Tennis vs Football
Some of the overriding factors in trading are opportunity, position placement and money management. Get any of these out of kilter and your trading strategy goes up in smoke.
Let’s look at Tennis and Football to understand what I mean.
Skill differences are slight across a lot of sport, but have you noticed how there can be some wildly uncompetitive matches in Tennis but in Football the opponents always seem to have a chance?
Football
Football is a game dominated by two factors. One is goals, the other is time.
When you get goals in a game of limited time, the outcome is highly variable. It would be nice to think you could get the outcome of a football match right very often, but you can’t. You can only say, this or that is more likely and here is the % chance. You can’t say, X team will definitely win.
Maybe it should. but one goal is offside, another is disallowed and then the away team runs up the pitch and the ball ricochets off an official and into the back of the net! Football is highly variable by nature so the outcome is as well. Skill difference may be large but overshadow by variability and time.
In the image, you can see a chart plotting the chance of a team winning given a head start or deficit. At zero, i.e. no advantage to either side the draw comes into play as a dominant outcome, as we are working with a time-limited event. Add a one goal advantage and the chance of a win shoots up 20%, but that still means there is a near on 40% chance that the team won’t win. Despite being more skilled they may not close out the match. Winning consistently is tough in football regardless of skill difference. There needs to be a vast difference between teams to bring up short odds.
Tennis
In Tennis relative skill between players counts for a lot, why?
If you take any small number and multiply it by a large number you get, well… a larger number. In Tennis there is no time limit and lots of ‘goals’. So any skill differences, no matter how small, can translate into a huge gulf in the scheme of things by the end of the match.
Imagine a football match where there was no end to the match, no draw and that it was just a question of who would get to 100 goals first. The chance of the outsider holding out for that long or having a run of luck that enabled them to do that; would be astonishing.
That’s basically what you have in Tennis. As you can see from the graphic, with a skill difference of 0% you would expect either player to have an equal chance, that makes perfect sense.
Even a 1% difference in skill, changes the start odds quite a bit. A 5% difference, pushes them into 1.27. A 10% difference and the odds reach just 1.06. This varies by match and there are other subtle elements, but that’s the general reality.
So it’s really the accumulation of small advantages over many points that creates these big differences in the odds and that’s down to the structure of the sport.
Trading perspective
From a trading perspective, that means that even if a favorite is behind on score it would take quite a decline in fortune to lose favourtism. Depending on how long is left it also means a recovery is likley. But that chance declines as the points and games ebb away.
It’s worth noting as it should influence how you trade individual sports.
Category: Trading strategies
