A fool and his money are soon parted….
‘A fool and his money’ It’s a classic phrase, but it always seems to ring endlessly true and never shall it be any different it seems!
I have written about this before and in particular about the now infamous Elliot Short: –
I wonder how many times I will hear about some gambling scam where people have lost enormous amounts of money? It seems that will always be the case.
It’s a real downer!
It’s a real downer to keep hearing stories about people getting ripped off in gambling markets. Either by people exploiting the gullible or by the underlying sport itself. I think this explains why gambling markets are generally held in such low esteem and why I just can’t get any mainstream traction despite my considerable success.
Pretty much every week I get an email from somebody that has been ripped off by somebody promising riches. Each evolution of this act morphs over time and unfortunately, trading seems a ripe area to commit fraud now. I guess because it’s higher profile and ‘new’ status.
Over the years, I’ve found it very hard to get the message across what a wonderful opportunity betting exchanges have been. I blame the sorts of things you see here for muddying the water. You also have the issue that people who have never traded successfully, positioning themselves as experts or people are seeking to exploit the trading opportunity, rather than getting on and doing it, that doesn’t help matters. So even the best opportunity to profit from sports markets that ever existed can get horribly fudged.
I feel sorry for people on the wrong side of these scams. But it has to be said, it’s fairly obvious that if you are producing stellar returns on something, you just reinvest the money yourself. No need to seek outside involvement. I know that because that is exactly what I and many others have done. I’ve never met a serious participant in the market who wouldn’t do the same. Take a look at this equity curve. It is re-based to Jan 1st and measured it as percentage return against the maximum exposure taken.
Most money is made by trading yourself!
The key thing you should take away from this image is that even starting with small amounts, you can move to much bigger ones very quickly if you have an edge. This is something fairly unique to sports markets. So if I start with a small amount of capital I don’t really need anymore, I just compound what I have.
More information is held within this image. From it you can see that I am unable to compounding all my earnings, else the graph would be exponential. The fact is, even if you have a decent track record it’s impossible to put that extra money to use because your ‘system’ will collapse under the weight of your own stakes. In effect, you become the market! The upshot of this is that sports markets are just not scalable enough to warrant raising significant funds to deploy in them.
You can ‘be the market’ with small sums
As I showed, with the tongue in cheek title ‘How to be a millionaire trader’ video, that I recently released. You can actually turnover spectacular amounts with quite small banks. Sports markets effectively allow you to ‘leverage’ your stake and bank because of the quantity of markets that are available and the process of instant settlement.
Because of this characteristic, even with a tiny bank, you can put many, many, many millions through the market over the course of the year. If you can do that with a positive expectancy of any amount your bank will multiply quite rapidly. But that brings a problem…..
Fire up a spreadsheet and you will learn quickly that compounding small amounts rapidly at pretty much any positive percentage will mean it isn’t long before your average stake dwarfs what is sensibly available on the market. The average UK horse race turns over £500k, but that’s matched bets, the back and lay stakes added together so the real total is half that £250k. If you have £250k in trading capital, you are the market!
That’s all that’s happening in that graph. Look again at that graph for those alleged periods of draw-downs that ‘must’ occur when you have such good upside. I say that, but it’s more a comment on my trading style and it’s quite unfair to assume that others, especially newbies, could replicate this curve, but that’s just the upshot of years of hard work. I have a small edge that I execute effectively and repeat frequently. That’s what you see in the graph.
So, in conclusion, unless you are at an initial speculative phase, you should ever need to raise funds to deploy in these markets. I have talked about it before but it seems my quest to inform people is no further forward. I’ve even spoken to the press about obvious scams or issues, but I think they get more of a kick out of dramatising a court case than stopping a scandal in the first place.
I honestly don’t think that will ever change.
