Tournament collapse – The redistribution of winning % chance

Some traders may be familiar with this strategy, this author picked it up from Peter Webb but I don’t think he has a copyright to it.

The idea is simple, backing some larger priced outsiders in the hope that one or two will make it to the later stages of the tournament and see their price collapse, putting you into a green position. This works particularly well when a very short priced favourite is eliminated. For example, let’s say there are eleven players left in a tournament, the favourite is priced at 2’s, meaning he has a 50% chance of winning. Now, let’s say the favourite is eliminated, that 50% winning probability now has to be redistributed to the other players. In order to make this a little less complicated, let’s say that 50% is divided equally amongst the remaining ten players (it certainly wouldn’t be…). Your player now has 5% more chance of winning the competition. In terms of odds, if you backed your player at 80/1, once the favourite has been eliminated, your guy’s price has just come crashing in to around 14’s!

Because the strategy is built around bigger priced players/teams, it’s not  necessary to invest a great deal. It works really well in any knock out type competition, this author has profited from Big Brother, I’m a Celebrity, X-Factor etc but it works really well in golf, if your guy makes the cut. Equally as well in darts, tennis etc and, of course, all football tournaments.

The summer-time always has such fantastic opportunities for sports traders, this strategy alone can give you a profitable few sunshine months.

Enjoy and stay green.

~ by latraderette on April 13, 2011.

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