General Betting
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21 May 11
12:38
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10 Jan 02
There is no doubt that if you are just gambling straight bets then if your criteria for selecting bets is flawed then you will lose in the long term but does this apply to trading? I'm not talking about momentum trading where people hope or expect the price to drop or rise without any worthwhile knowledge as to whether the price represents value at a given point in time.
I'm talking about positional value trading where the bettor thinks the price is value at a given moment (whether it be in running or pre event) and where the bettor will seek to trade out (using the same logic) when he thinks the price has moved to fair value. The question being can the flawed startegy work because the market will fluctuate enough around the true value to give the bettor enough opportunities to get out abd realise a profit?
I'm talking about positional value trading where the bettor thinks the price is value at a given moment (whether it be in running or pre event) and where the bettor will seek to trade out (using the same logic) when he thinks the price has moved to fair value. The question being can the flawed startegy work because the market will fluctuate enough around the true value to give the bettor enough opportunities to get out abd realise a profit?
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Hello there.
Firstly i'm not totally sure what Maximum is saying but i am reading it as saying that trading isn't really trading it's just making bets and then more bets. If that is the case i'd have to say that that is way too simplistic and as a consequence not really accurate. For me it's equivalent to saying a bet is a good value bet if it is a winner and a bad value bet if it is a loser. Apoligies Maximum if you are saying something completely different and i have just missed it. If you are talking pre-match then positional trading is not so much about whether you feel the price represents value it's about whether you feel the price is going to move in a particular direction and the likelihood of it doing so. There are 2 thought processes that you can take as to whether the system is flawed or not. 1)The principle behind trading is about getting it right more than you get it wrong, so if you are making profit then it is working and not flawed. 2) The ultimate aim is to make as much profit as possible. This would ultimately mean trading at both the lowest and highest point in every market every time. Given that you will never do this no matter what system you use then your system is flawed to some degree. You mention at the beginning "There is no doubt that if you are just gambling straight bets then if your criteria for selecting bets is flawed then you will lose in the long term but does this apply to trading?" but can you honestly say that your system for determining the probability for every outcome is 100% accurate every time. Probably not so mustn't it be flawed in some way, especially if you are making your "value" bets on this system, but yet i am sure there are many people who make long-term profits. |
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U.A. This example probably explains better what I mean.
Imagine a coin toss. The odds are evens head and evens tail. Its the best of 11 coin tosses to determine whether heads or tails is the winner so that its evens whether there are more heads or tails. The bettor with the flawed system makes Heads 1.95 and backs heads if it hits 1.98 or its equivalent (based on his derivative based model) at any point through each coin toss. He only bets the position once and when he does his next play is to get out when it hits fair value (in this case 1.95 or its derivative based equivalent). His logic is flawed in so far as straight bets at 1.98 will result in a loss but because the market fluctuates he is normally able to close out at 1.95 meaning he wins long term |
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What do you mean by the market fluctuates?
The market trends towards a fair price. |
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This trader is getting value on the likelihood of the price moving in a way that is satisfactory for him as an integral part of the 'value' on the bet.
He may think of the bet in terms of 'true value' only, in which case he is ignorant of why he is successful. The time value of the bet will be v. important for whether this strategy pays off. On horses, this kind of strategy wins through what appears to be luck (w/ respect to true probabilities) when you go up very early. There are kinds of market movement (trending) where the strategy wd not pay off, and the trader might not place bets in these conditions. |
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My broad answer to yr title question is 'yes', rather than 'no'
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CLYDEBANK29, theoretically the probability of these fluctuations occuring should already be priced into the market.
Having said that what you're suggesting can happen. An example was when I backed Man Utd to qualify at 1.03 against Schalke after Man Utd had won the first leg. I didn't think Man Utd would play a weak team, so the market didn't agree that backing at 1.03 was value. As I'd also layed Schalke as low as 27 and backed them as high as 44, the fact that I was (slightly) wrong did not stop me making money overall though. |
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yes, if you have unlimited bank.. the variances in gambling even make a flawed strategy winners but its their bank that lets them down
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It depends how noisy the market is. Although all markets are noisy to some extent.
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In general I don't think fluctuations can fix a flawed trading strategy.
If fluctuations were that good then we could make money just by copying the existing best prices in a market and letting fluctuation fill both sides for us. |
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I've done something similar to that Fred. The trick is of course that if a price moves and you get matched, it could move a number of ticks, meaning you get poor execution. I have found ways of doing this that make a marginal profit, but you have to monitor the market all the time, so it's not really worth it as a manual strategy.
If a market is too thin, you can make money by filling the increments at or near the front of the queue. Again I have to say though, that this kind of thing becomes more and more difficult over time as people always step in to exploit and 'fill' loopholes. |
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If fluctuations were that good then we could make money just by copying the existing best prices in a market and letting fluctuation fill both sides for us.
I do it all the time. You just have to pick the right markets. If a market is too thin, you can make money by filling the increments at or near the front of the queue. A well known strategy in financial markets. |
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I do it all the time. You just have to pick the right markets.
I'm genuinely surprised to hear that pxb, I think I'd be eaten alive if I tried it on my usual horse markets. I'll have to have a poke around some other markets at some point. |
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Fred, try U17/U19 soccer matches.
I did try it in horse races, but it didn't work. For a while, I answered the question, 'How do you make money on bf?' with 'Because most people don't understand randomness.' |
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If fluctuations were that good then we could make money just by copying the existing best prices in a market and letting fluctuation fill both sides for us.
Fred! In the hypothetical equation the bettor isn't guessing, they are very close to the correct price so the strategy is much more likely to work. In reality no one will be able to calculate the correct price. If someone made an event 1.98 on average when its true probability was 2.00 they would be a genius and very rich as there would be loads of opportunities where they could bet the 2.00 chance (which he makes 1.98) at less than 1.9. The key to profitability may well be establishing our own margin of error. |
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Can a flawed strategy be succesful in trading?
Hopefully, because it seems they're the only ones I've got. |
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Fred! In the hypothetical equation the bettor isn't guessing, they are very close to the correct price so the strategy is much more likely to work.
They might not be guessing but I thought it was supposed to be flawed selection process. No matter how you close the trade, flaws tend to cost more ticks than perfections. |