Tuesday, 20 December 2011

Value

I'd actually written this post originally 3 weeks ago and was not going to bother putting it on the blog. But today, I read a post by Dave on 'Betfair Football Trading - the Highs and Lows'(an excellent blog, by the way), which was discussing one of the answers from my interview with Cassini from 'Green All Over'. Cassini has since responded with his own post on the subject. Please take a look at both blog posts, which discuss whether value is relevant in the unders/overs scalping market. I also posted a comment on the Betfair Football Trading blog, which ended up much longer than I'd intended! It prompted me to return to this original piece which I'd written:


I'm not going to go off on a boring explanation as to what value is. Most of you will already be aware of what it means in regards to trading. But I can guarantee that some people that read this won't. Having spent a lot of time recently on Twitter and watched people posting up their bets, it becomes very obvious that it's not just a small number of people who have no idea about value. I don't want to sound patronising in any way because I am now going to admit something - I have only been trading with value for about 3 months *hangs head in shame*.

Don't get me wrong, I've known about value for years but like many, I was one of those who didn't think it really mattered as long as I could win more than I lost. As far as I was concerned, as long as I wasn't taking bad prices (i.e. if the price was roughly what I felt to be correct) then I wasn't bothered. But this year, I started to understand the concept a little better. The problem was, I didn't know how to apply value to the tennis markets. Then came the Betunfair Premium Charge.

The changes this made to the tennis markets, with less money around from the big-players, forced me to take a look at the way I was trading. I wasn't getting matched as often and found it difficult to get wins. In the back of my mind, I had been wondering for a while whether I was doing the right things. I had been looking at different ways to trade back in March, during my really bad spell, and I went back to those ideas and found a better way to make them work. Things started to click in September as it finally dawned on me; I knew where the value was and had done for ages, I just didn't have the guts to go for it.

Now, I never place a bet unless I feel there is some value in it. It took me a couple of months to get used to trading this way. It's not easy after years of just taking any price. But as someone who was always baffled by all the talk about value in the past, I can now also say that if you are reading this and you are not placing trades which are based on good value, then you are probably gambling.

I'm not being critical or trying to sound like an expert, far from it. I don't think anyone who just takes any price is stupid or ignorant or doesn't know anything about trading. I certainly was not stupid or ignorant and I knew the tennis markets like the back of my hand! But I just didn't know how to apply the concept properly and was also quite fearful of admitting my strategy (which I'd slogged away at for over a year) might be flawed.

I realise now that being able to find value is in fact where my edge lies and I think it is where most successful trader's edges lie. So if you aren't able to find value, don't understand it or feel you don't need it, then you probably need to think again. I don't see how you can win at this game (long term) without it. I just wish I'd made the changes sooner.


I will now post up the comment I made on the Betfair Football Trading blog:


I'm no expert on this subject and cannot reel off the percentages and probability calculations like Cassini but I understand the basics. I'm with Cassini on this one.

The first comment says 'As long as you don't leave it too long'. How can you possibly know how long to leave it? A goal being scored in football is a completely random event, so what are you basing staying in the market on? Surely the only thing you can base it on as a trader, is whether the price is value or not. If it is, you stay in, if it isn't, you come out. Otherwise, you are just guessing and hoping, which is pure gambling.

'It doesn't matter if what you do is value because you will have locked in profit anyways' - not if a goal is scored you won't! In the long run, your losses will almost certainly exceed your wins because you will have been taking prices regardless of probability.

I used to think the same way as Dave and 'anon' but realise now that this is not trading, it's gambling. You can still make profit from it but you'll need a hell of a lot of wins compared to losses and be able to accurately predict which games will have few goals AND predict when those goals are likely to be scored AND hope you are quick enough to get matched before the suspend sign arrives.

By dipping in and out the market when it seems like a goal might be scored, you may as well be betting on a video game where you try to press the button as quickly as you can to get the goalkeeper to dive and save a shot. The only difference is, you get much less than 5 seconds delay in waiting for the keeper to dive in a video game!

Sorry, comment has gotten much longer than expected! Not criticising anyone here, just wanted to add my opinion and to see what others make of it. I'll admit if I'm wrong, maybe I'm missing something but as someone who did used to trade the unders/overs in this way, I stopped because it was really just too risky.

20 December 2011 13:18




I'm completely lost by Dave's reasons and method for scalping the unders market but to me, those reasons make it even more of an unworkable strategy in the long run. Cassini explains this well on his blog. Looking forward to hearing people's thoughts on this. Just to re-iterate, I do not profess to be an expert on the subject and am just throwing ideas out there for discussion.



Here's the world number 8 (and my favourite WTA player) Agniezska Radwanska of Poland:

2 comments:

  1. Sultan, your statement "Now, I never place a bet unless I feel there is some value in it" is somehow flawed. In my understanding value is quantative in nature, something you could express in numbers and compare against the benchmark – the real probability of an underlying event to happen. If you have no numbers behind your feelings, then it is pure speculation on value theme.

    Maybe I am too conservative here, but for me a concept of value which you can just to “fell” but can not to measure is something I just cant accept and agree with.

    Mulkis

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  2. Hi Mulkis. I never said that I don't use numbers, I say that I base my trading MORE on intuition than I do by using statistical analysis or strict entry and exit points as part of my system. I prefer to go more on my intuition but of course, you have to be able to price up a match to know whether the price you are taking is value.

    I am always looking at the prices and when I feel that the price is value, I take it. That 'feel' is purely subjective though - what I think is good value, someone else might disagree with. But all value is subjective.

    When you have been studying the market for a long time, you get a natural 'feel' for the way it moves. This means you can make decisions based on intuition, rather than just looking at a chart or a number. You can't just say 'Federer is 1.7, that's value cos he's not normally priced that high'. You have to take into account other factors, such as current form, his opponent, how he's playing at that time, motivation, health, how the market is fluctuating and what you think the market is likely to do.

    So how do I assess all of that info quickly in a few seconds? Intuition. But that intuition is based on years of watching price movements, looking for patterns and analysing matches, it's not just a guess. Most traders will quantify that by saying something like 'Federer should really be around 1.9, so 1.7 isn't actually value', which is what I do.

    You have to find a balance between using purely stats and numbers and using just your intuition.

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