Talkbet's interesting Powerstats season summary. I suspect his automated process is similar to my manual spreadsheet process, so it will be interesting to compare findings. Well, interesting to me.

I also cleaned up the blog rolls so that a few extinct ones have now been removed (amazing how many blogs fall by the wayside) and I also created a seperate list for the primarily horse-racing blogs. John the Gambler's blog will soon be on its own in a new Walter Mitty section. If his bets are to be believed, it looks like he took a hammering on the golf at the weekend, but 'if' can be a big word.

Punting Psychology

Continuing from the last post, and the favourite-longshot bias, just why should it be that even if it doesn't make financial sense to do so, people continue to support the underdog?

The conclusion of studies appears to be that it's not simply because we get some special pleasure from playing the horses at 100/1; it's because we tend to overestimate the long shots' chances.

This bias might be explained by a tendency that behavioral economists have labeled the "availability heuristic": We make judgments about probability based on whatever data spring most easily to mind. The examples you remember are the ones that influence your beliefs. If you've just watched hours of footage about 9/11, for example, you might think you're more likely to die in a terrorist attack than in a car accident.

A study by the Broadcasting Standards Council found that Crimewatch UK increased the fear of crime in over half of its respondents, and a third said it made them feel "afraid".

We are apparently quite easily influenced. A few years ago, a graduate student named Nadav Goldschmied invited students to read a fake newspaper article about an upcoming rugby match. According to the article, odds makers had given one of the teams just a 30 percent chance of victory. When asked to make their own predictions, the students were more optimistic. Instead of pegging the underdog's odds at 30 percent, they guessed it was more like 41 percent. If the article specifically referred to the disadvantaged team as an "underdog," the effect was even stronger, with the students pegging the chance of victory at 44 percent.

Goldschmied repeated the experiment twice more, replacing the rugby teams with mayoral candidates and then a pair of businesses competing for a contract. In each case, the results were the same: The mere act of labeling one side as an underdog made the students think they were more likely to win.

Last Favourite

I'm not a horse racing man by any means, but some of you out there might be interested in this post.

Most serious bettors are aware of the favourite-longshot bias in horse-racing, a phenomenon that was first observed in 1949, and 60 years later continues to be seen.

I remember first hearing about this while I was studying my 'A' Level in Pure Mathematics with Statistics. My Pure Maths was crap, but I did rather enjoy the Statistics part. A pity I'd forgotten most of it by the time Betfair emerged, but the Internet's a wonderful thing.

A recently (2010) published paper from the National Bureau of Economic Research in the USA reviewed the results of no less than all 6,403,712 horse races run in the United States between 1992 and 2001 and some of the findings are very interesting.

The rate of return to betting on horses with odds of 100/1 or greater is about -61%, betting randomly yields average returns of -23%, while betting the favorite in every race yields losses of 'only' 5.5%.

They then also included races from Australia (2,725,000 starts) and the UK (a mere 350,000) which also showed the same favourite-longshot bias. The chart is included above, along with the findings of other reports.

I also remember being told at a tender age that the favourite in the last race was seldom value because it was typically over-bet. It seemed logical, with the explanation that punters were losing by that time, and were looking for a lower risk selection in the last race to recoup some of those losses. According to the report, this was first mentioned in a study made in 1956 and cited in other subsequent studies, but all these were based on small samples.

Not many people would consider 6.4 million a small sample, and it was interesting that this study did not show the last-race results to be statistically significant from other races. So there goes that theory.

I'm noticing a similar trend with baseball, but I haven't yet researched 6.4 million matches, (could be a while), and my sample is way too small for any conclusions.

Self-Exclusion, Self-Delusion

A cheeky, and somewhat tongue in cheek, comment recommended John the Gambler's blog for a "real gambler's blog" and while I do include this in my "Other Blogs I Read" blogroll, in part because it's one of the longer running blogs out there, and in part because it can be quite entertaining, a gambling blog it is not.

John gives the impression of a traditional on-course / betting shop gambler who discovered Betfair, had some initial success and then found out the hard way that winning in the brave new world wasn't that easy.

Some of his wins / losses are no doubt true, but there are too many contradictions to take him seriously.

On 29/3/08 he wrote

"All round one of those days where I will be happy to settle for 50 quid profit. I only need just over 100 to hit 5k for the month, so I will be taking it very steady till the end of March.

I would welcome suggestions/comments on how to make money over the next couple of days, as I say I cannot see many. What I call a quiet end to the month."

Then a few hours later, a very brief and dramatic post (John loves drama) read: "Just had a really bad day on Betfair. Time for a long break. Catch you all later. I am afraid this blog is dead. Bye for now. :-)"

We never heard how bad the day was, or what the loss was, but today John writes: "I self excluded when I stuck 10K on a US geggee. Very stupid. Was still 10K up on month but very stupid. Thought the break would do me good. I was 20K up on the month, but lost half midway through the month with one stupid bet."

So in 2008 we were 28 days into the month and "a little short of £5k", but two years later and the profit for the month was actually £20k?

It's a tendency of problem gamblers to remember their wins but forget their losses, and it seems that time has softened the loss for John. The size of the loss is of course irrelevant. I think the important things to note here are that it was serious enough to prompt a request for self-exclusion, and that John is not being honest with us, and possibly himself, about the loss.

£10k on a US horse race? Really? Leaving aside for a minute the fact that without any specialist knowledge, or any history of betting on these markets, this would be a ridiculous market to bet even £2 in, since the post was written late-afternoon (5:41pm), and it was thus still morning in the USA, I have my doubts that US horse-racing was the market where the loss occurred. The truth is out there.

You Punter!

Am I a trader or a punter? A recent post apparently produced “evidence if it were ever needed that you are not a trader but just a punter”.
I think it was meant as an insult. “Just a punter!” Oh the shame.

Actually, as Matt said “Aren't punters and traders the same thing? :) It's all gambling”.
Does it even matter?

Traders are clearly “taking a risk in the hope of gaining an advantage or a benefit”, the definition of gambling, and the outcome of a trade is uncertain, and so are punters.

Given that trading and punting are just two (sometimes overlapping) approaches at solving the same problem, I’m not sure why a trader should be held in higher regard than a punter. I would think it more appropriate to base any respect on profitability.

What do most people mean by a ‘trader’ or a ‘punter’ anyway?

If I back something pre-game and then lay off at 1.01 two minutes from the end, am I trader?

If I start trading an event, and decide that there is no value in the price to lay off at and let the bet run, am I a punter?

And then there’s the question of trading styles. All traders do not trade the same way. (This is a good thing!) Some trade a couple of ticks, others are swing traders, others are momentum traders and so on. Some trade pre-off, others in-play.

So it seems to me that it would be rather silly to limit my options to just one style or the other, for no good reason. Winning at anything can be achieved in different ways. Find a style that suits your risk tolerance and if it’s profitable, run with it, but no extra credits are awarded FOR style. It’s an individual choice. Play to your strengths. For most people (not all) a job title in itself is meaningless - it's the salary that matters.

Where do I fit on the trader-punter scaIe? Definitely well over to the trader side in terms of money, (or the trader targeting Premium Charge would never be a problem), but certainly not averse to punting on certain markets or on events that might be running parallel to a trading event if I consider it value. My Elo selections and those of Football Elite fall into this category.

One limitation of trading is that only one event can be traded at a time. Sure, there are the 2.5% of the population I was reading about who are “super-taskers” but unfortunately I’m not one of them. I get distracted or bored often enough as it is, with just one event in-play!

Quantum Leap

From the pages of the NZ Herald comes this:

Fear not, fans of the Three Lions, the World Cup is yours. Financial analysts at JP Morgan have crunched the numbers and found that England will triumph in South Africa.

Bank boffins Matthew Burgess and Marco Dion used quant methodology (that's the use of mathematical data to assess investment opportunities - do try to keep up) to find that Fabio Capello's men will end 44 years of hurt by downing Spain in the final. According to their numbers, Holland will finish third. No word on the All Whites.

"Having developed a rather successful quant model over the years," Burgess and Dion say, "we intend to introduce it to our readers and also use its methodology to apply it to a fruitful field for statistics: football and the World Cup."

Swiss bank UBS sees things differently. They're predicting Brazil will triumph in South Africa. Using economic theory, the Swiss bankers rate Brazil a 22 per cent chance of lifting the cup and Germany an 18 per cent chance (this was before the exit of Michael Ballack).

The fondue-munchers have calculated England won't make it past the quarter-finals. Again. And, again, no word on the All Whites.

Home Run

A couple of good wins last night put my baseball investing for the season into the green for the first time. After my documented bad start on April 17, my tried and tested slow and steady style has recovered that loss so it's onward and upward from here. I hope. Given the SBP's record in this sport, I was glad to see that one of my selections was opposed by one of his seven. (He did go 4-3 last night, but still 57-67 on the season).

His basketball selections are on a losing sequence of five, so anyone following his A, B, C progressive staking system is on the verge of a second system loss, but what does he have to say about it? Nothing. Very telling too, how he completely ignores the losses, but never misses an opportunity to tell us about a win. Not the behaviour of someone with any confidence in his selections.

It's been suggested that I am 'obsessed' with the SBP, but I like to think the word is, or rather was 'intrigued'. I was admittedly intrigued by how his NBA picks worked, in particular what were the key spreads that he felt were favourable and why. Well I now know what they are, and accept that over the past few years, these may have performed better than average, but there is no explanation as to WHY these spreads should be more profitable, and no rationale for his bizarre A, B, C staking system.

It is my opinion that the Professor is not an expert in Sports Betting, but in Marketing, the subject in which he received his degree. He has no edge, and fancy staking plans might disguise that fact for a while, but bad value catches up with you sooner or later. And anyone selling a Craps system clearly doesn't have the best interests of his customers at heart, as well as sending the message that he thinks we're all idiots (as opposed to simply curious!)

What a contrast to the SBP is Matt at Football Elite, the one service that I do pay good money for. I missed the start of the season, only joining at the end of November, but since that time he sends out not only the tips each week, but also a follow up update e-mail. Some weeks this can't be a pleasant task, but Matt does it, secure in the knowledge that his clients know that he has an edge, and that when there is a disappointing set of results to report on, there's no point hiding from the fact. His end of season review was very interesting too. Well written, thoughtful and above all, honest.

Long-time readers of this blog will know that I am naturally very sceptical of tipsters, in a healthy way of course, but Football Elite have been a breath of fresh air. The SBP hasn't. Very simple.

Number Crunching

A couple of days ago, I posted some numbers that I had calculated last July, showing the daily average that one would need to make on the exchanges to earn the equivalent of the UK median and mean incomes.

Anonymous very kindly pointed out that my figures assumed a higher tax rate than is actually correct, so in the interest of accuracy, I am revising them to reflect the current tax and National Insurance rates for anyone earning this amount.

The median UK full-time gross income as of 2008 is £25,123.

The net is £19,259.07 which works out at £52.76 a day.

If you choose to trade just 5 days a week, then you would need to make £74.07 per work-day but I suspect that most full-timers actually work for at least part of most days.

Even as a part-timer, there are very few days in a year (24 on average) when I have no activity on my Betfair account, although the time spent might vary from a few minutes to several hours. Two days off a month doesn't sound like much, but trading is something I enjoy and to quote Harvey MacKay “Find something you love to do and you'll never have to work a day in your life”.

To achieve the mean full-time gross income of £31,323, you would need to make £64.66 a day (or £90.53 per day for a five-day week).

Unfortunately for those who are looking for (close to) the same steady profit each day, trading is not like that, at least it's not for me. I have a definite 'season' when I make the majority of my profit - October through March accounts for a lopsided 76%. The Spring and Summer months are a relative struggle, and I suspect that most traders have their better seasons too. The two worst months are April and May, and June and July aren't too much better.

If only I could seriously get into trading tennis or golf but finding value in those sports really is work, at least it is for me.

In 2006, golf was my top summer sport, (followed in order by baseball, cricket and tennis), but by 2009 golf had dropped to last, with the top three in order being baseball, cricket and tennis. Evidence that what works well one year doesn't necessarily work so well the next. Evolve or go extinct I guess.

The Yanks Are Coming

May 18 (Bloomberg) -- A glimmer of common sense in the US perhaps. What next - an openly atheist Presidential candidate?

When U.S. Representative Jim McDermott went looking for revenue to improve foster care for kids, he said he stumbled on what may turn out to be a jackpot: a tax on Internet gambling.

McDermott is seeking to impose taxes on online poker and other Internet gambling that could bring the federal government as much as $42 billion over 10 years, according to a congressional analysis. States may collect as much as $30 billion, McDermott’s office estimates.

“It’s a human activity that people are going to do, and it’s a good place to pick up some dough,” said McDermott, a Washington Democrat, in an interview. “I’ve gotten a thousand ideas pumped at me about what we should do with the money.”

The House Ways and Means Committee tomorrow will consider his proposal, which depends on passage of a separate bill to legalize some Internet gambling and roll back a law designed to block wagering beginning June 1. That bill would let U.S. residents gamble online with companies licensed by the Treasury Department.