Payback time! Rafa Nadal's exit from Halle yesterday (his second match since winning The French Open) has more than made up for him scuppering my outright winner bet on Djokovic at Roland Garros. The world number one started his quarter final against Phillip Kohlschreiber at 1.17. Under normal circumstances this price was about right (if anything, I would have expected it to be slightly lower) but the market didn't seem to have a clue about the extenuating circumstances. It was yet another example of people blindly backing a big name player. This market shows that if you really do your research and take the time to fully understand the world tour and to know more than the average punter, you can have a significant edge. To be honest, even I was surprised at the lack of knowledge that this market displayed, collectively. I was expecting to see a price of at least 1.3, taking into account the following reasons:
1. Nadal had won Roland Garros just 4 days earlier
2. He'd said in a press conference that he was so tired that he didn't think he could last another 3 hours on court
3. He traditionally does quite badly the week following The French Open, getting knocked out early at Queen's (where he usually plays) several times in recent years
4. It was only his second match on grass this year and a tough transition to make from the slowest surface (clay) to the quickest
5. Kohlschreiber is German and playing in front of a home crowd and had already played a couple of matches, so was better acclimatised. He also won Halle last year.
When you consider all of the above, 1.17 is clearly ludicrous. I would've had the price much closer to evens and it wasn't even a close contest in the end, the German winning 6-3 6-4. Laying was a no-brainer and the result, to me, was not a surprise, yet as I scanned Twitter at the end of the match, I saw that it was full of comments displaying shock at the outcome. Phillip Kohlschreiber even trended worldwide, such was the popularity of this bit of 'amazing' news!
So it just goes to show that in the tennis markets, there are a lot of people who do not really put in a great deal of research or thought into their bets. So although I have to thank Rafa (who appeared to have his body and mind on a fishing boat off the coast of Mallorca rather than the tennis court), as a trader we should never forget that we don't make money purely because of what the players do, we make money because of what other people in the market do. I think this is something that many traders do not understand, instead thinking that it is all about pre-empting what the players are going to do. That is only part of the equation though and if you aren't considering what your competitors (and that is what every other trader is) are likely to do too, then you are going to struggle in the long run.