Back the draw
I’m going to put up some information on Saturday’s about football / soccer. Some of it may seem contradictory for some of you and some logical, but it’s all based on years worth of research and application in the market.
For starters: –
If you backed the draw, pretty much at random, last weekend; you would have have netted a cool profit. I know, because I did exactly that and suffered a 60% thumping as a result! I was doing some work on how diversification affects your net P&L if you are backing varying numbers of events and wanted to test something.
It drew me back to a spreadsheet I did in 2005 based around the efficiency of the market. I came up with a back the draw strategy that squeaked around a 1% margin on average out of the market. I brushed down the spreadsheet and updated it and had another look at the efficiency of the market.
I looked at 15935 recent matches and discounted the implied probability the market was giving on the draw. I then compared that to what happened. On average the market was only about 0.66% out. The chance of a draw occurring versus what the market offered at the time was pretty much spot on. It also highlighted that you could come up with some crazy system based on the draw and still end up with only a small slice of luck. A lot of filtered selections could still end up and fool you into thinking that you had discovered some edge. Check out a few e-books for some examples of this.
The main problem was not an edge though. I worked out, with a simplistic calculation, that using £10 stakes I would have lost £8686 to commission. If you imagine somebody staking in a sequential manner, their £10 per match turned into nearly -£9k. This also highlights the difference between commission on outright betting versus trading on the price movements. It is much more favourable for the latter.
If you think hard enough though, even with that commission paid is possible to overcome. It ‘only’ represents 3.9% of the total amount bet at the worst rate of 5%. Pay above 5% though and it becomes very hard indeed.
So there you have if. The market is still as efficient as ever, but this means you will need a fair chunk of data to ensure you have an edge. You will also need to ensure that edge is quite large to overcome commission. By trading you reduce some of the liability and that will help you overcome that 0.66%.
Motherwell 6-6 Hibernian – SPL highlights
Category: Football trading strategies
