"This match exhibited perfect trading characteristics again. It was another match, where if you were trading, you couldn’t lose. If you backed the outsider his price shortened considerably. If you backed the favourite he won!"
I am really sick of reading this! Typically, it is the blogs which have tennis systems and other trading tools to sell, that trot this complete garbage out time and time again. This was taken from Peter Webb's latest blog post on the Wawrinka-Djokovic Australian Open match. Whenever there is a tennis match which swings back and forth, we never hear the end of it. All of a sudden, tennis becomes the best sport to trade, so good that you can't possibly lose no matter what you do! I'm sure most of you will already realise that this is simply not true but I'm also sure that plenty will be taken in by this. So as a tennis trader of 3 years now, I'll make it very clear just why it's a fallacy.
Let's say you layed Djokovic at the start of the match. I don't know what the SP was as I was actually going to bed when this match started and missed out on all the fun. It will have been sub-1.05. So that's a very low risk lay of Djokovic which would have won you some money greening up at any point up to just over evens. Of course, I'm 100% certain that some people will have stayed in looking for the big win on Wawrinka and ended up losing the lot but I won't split hairs on that.
If you'd backed Djokovic at SP, first and foremost, you are a mug! But putting that to one side, at what point do you decide (as a TRADER, not as a gambler) to exit your bet? If you don't already know this, then you are not a trader with a plan and a trader without a plan is normally a loser. So let's say that you know your stop-loss point. Where is it? If you backed at SP, you would be in a lot of trouble once Djokovic hit 1.5 in set 1. You are then staring down the barrel of a rather hefty all-red screen if you didn't exit before then. Djokovic actually traded over evens later on. Surely no one at that point would have not hit their stop-loss point? If you hadn't exited your trade by then, you were really just gambling. And this is the point I'm trying to make. All traders have to have an exit point, otherwise, they are not trading.
I'm certain that lots of people who backed Djokovic (either at SP or more wisely, above 1.2) would have been in a serious quandary once he hit 2.0. I'm certain many will have redded up nice and early and taken a small hit. I'm certain others will have let it ride a bit longer than usual, just because it is the world number 1 and taken a slightly larger hit than usual. I'm certain that some will have gradually reduced the liability as the price increased. I'm also certain that many will have panicked, not exited, bitten their nails to stubs and gone through emotional torment to bag themselves a green. So to say 'you couldn't lose' is obviously a load of horse manure and many who will have won, will know deep down that they got off the hook on this one. Just as many will know that they made a loss but did the right thing in redding up on Novak. Others will learn never to back at sub 1.10 ever again, whilst some will think this is a license to do it even more!
My point is that everyone has a different strategy, different stop-loss points and different risk aversion. So there are of course, always going to be winners AND losers on every tennis match. It's impossible to guess which way it will swing and when it will happen in every tennis match. I'm sure plenty of people layed Djokovic between 1.5 and 2, when it would have seemed obvious that the market was in love with him, despite being a set and a break down. The price will have looked great value and I can't argue with that- it looked a good move. How do you think most of them reacted when the price tumbled back down to sub-1.10? It would have been different for everyone - some would have taken a small green after a few ticks, others will have gone for more and had to scratch when it reversed, others will have held on longer and taken a red.
Let's say you greened up after an early lay of Djokovic. Some will have re-invested that green by backing Djokovic, as Peter Webb did. But Djokovic then went back out to over evens - so what do they do then? It's possible they may have scratched and won nothing or they may have dipped back into the red and ended up redding-out despite the fact they'd initially made a profit. There are many scenarios which illustrate my point but I'm sure you get what I'm saying now.
A tennis match only shows 'perfect trading characteristics' when it fits YOUR strategy. Otherwise, it's only a perfect match for someone else. Of course, a match that swings back and forth and has a wide odds range (which this one didn't, ironically, as Novak barely shifted above evens) is usually a better match for most traders to get involved in, as it offers more opportunities but that still doesn't make it impossible to lose. But authors such as Peter Webb (and this is in no way a personal attack on him as other blogs are guilty of this too) make it seem as though all these tennis matches are ripe for the picking and that you'd have to be a complete cretin not to make money from them. But I guess that is entirely the point when you have something you are trying to sell................