What Betfair traders have forgotten
Back in the ‘good old days’ when gambling meant just backing only, your objective was clear. Back then, excuse the pun, you had to back something that won more often that the odds would suggest.
Participate in these modern markets and you would think that this quaint old fashioned strategy had long since completely died a death. Everybody seems to be doing all manner of things in the market and you could be forgiven for thinking you couldn’t do anything useful by just backing. But curiously, that quaint old strategy is still a winner.
This is because as the market has become more competitive, the propensity for the book % to reach 100% is getting more and more common. Whether you back or lay in a 100% book it means that there is no theoretical slippage to either side of the market. Last year one of my team thought they would put the theory into practice and use level stakes to back up the numbers. A year later and we can tell you that, for good money, the variance over that year was just 0.8% out, it actually happened to be in our favour. This is without trying to catch value so it’s very close to an efficient market. Of course this number could have been negative as well but we can assume that our results indicate the market is +/- less than 1% over that time period. Running another experiment showed that catching prices when they deviate from expected path was enough to tip it to a much higher positive.
Part of the reason that this is happening is that people are chasing prices. You often clearly see where prices are being chased out or in, outside of true value and you also see they tend to return to a more reasonable point quickly after. This is almost certainly due to trading type strategies. Traders don’t care what price they are offering, as long as it achieves the overall objective they have set out. Curiously, learning to trade and about trading will allow you to indentfy points at which to place that bet, so learning about trading is useful, even if you don’t actually trade. Also, using Bet Angel automation to trigger a bet is useful because it you can set it up to do so when the market is at it’s most efficient. So the strategy is simple, the execution a little more detailed.
So, in summary. It appears that participants enthusiam for more complex strategies is encouraging prices to stray beyond where they represent a true reflection of the underlying market. Because the market is so efficient you can catch that point at zero slippage and you suddenly turn positive over the long term with a simple back or lay strategy. It’s a combination of a very efficient market over the long term, which is also temporarily inefficient.
Category: Trading strategies
