A year in the life
You may recall my blog posts a day, a week and a month. So what better way to sign off 2013 than a year in the life.
The year
I tend to follow a predictable pattern each year, skipping between major events where liquidity is highest. I used to do everything a few years ago but as my percentage return on invested capital shrinks, I am much more picking nowadays.
So I can tell you at the start of the year I will be doing the Aussie open tennis, then February shifts to Footy, March is Cheltenham, April Aintree, May French open & the end of the footy season etc. etc. You can see the pattern.
How 2013 panned out
I was surprised to do a bit better than I thought I would in 2013. I fulfilled my promise to be picky last year and I thought that may undermine my efforts. But the idea was to allow myself some space to work on new projects. So I knew I definitely wouldn’t be able to have a record year, but it was actually quite nice to not have to reach for that. I was much more creative as a result. Despite this I still managed to break my record for a race and was just a fraction off a record week.
At the end of last year I figured that 60% of my profit was coming from 33% of my activity. At the other end of the scale just 17% was coming from the bottom 33%. I’ve done enough research to be able to identify in advance where the best opportunities are, so it made perfect sense to knock out the bottom 33% of effort for a comfortably smaller overall profit on the year.
When people struggle to earn anything at times, it may seem odd to leave something on the table, but I’ll explain properly about issues of scale in another post. Basically if you have more money than you can put to use for a reasonable return, you are better off putting it to use elsewhere and the effort you use to do that. Betfair haven’t cottoned onto this fact at the moment! I’ve also been able to automate strategies to produce some return on these days. It’s not as good as manual trading, humans are good at that, but it’s a very useful addition to my manual trading. I strongly suggest that you try automating some strategies, we don’t put things in the software for the hell of it!
How 2013 panned out
I was surprised to do a bit better than expected, so I’m more optimistic about 2014 than I expected. I think it’s a case of just plugging away, doing the best you can do and seeing where you end up. I don’t particularly have any targets to hit, so I just do the best I can and see what pops out at the end. That was a bit higher than expected.
I’ll be honest with you, the markets have been weaker this year. You can see it in the numbers and feel it when you trade them. It would be a surprise if markets got easier over time, but the lack of growth can also be firmly planted at Betfair’s door. Their single minded pursuit of the sportsbook has no doubt weakened the exchange and when not a single piece of advertising promotes the exchange, it’s always going to be harder to attract people to what is the most compelling way to participate in sports markets. Irrespective of whether you are a traditional gambler or a more modern participant, exchanges are the only place that offers you the chance to win over the long term. That’s a compelling proposition and one that holds much promise in the right hands, as Betfair showed when the drove the concept.
My best month in the year was June and worst will probably be December of February, which is par for the course. I tend to do 1/3rd in the weakest month of the highest month. But this year I was slightly better than that.
Some stats
I participated in around 25,000 events last year, some of those will be duplicated as it’s possible to deploy more than one strategy in one market if you wish. If you count full duplicates it would be much higher than that. But that’s about the best figure I can give you.
Unless you know how I achieved my results posting the best and worst won’t really give you much insight, but I can tell you that my best result was 23.33 times that of my worst absolute loss. So my risk reward is well under control! Generally I’m looking to expose myself to potential upside at the lowest risk, I tend to start with a limited loss and build from there, so when the big ones come, they really come in.
I had more losing day’s last year than previous years, but to put that into perspective; that would be three in the last three months!
Next year
Last year I did some neat work in a number of areas and expanded my knowledge and depth of the markets. I aim to do more of that next year. I’ve come up with a number of models and formulas for the markets and I aim to elevate that work to new levels. It’s funny but the monetary side of things has become much less important than the discovery. I really enjoy solving the puzzles the markets throw at me and pushing myself to solve seemingly intractable problems. One area I am really interested in exploring in further depth is that of the psychology of risk. I’m constantly surprised how I can give two people the same strategy but they can come up with remarkably diverse results. Sometimes trading worse than luck alone. I’m know the reasons why, I’m just trying to find a way to reverse peoples mindset.
I will aim to focus my activity again to allow myself time to keep pushing forward, while not spending time on markets or days or events which exhibit decreasing returns. There is hardly a month goes by where I don’t discover something new or interesting. So I want to discover more. A big focus for me in 2014 will be the world cup in Rio, where I hope to deploy some new strategies that worked well in 2010. But this time I will be using much bigger stakes.
I’m not really sure what value I could pin on 2014, it depends on so many things? How many markets will fall into my range? Will Betfair deliver on their promise of a year ago and link the sportsbook and exchange? What difference will that make? Will Betbrokes or LadDaq deliver on the potential? Will new exchanges emerge? Will legislation change? So many unanswered questions as we march into 2014!
But my attitude will be the same as when I first started, when things were even less certain. If there is one thing I’ve learnt over the years, it’s that where pessimists find problems, optimists find opportunities. So I’ll just continue to push forward and do the best I can and look forward to reporting at the end of 2014, my fifteenth year on the exchanges.
Category: General, Trading strategies
