Wednesday, 21 November 2012

Job Security

I've been a Chelsea fan since watching them draw 2-2 with the once mighty Leeds United in the 1970 FA Cup final with my late Uncle Arthur. From the heady heights of Dave Webb's winner in the replay at Maine Road I have stuck with them. From the days of Peter 'The Cat' Bonneti, 'Chopper' Ron, Peter Osgood, Alan Hudson et al through the doldrum years to the start of the resurgent Chelsea just prior to Roman Abramovic it has been, in the words of the song, a long and winding road. The club has known great success since Roman arrived with his money, league titles, FA and League Cups. The first London Club to bring home the big one as well. And, to cap it all, an operating profit in the last financial year. On the surface, all was well..........

However I'm finding it really hard to take what's been going on there of late, and worry for the future. The mishandling of the Terry situation, the completely pointless Clattergate nonsense and now the sacking of the man who won us the Champions League. It's too much for the sanity of a man of my advancing years.

So, I go onto Betfair this evening and see the opportunity to lay the fat waiter in the Next Chelsea Manager market at 1.03. Remembering reading a blog post (sorry, can't remember who penned it) about letting these markets 'come to you' I duly laid him for £250. A small liability, I acknowledge. But honestly, surely that was just an over hyped Redknapp-eque bit of nonsense, wasn't it? The weekend's beer and baccy money in the bank, you'd think. No way even Roman would appoint the man who caused us so much grief (somehow, not sure how!) as Liverpool manager, was there? Safe, sensible trade.

So now, we have yet another 'interim' manager. And it's f******g Benitez.

The mind boggles.

Monday, 19 November 2012

Growing the bank

When I started my blogging journey my principle aim was to improve my discipline in trading. My chosen vehicle was compounding (hence the url of this blog, even though the blog's name has changed). The idea was that by consistently making small, regular profits that my bank would grow steadily.

I no longer aim to win a certain amount, neither a sum of money nor a percentage of bank but I still think that process put me broadly on the right road. The reason for veering away from the compounding idea was basically that it isn't a sustainable long term strategy for growth - put simply the numbers  grow too large too quickly in the medium to long term and too slowly for an impatient bloke like me in the short term!

That said, it is a basic truth that a trader's bank is his / her main business asset and therefore needs some kind of plan to underpin it. It has been written often that one should not use money to gamble with that one can't afford to lose, and I think that is eminently sensible advice. But it's naive in the extreme to think that losses aren't going to come your way, no matter how good your analysis and your ability to seek out value trades, so some sort of bank management is needed. I trade principally for the fun and the challenge, and my main financial aim, believe it or not, is not to have to top my bank up!

The subject of growing / managing banks has come up recently in two of the blogs that I read every time they are updated. Sultan has expressed his desire to grow his bank over the forthcoming tennis season to five figures, the better to enable him to cope with the slings and arrows of outrageous fortune as he tries to put himself in the position to trade professionally. I wish him well with that aim, although I wonder if that amount of bank is really needed to trade professionally.

In reply to a question from Bet19 and others, Cassini advises that people should aim to grow their bank and leave it alone  - neither needing to draw down from it or to top it up. A sort of 'retirement fund' if you like. I do wonder, as an aside, whether he genuinely has not withdrawn anything from his account - if it were me paying a 50% ish tax on my winnings I'm fooked if I'd leave 250 large in Betfair's coffers with no consideration in my direction at all!

Bet19 adopts a two bank approach. He has a 'short term' bank and a 'medium / long term' bank. I did something similar for a while a few years ago, but I'm sure Bet19's approach is more disciplined than mine! I had a day to day account, from which I'd siphon any winnings over a certain size into what I had somewhat optimistically christened my 'SpecToAcc' account (seriously, that was how the relevant spreadsheet area was named!). Lets just say there was considerably more speculation than accumulation going on there so the idea was swiftly ditched!

The point I'm labouring somewhat to make is that as with many things in life bank management is horses for courses to use an appropriate idiom. If you wish to live day to day, supplement your salary or build a nest egg for the future you need to have identified your goal, and to have worked out a method that works for your trading style, preferred sport(s) and time available. And stick to it!

Friday, 9 November 2012

A word of caution....

... from someone who should know better.

I made a painful mistake in a game during the 2010 World Cup. Trying to get matched on a particular price for U2.5 goals I allowed a £100 stake to go in-play with the 'Keep In Play' facility checked. The match started, I got distracted, and it got forgotton. About 15 minutes in there was a goal, and some lucky layer was able to gobble up my stake as it sat there waiting for the market to reform. Needless to say by the time I had realised what had happened there'd been another goal, so I really was upside down on the trade! A third goal in quick order killed me off completely.

They say it's not the mark of a foolish man to make a mistake. However, it IS the mark of a foolish man to make the same mistake again.

So s**t for brains left an unmatched half time lay of Leverkusen in the market with 'Keep In Play' checked yesterday evening. They scored after about 3 minutes and 1-0 it stayed. As it happens my intended trade would have failed had the bet been matched in any case, but that's not the point!

So, my advice is to use 'Keep In Play' with caution, and the second a market turns in-play cancel the 'Keep'!

Wednesday, 7 November 2012

Betfair calls the race to the White House

I have been following the USA Presidential Election for some weeks now, both on the TV, web and other media and have been reading Cassini's thoughts on the odds on offer. I didn't get involved with any trading during the run up, but managed to scalp a nice green by laying the incumbent at 1.09 at around midnight UK time last night, and hedging at 1.15 or so. Managed to do that a couple of times.

What I found most interesting about the whole thing is how the Betfair market, and Cassini to be fair to him, called this result some weeks ago. At the same time the catchphrases of the campaign seemed to be 'too close to call' and / or ' a close run thing'.

The convincing result for Obama, ultimately, is more a reflection of the US electoral system than the national split of opinion - hence the massive interest and focus on the key 'swing' states - chief of which was Ohio. This system has worked well for some time now but it would seem to be even less fair on the individual voter than our own much maligned 'first past the post' system spread across over 600 constituencies. A few hundred votes one way or the other in a key state decide the fate of whatever number of Electoral College seats that state has to offer. We might think it harsh that a Tory voter in Camberwell & Peckham effectively has no real voice in a General Election and neither does a Labour voter in Bromley and Chislehurst, but that effect is magnified enormously under the American system.

In my opinion Romney fought a good campaign bearing in mind the difficulties he faced. To gain the nomination he first had to court the more or less entirely un-electable preferences of the Tea Party and then to perform a balancing act of appeasing them and trying to appeal to the broader electorate. The fact that he managed to poll just under half of the total vote is testament to a great political skill and considerable public appeal.

I don't care for his religious views, but wouldn't vilify him for them either. There isn't a religious bone in my body, but I feel a sense of respect for someone who holds and defends a set of principles and standards out of a strong sense of conviction. We could do with some conviction in this country, where, for example, a sitting MP (drawing a rather nice salary from the public purse - care of you and I in other words) feels it's quite acceptable to disappear to the outback to take part in some vacuous 'reality' TV show whilst parliament is in session!

On balance I suspect that the Americans have returned the right man for the job. But anyone who thinks Obama's second term will become a great reforming presidency needs, in my opinion, to take a reality check. The Republicans have a majority in the House of Representatives and the Democrats a  majority in the Senate. The American political model features a much more visible and real division of power than we have in the UK with the President being the Executive and Congress the Legislature. There are bound to be clashes and the President might well find himself hamstrung, despite Romney's calls for Americans to unite in an hour of need. The first challenge for the President Elect will come when America falls over the so-called Fiscal Cliff on 1st January 2013. Challenging times ahead for Mr Obama  - good luck to him.

I think I'll take more notice of the political markets on Betfair going forward. This one was quite easy to nick a few quid from and my suspicion is that it is a more realistic guide to what is likely to happen than opinion polls.

Tuesday, 6 November 2012

The importance of research

Matt, otherwise known by the rather mystifying moniker of 'IronyPirate', has an interesting blog going and it's well worth a read. I don't know where he got the name of his blog from, but I'm sure he consulted his lawyers before choosing it ;-)

Matt likes spreadsheets and trawling through data looking for reasoning to aid him in his decision making, an exercise which I must confess that, despite knowing that I should, I don't generally do. My research is normally restricted to a quick look at the H2H on the Betfair site and a glance at to give at least a crumb of comfort to my decision making. Advertisements for life assurance products and similar carry a warning along the lines of 'past performance is no guarantee of future performance' and football data needs to be treated with similar caution in my opinion. But as a guide it has to be better than nothing!

If your data mining produces a sure fire way of avoiding 0-0's, Matt, I'd bottle it if were you, and put me down for the first crate, please! As that's unlikely to happen I'll certainly keep a weather eye on your research and watch your strategies develop with interest.

Monday, 5 November 2012

Options, options, options

A great post by Eddie at A Football Trader's Path about a little trade that I did the other night. As he is much more of an analytical sort of bloke than me he back tested laying 2 goal leads across a couple of leagues with some interesting results. Take a look here.

Essentially all I did was to lay Cottbus in the Match Odds market when they were 0-2 in the second half of a Bundesliga 2 match against Bochum. The home team had started as marginal favourites in a classic Scatter Gun profiled match. In that particular instance I simply removed my liability in the market at 1-2 and let the trade run to be rewarded by a last gasp equaliser. I laid to £50 stakes in that game, but thought some people might be interested in exploring the different potential ways in which that trade might have been played.

To make the maths a bit easier let's assume I'd laid to £100 stakes. I laid at 1.06 and the price I took just after Bochum's first goal was 1.23.

A) Let it run. This is really quite simple - a £6 loss if it Cottbus won, £100 if they didn't. You pays your money and takes your choice!

B) Remove liability. This is also simple. My liability on a £100 lay at 1.06 would have been £6. To leave a scratch on a Cottbus win would have required a back stake of £26.08. That would have left £73.91 on the draw or Bochum or no profit or loss if Cottbus had held on. A free bet, if you like.

C) Hedge and recycle. Bochum's first goal came in the 73rd minute, so allowing for a little bit of injury time there was about 20 minutes of the match left. By hedging after the goal it would have been possible to have guaranteed a win whatever happened. Hedging at 1.23 would have given a green all over of £13.82 whatever the result. A doubling of my original exposure, so not too shaky. However, if I'd let then re-entered the market at, say, 1.10 for £100 I would have been ideally poised in this particular game... a very small profit on the Cottbus win (£3.82), and a much larger profit (£113.82) on any other result. But, importantly, I'd have had no downside at all - a win / win situation.

D) Back Cottbus. If I had felt that Cottbus were able to hold out for the win the other option would have been simply to back them for the same stake that I'd laid for originally. That would have left me with a scratch trade on Bochum or the draw and a whole £17 on Cottbus. Probably not the best value trade in the world, but of course there is nothing stopping me from mixing options C) an D) here to have the best of both worlds.

As always with Correct Score trading the timing of goals has a big impact on what you can, and choose to, do. In this particular trade the timing of the first goal was perfect ... soon enough to get a decent price movement yet with long enough left for anything to happen. The great thing about this sort of trade is that the liability won't hurt you too much, yet the upside is relatively large. If Bochum had left it until the 85th minute to get their first goal I reckon the price on Cottbus would have moved sufficiently to have allowed a scratch trade should I have wished to take it.

Talking about low liability lays, most traders in the chatroom tonight (including this one) had the Getafe v Betis game down as a low scoring hum drum affair, re-inforced by the fact that it was 0-0 at half time with half a dozen shots, few of which troubled wither goalie. I suggested a dutch of 1-1 2-0 0-2 which we greened up on at 1-1.

The screenshot below shows the outcome. Oh to have laid U5.5 at half time for a grand at 1.01 / 2!!!! Or to have backed AU at 50 odd for a tenner! Hindsight is a wonderful thing, but not always the trader's best friend!

Friday, 2 November 2012

Well, what would / could I have done?

In my previous post I mentioned that Brazillian games often result in either a 0-0 half time score, or a goalfest in the first half. The game I posted about proved to be the former, but Simon, quite reasonably, asks what I would (and by extension, could) I have done had it been the latter.

Before I go on I should just say that to an extent that Brazillian game the other night was a bit of an 'accident' in the sense that I went to pick Gun jr up from work and he wasn't quite ready.... so a five minute trip took closer to 25 mins. Ordinarily when I do this trade I remove the stake from 0-0 when I can leave a small profit on that score whilst at the same time reducing my exposure on the whole trade by a quarter. In other words I don't usually let it run until half time, but it was so close when I got back that I took the chance and, on this occasion, it paid nicely.

The obvious problem with backing the 0-0, 0-1, 1-0 and 1-1 scores is that a goal wipes out two of the four. As with all Correct Score trading the timing of goal(s) plays an important part in your decision making. A very early first goal presents the biggest problem, as the odds on the two remaining scores drift, sometimes massively if the favourite scores first. You need to decide quickly whether to a) let it run b) take a 50% plus hit or c) cover some other scores.

Let it run - a second goal to the leader kills the trade completely leaving you with the choice of chasing other scores or taking the loss on the chin and moving on. The trade will still win if the score stays as it is, or if there is an equaliser and it then stays at 1-1. You might decide to set a 'stop loss' figure, hedging the current score and 1-1 when you can recover, say, 75% of your original stake.

Take a 50% (plus) hit - this is possibly the smart thing to do - bank protection is a crucial part of your success as a trader in my opinion. Assuming you've used £10 stakes on each you'd probably be able to get out for a loss of around £12 - £13 after an early goal by hedging the current score and 1-1. An alternative is to just take what you can out of the current score and leave 1-1 alone as the price will start falling, and the score can still be a winning score for the trade. Of course occasionally a match with a very early goal sees no further goals - and to avoid the frustration of that happening you could lay Over 1.5 goals at very low odds to cover the rest of your original stake. So there are options with this method.

Cover some other scores -  of the original 17 possible scores only thirteen are left after a goal. They can't all be covered and it is easy to find yourself chasing what is already a potentially losing position. Having said that there are some other options to consider. At the risk of actually increasing your overall liabilities you could take advantage of market over reaction to an early goal by laying some of the scores that raced in after an early goal. Possible candidates are 2-0, 2-1 ( or 0-2 1-2) plus 2-2 and Any Unquoted all of which would be significantly lower than their starting price after an early goal. The main problem with this approach is further goals - you might find yourself in a lot of hot water if the goalfest ensues.

Whichever route, or a combination of routes you take you can always do some scalping to reduce your exposure (wealth warning!) - but in my view the key is the do something - decide quickly.