Trading with season probabilities

**Daveyboy** · 07-13-10, 03:17 AM

It's a good thought, as long as things go your way from the start though. Otherwise you lose

**Poogs** · 07-13-10, 10:41 AM

I used to think about this before I had even heard about betting exchanges. This is interesting to me, let me know how you do on this.

**Poogs** · 07-13-10, 11:42 AM

I used to think about this before I had even heard about betting exchanges. This is interesting to me, let me know how you do on this.

**Optional** · 07-13-10, 11:52 AM

I work in a similar way, on a shorter time frame, betting F1 races. Looking to bet the overs or lay the unders during the week leading up, then lay everything off for a green book.

Since reading a bit more about gambling theory recently, I think most pros would see what we do as hedging, and just a dumb way to minimize potential wins though.

I'm at point where I'm a bit confused on the issue now. One thing I can say though, I enjoy the challenge of framing/predicting the market, and trading myself into a risk free profit position more than I do just making straight bets.

**brettd** · 07-13-10, 11:22 PM

Hhmm.. Hopefully Justin or Ganchrow can give an enlightened opinion on this.

**Thremp** · 07-14-10, 04:32 AM

Futures are typically mutually exclusive outcomes which directly hedge each other and almost always have unlimited hedging options (to win lines are available for games on and on and on). You need lots of money and to know what you're doing, but you can earn a nice living.

http://www.castrader.com/kelly_formula/index.html

**brettd** · 07-14-10, 05:55 AM

Hey Thremp thanks for the reply.

I'm well aware of the kelly criterion and its discounted variant as it's the method with which I conduct my betting.

I can say that given my expected rate of return on the amount that would have gone out of 'circulation' for given a futures bet; would prevent me from betting on a futures bet at all. Possibly excepting until very close to the event's conclusion.

Hence my reasoning of trying to find an alternative to simply betting a futures bet with discounted kelly.

Can you (or anyone else for that matter) elaborate on how this 'hedging' practice would pertain to a sporting futures market?

**Thremp** · 07-14-10, 10:51 AM

You could be a shit ton more than "Kelly".

"Kelly" assuming that it was an independent binomial. In reality you could trade positions back and forth as their mutually exclusive. I don't know a whole lot about this as 1) I don't know futures markets that well 2) I don't know math that well. But its pretty easy conclusion that +EV hedges on the same outcome will markedly improve growth. Ergo bet more.

But in your case it seems like the time value is a non-starter.

**u21c3f6** · 07-14-10, 11:24 AM

Originally posted by brettd

Can you (or anyone else for that matter) elaborate on how this 'hedging' practice would pertain to a sporting futures market?

Most of my sportsbetting involves "hedging" in some way in highly correlated markets. I agree with Thremp and your observation that the "hold period" by betting too far into the future is a problem. Only if you "know" that you will be able to cover the other side in a relatively short period of time to free up your bankroll will this be viable IMO.

This "hold period" is exactly the reason why I forego any wagers into the too distant future but I make up for it by aggressively attacking playoffs. Playoffs can produce the same kinds of hedge opportunities with a much shorter time span which then allows you to wager a much larger % of your bankroll.

Joe.

**jetsjets1028** · 07-14-10, 01:01 PM

hmmm

**brettd** · 07-18-10, 08:56 AM

Hey Ganch or Justin, could we have your 2 cents on this please?

**Peregrine Stoop** · 07-18-10, 01:56 PM

nice thread

**Justin7** · 07-19-10, 07:20 AM

If you have a 10% EV, but tie up your money for 4 months... Is your average return on your bankroll 30%+ a year? If it is, season wins aren't as good. Unless you play on credit.

**brettd** · 07-19-10, 09:57 AM

I totally agree with you.

But is there some sort of methodology where one can still take advantage of value through shorter-term trading on exchanges?

**u21c3f6** · 07-19-10, 11:50 AM

Originally posted by brettd

I totally agree with you.

But is there some sort of methodology where one can still take advantage of value through shorter-term trading on exchanges?

Yes, of course whether you will be profitable or not is another question.

For example, not too long ago, Philadelphia was running about 600-700 to win the World Series. If you had some reason to believe that Philly was going to perform poorly and/or some other team was going to step up in the near future, you could have wagered Philly No at that time in the -600 to -700 range. At this time you can now play Yes for about +1700 for a guaranteed profit while freeing up your bankroll (assuming there is enough liquidity for your size of wagers).

The bottom line is, can you "predict" this happening enough times so that the total amount you win on lines that move your way exceeds the total amount that you lose when the lines move the other way?

It all comes down to figuring out the chance of the market moving for you (hopefully in a relatively short time-frame) as opposed to the market moving against you and then calculating whether there is a way to set-up a +EV scenario.

Now some may say, why give up your huge +EV advantage? Because the hold period deteriorates your return as Justin7 pointed out. By freeing up your bankroll you have the opportunity to make more than the amount you "gave up" especially considering the time-frame your bankroll would be tied-up. In addition what happens if Philly comes back and actually wins the World Series?

Joe.

**brettd** · 07-20-10, 12:46 AM

Hey Joe, awesome reply. Cheers!