Had a good week last week? Here’s why…

03/08/2017 | By | Reply More

You may have seen me post up results or information along the lines of ‘If you did this with £100 you would have managed to achieve this’.

I collect and analyse a lot of data and it’s all with the aim of identifying biases and the structural nature of a market. You would be surprised how many markets exhibit biases. Some have exhibited a structural bias for my entire trading career. I’ve casually dropped hints now and again and it’s great to see some of you pick up and run with them.

Last week was unusual and stood out by a country mile, so I felt it was worth a blog post.

What happens at random?

First up, let’s put things into contrast. If you trade at random on racing markets you will more or less end up with a 50% strike rate. By random I mean you back or lay a set time before the off and trade out at post time. If you do this with no judgement then things will roughly even out the longer you do it. I looked back over the last year and that’s pretty much what I found. If you add up all the positive and negative outcomes you break even, less commission of course! You never quite get 50/50 as there is a demonstrable chance that the price may not move at all, but excluding that, it’s 50/50. Big wins net out big losses, small ones the same and so on.

In that data set there are many biases, we are ignoring those, simplifying and assuming you we nothing to exploit them. Just enter and exit at defined points by either backing or laying.

July 2017

If you look at July as a whole, laying the favourite and trade out at post time, ended up at 49.36% chance. So you can see there was no bias over the course of the month. However, if you look at week 30 that shifted to a 45% chance of a favourable position. It wasn’t the lowest though as week 27 was nearly 41.63%. In fact, there was only one week in the month that was generically favourable to laying first and closing out at a profit at post time. Therefore you can conclude that backing the favourite and trading out at post time was a good strategy in July.

Anybody pursuing this strategy would have managed to earn roughly £1,200 in July just by backing the favourite and trading out at post time with a £100, again less any charges. If you have a strategy or style that generally backed the favourite and traded in this manner you would have had a good month.

Last week

The remarkable thing about last week though, wasn’t that this happened during the week, but it was the fact that it happened every day! That’s pretty rare. If we assume the occurrence is random, then the mean return time would be about 2.5 years on average.

Of course, if you were laying to open, you had a mare. But in reality, you shouldn’t be lopsided in your approach. If you are, you should be looking to be very selective and use that as a defining point of entry. If you generally backed and still lost money, then you are cutting out of a trade too quickly. It’s very rare for a market to go in a straight line, so expect it to wobble around before following its path of desire. While cutting losses is a generally good idea, getting shaken out of a good trade quickly is a terrible trading error.

Ignoring errors, however, if you had any strategy that backed to open, you should have had a blinder last week. Just be aware it’s unlikely to continue and you probably haven’t discovered some amazing new characteristic, you just experienced a bit of a run. Enjoy it!

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Category: Trading strategies

About the Author ()

I left a good job in the consumer technology industry to go a trade on Betfair for a living way back in June 2000. I've been here ever since pushing very boundaries of what's possible on betting exchanges and loved every minute of it.

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