Super “Market” sweep

Knowledge, as they say, is everything. As such, you will often find this author buried deep in a book. Recently, I finished A Bloody Good Winner by pro horse punter, Dave Nevison. Horses aren’t really my thing, but I’m always intrigued by those who can make a living from gambling. This is not a book review by any means. It’s a decent read… the really interesting point that came up within the book, time and time again, was the focus on value. When asked what will win the next race, Nevison will reply by saying “the favourite probably”, then he suggests the better question to ask is “Where is the value in the next race, Dave?”. Nevison does not back the obvious horse, he backs the horse he thinks has a better chance than the bookies suggest. If a horse is priced at 14’s on the book and his own ratings make that horse a 6/1 chance, that’s where his money will go. Very successful he is too.

As traders, we use our own knowledge and other available information to form our opinion. The difference between us and the pro punter is, we take steps to minimise loss. (The pro punter might suggest by getting 14’s about a 6/1 shot is doing the same thing, it’s a whole other argument but a valid one.) But how often do you look for value? We wait for Overs to drift to 2.1 in-play but might miss the opportunity when an early goal is scored. We might have a similar problem if we wait for 10’s when trading 2-1. We ask to be matched at a higher price because we want the best price we can get but are we really value concious?

Before you can be really value concious you need to have two things – a good understanding of how odds work and you have to be able, using your own ratings, to allocate a percentage chance to X happening. As an example, what chance do you think Chelsea have of winning the premiership title this season? Try and allocate a percentage to that chance, then you can allocate your own price. If that price is out of sync with what is on offer then, based on your own ratings, value is available as a back or a lay. Bookmark the two links below, do the exercise and try and get in the habit of using these equations regularly. – The third calc down is particularly good.

Keep learning and stay green.

~ by latraderette on April 27, 2011.

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