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First of all this is not a topic about value as definition so please no arguements about what value is.
Now to the topic. Lets say you have got value during in-play match. Now the situation changes and market moves to a fair price in your opinion. What should you do now? Should you trade out or let it ride until the end because at the entry point you took value? Bear in mind that at this fair value point now you can be on green side and also on red if market has gone against you. In either case what is the best solution and why?
Now to the topic. Lets say you have got value during in-play match. Now the situation changes and market moves to a fair price in your opinion. What should you do now? Should you trade out or let it ride until the end because at the entry point you took value? Bear in mind that at this fair value point now you can be on green side and also on red if market has gone against you. In either case what is the best solution and why?
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Depends if you're a gambler or a trader. Other things being equal, a gambler will let it ride, happy in the knowledge that they got the bet they wanted at a good value price wheras a trader will trade out for the percentage profit, thank you very much.
Either way, if you are getting good value bets (and you're judgement of "value" is correct), both types of punters should make profit over time.
That said, even though I consider myself a trader, I usually let a bet ride until I can get good value the other way. This usually costs me (I think it's known as $od's Law - or just because my entry point is usually to lay at odds on, so the bet is more likely than not to lose anyway) but the higher than expected profit some of the time covers this for me in the long run. As a general rule, If I see "value" I take it and let the results take care of themselves.
Fwiw, I don't think there's a definitive answer to you question, as long as your not giving value away for the sake of a green book, in which case you will not be as profitable as you could be.
Either way, if you are getting good value bets (and you're judgement of "value" is correct), both types of punters should make profit over time.
That said, even though I consider myself a trader, I usually let a bet ride until I can get good value the other way. This usually costs me (I think it's known as $od's Law - or just because my entry point is usually to lay at odds on, so the bet is more likely than not to lose anyway) but the higher than expected profit some of the time covers this for me in the long run. As a general rule, If I see "value" I take it and let the results take care of themselves.
Fwiw, I don't think there's a definitive answer to you question, as long as your not giving value away for the sake of a green book, in which case you will not be as profitable as you could be.
Long term financially , you would be better off trading out(levelling) your position whether you go all green or all red.
If you can trade out at fair value (taking into account commission / PC) then you should do so.
NOT doing so means you are taking risk without any expected reward, and risk is a bad thing for bankroll growth.
NOT doing so means you are taking risk without any expected reward, and risk is a bad thing for bankroll growth.
Thinking about it a bit more, I was wondering why I let more bets ride than I used to and the answer is Premium Charge.
If you keep winning nearly all the time, you will eventually and inevitably have up to 60% of your profit on winning weeks deducted by Betfair. The added volatility by letting bets ride helps reduce this a bit.
If you keep winning nearly all the time, you will eventually and inevitably have up to 60% of your profit on winning weeks deducted by Betfair. The added volatility by letting bets ride helps reduce this a bit.
Yes, what Eddie said, because of commission.
Let's say you have a 50% chance of +100 and 50% of -80, and both selection now are available to back @2.
Then you can make it 100% of +10, for a profit of +9.5 after commission (if you pay 5%). (Leaving it at 50% of +20 and 50% of 0 is also fine, that gives the same expected profit.)
If you don't trade out your expected profit after commission is: 0.5*100*0,95 + 0,5*-80 = 7.5
You should also red out if you for example have a 50% chance of +80 and a 50% chance of -100. Same logic.
Should you be struggling to avoid PC it all matters very little though.
Let's say you have a 50% chance of +100 and 50% of -80, and both selection now are available to back @2.
Then you can make it 100% of +10, for a profit of +9.5 after commission (if you pay 5%). (Leaving it at 50% of +20 and 50% of 0 is also fine, that gives the same expected profit.)
If you don't trade out your expected profit after commission is: 0.5*100*0,95 + 0,5*-80 = 7.5
You should also red out if you for example have a 50% chance of +80 and a 50% chance of -100. Same logic.
Should you be struggling to avoid PC it all matters very little though.
well, if you are at risk of having to pay 60% you should ofc let it ride and do whatever else you can to pay more commission until that risk is gone...
Why does it matter very little? From my perspective, it matters all the more.
Good posts guys. I always thought that if you get value then long term it doesnt matter so much if you trade out or let it ride. I thought that if you let it ride it will be more up and down but at the end you have to make profit considering that the value was there. When I started out then naturally I was a bit cautious and traded out more and also didnt take as big chunks of money...lately I have noticed that I'm taking bigger chunks(lets say I operate normally with X stake and when I see 4X available at value I take it all not only 1X of it) and when the liquidity is not there then it is often the case that I cant even trade out. Thats OK I thought because at the end it shouldnt matter. But I have noticed that I'm losing money in this way...
Hadn't read your second post when I wrote my first, and I didn't have 50 or 60% PC in mind.
Yeah good explanations. I didn't agree with 1.01 layer's first post, but what he subsequently added in later posts meant it did make sense.
If maximising profit is your only motive:
1) Not paying charges (commission, PC etc.)
Always trade out at fair value.
2) paying commission only:
Same as above, but now the fact that you reduce commission by trading out makes it even more valuable.
3) paying commission PC and possibly other charges:
Now you are effectively 'being paid' to take on volatility so you need to strike a risk management balance.
Assume a person either wins all his bets or loses all his bets in a given week for the example below:
Normally you would consider someone that makes £500 a week after commission every week to have better risk adjusted results than someone that each week has a 50% chance of making £5,000 and a 50% chance of losing £4,000 (again after commission). When PC comes into play though, the second person's return characteristics are much more favourable (unless you don't have enough cash to take the volatility, which is where the risk management balance comes in).
If maximising profit is your only motive:
1) Not paying charges (commission, PC etc.)
Always trade out at fair value.
2) paying commission only:
Same as above, but now the fact that you reduce commission by trading out makes it even more valuable.
3) paying commission PC and possibly other charges:
Now you are effectively 'being paid' to take on volatility so you need to strike a risk management balance.
Assume a person either wins all his bets or loses all his bets in a given week for the example below:
Normally you would consider someone that makes £500 a week after commission every week to have better risk adjusted results than someone that each week has a 50% chance of making £5,000 and a 50% chance of losing £4,000 (again after commission). When PC comes into play though, the second person's return characteristics are much more favourable (unless you don't have enough cash to take the volatility, which is where the risk management balance comes in).
Although the 5000/-4000 scenario above would take a long time to easily play out favourably.... 
It also depends in which markets you play, specifically what the odds increments are for that market.
Trading out at fair value is best in theory, but not in practice in my experience. I've tried both and found that letting my bets ride pays far more, but as I say it is down to individual circumstances and markets played.
Trading out at fair value is best in theory, but not in practice in my experience. I've tried both and found that letting my bets ride pays far more, but as I say it is down to individual circumstances and markets played.
Tier: lately I have noticed that I'm taking bigger chunks(lets say I operate normally with X stake and when I see 4X available at value I take it all not only 1X of it) and when the liquidity is not there then it is often the case that I cant even trade out. Thats OK I thought because at the end it shouldnt matter. But I have noticed that I'm losing money in this way...
How long have you been losing that way? Can you say with 90% certainty that the bets are value? If you can you will make good money, but it sounds like you're perhaps worried about a short term spell of poor results? We all suffer from runs of poor results, but that doesn't mean anything in terms of long term profitability, I always judge each bet on the price matched and NEVER the result.
How long have you been losing that way? Can you say with 90% certainty that the bets are value? If you can you will make good money, but it sounds like you're perhaps worried about a short term spell of poor results? We all suffer from runs of poor results, but that doesn't mean anything in terms of long term profitability, I always judge each bet on the price matched and NEVER the result.
I always judge each bet on the price matched and NEVER the result.
Very few do that and I can vouch for that. The price is the one thing
you have control over.
Very few do that and I can vouch for that. The price is the one thing
you have control over.
I tried to do that also but I just cant anymore....maybe its my luck...unluk actually that everytime when there is available big sums on value prices they go against me....it has been couple of months now. I'm sure they are value because they have been way off bookkeepers prices and I dont think they are so wrong and so often.
I'm playing in tennis markets and in play where odds move quite a bit and often someone leaves good chunks of money for taking even if the point goes against them. So I have justified it to myself also with the fact that I got value and in long term I should come out ahead but my money seems to have magical powers epecially when I manage to get bigger sums because at that very moment no matter whos playing who it goes against me :D and for couple of months now although I've been dong it long time now with success. Only thing that I have changed is that I am taking all te money that is available opposed to my usual 1X stake reasoning that if it is value I should take it all.
A couple of months doesn't mean much, you could place 10 or 10000 bets in that time. I know what you mean about taking all the available money at value, but it's something I don't do because I don't want to get tangled up in huge losses compared to gains, so I always use a similar percentage of bank for liability and let someone else have the remaining value if any. My longest flat run (with no profit) was approaching 10000 bets last year.
Now that I think about it it sounds logical to not take it all maybe. Because effectively what I was doing was acting as bookkeeper or casino...I took value and traded out at fair or value price on the other side. Therefore making money on juice if it is correct tm (I'm not native english speaker). And no casino or bookkeeper in right mind should not take any bet if offered at their price but over their table limit. And effectively that was what I was doing when taking whole sums...lesson learned!
How many bets have you had in these couple of months that always go against you? I'd definitely be worried if it was me.
ignoring, for a moment, commission and PC:
assuming the premises are correct you should trade out to lock in your profit, as others have said.
the reason being you are giving nothing away, and in return are are entirely eliminating your risk.
the trickier question imo is how much value is it worth giving away to achieve the same result? eg, to use the classic toss of a coin analogy, if you get to lay heads at 1.8, at what price should you back heads before the coin is flipped? at 2.0 the answer is clearly yes. at 1.81 it's clearly no. so where is the boundary between the two?
obviously the answer's variable depending on the degree and nature of risk and reward in the initial position. it's how you go about modelling that that I think's interesting.
assuming the premises are correct you should trade out to lock in your profit, as others have said.
the reason being you are giving nothing away, and in return are are entirely eliminating your risk.
the trickier question imo is how much value is it worth giving away to achieve the same result? eg, to use the classic toss of a coin analogy, if you get to lay heads at 1.8, at what price should you back heads before the coin is flipped? at 2.0 the answer is clearly yes. at 1.81 it's clearly no. so where is the boundary between the two?
obviously the answer's variable depending on the degree and nature of risk and reward in the initial position. it's how you go about modelling that that I think's interesting.
If 1.81 you would do a little bit
If 1.82 you would to a bit more
etc
If 2 you would do it all
If 1.82 you would to a bit more
etc
If 2 you would do it all
would you do any at 1.81 though? if so, why?
I really dont know how many bets I have made but I think as usual. Is there a way to look how many bets have I made from betfair statistics? P/L page shows that? I wouldnt want to start counting them one by one from P/L cause I try and trade pretty much all points....or at least mayority of them. Leaving out december cause it was a month off for tennis but november and now january I have been doing it as always and these are the months that worry me. But now I understand that it only worried me and the only place where losses occured were mainly value bets which I took all the monwy that was for offering using 4 times bigger amounts that I usually use and due to liquidity couldnt trade out so let them ride thinking that if they are value then over time it doesnt matter...
"would you do any at 1.81 though? if so, why?"
because I would lay more of the original bet at 1.8 than at 1.81 (because it's better value)....
In your example now it's 1.81 I've made a little (paper) profit, but would still only want to bet the same proportion of bankroll as if the original bet was at 1.81
because I would lay more of the original bet at 1.8 than at 1.81 (because it's better value)....
In your example now it's 1.81 I've made a little (paper) profit, but would still only want to bet the same proportion of bankroll as if the original bet was at 1.81
A for a coin toss I would start thinking about trading out at 1.9 and 2.0 and over would deffinately trade out. Under 1.9 I would let it ride until I can get fair price(if there was a poossibility to go inplay or sth :p).
viva el presidente!
Date Joined: 10 Jun 06
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09 Jan 13 17:49 Joined: 10 Jun 06 | Topic/replies: 13,333 | Blogger: viva el presidente!'s blog
ignoring, for a moment, commission and PC:
assuming the premises are correct you should trade out to lock in your profit, as others have said.
the reason being you are giving nothing away, and in return are are entirely eliminating your risk.
the trickier question imo is how much value is it worth giving away to achieve the same result? eg, to use the classic toss of a coin analogy, if you get to lay heads at 1.8, at what price should you back heads before the coin is flipped? at 2.0 the answer is clearly yes. at 1.81 it's clearly no. so where is the boundary between the two?
obviously the answer's variable depending on the degree and nature of risk and reward in the initial position. it's how you go about modelling that that I think's interesting.
All you need to know is how trading out affects future prices and how likely you are to get matched after trading out.
So one guy lays £100 at 1.8 on heads and leaves it at that.
Another also lays £100 at 1.8 but then back's a bit at some higher price 1.85 say, and then tries laying 1.8 again, or perhaps 1.81.
My solution to this problem has been to try to get enough money together to take all the 1.8 and only trade out at evens or better
Date Joined: 10 Jun 06
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09 Jan 13 17:49 Joined: 10 Jun 06 | Topic/replies: 13,333 | Blogger: viva el presidente!'s blog
ignoring, for a moment, commission and PC:
assuming the premises are correct you should trade out to lock in your profit, as others have said.
the reason being you are giving nothing away, and in return are are entirely eliminating your risk.
the trickier question imo is how much value is it worth giving away to achieve the same result? eg, to use the classic toss of a coin analogy, if you get to lay heads at 1.8, at what price should you back heads before the coin is flipped? at 2.0 the answer is clearly yes. at 1.81 it's clearly no. so where is the boundary between the two?
obviously the answer's variable depending on the degree and nature of risk and reward in the initial position. it's how you go about modelling that that I think's interesting.
All you need to know is how trading out affects future prices and how likely you are to get matched after trading out.
So one guy lays £100 at 1.8 on heads and leaves it at that.
Another also lays £100 at 1.8 but then back's a bit at some higher price 1.85 say, and then tries laying 1.8 again, or perhaps 1.81.
My solution to this problem has been to try to get enough money together to take all the 1.8 and only trade out at evens or better
This is a bit like this game:
Politics > State Voting : Florida Showing 1 - 4 of 4 Selections
Selection Odds Stake(£) Bid type Placed Profit/loss(£)
Democrat * 1.92 236.41 Back 217.21
Democrat * 1.81 200.32 Lay -161.33
Republican * 1.86 152.24 Back -152.24
Republican * 1.82 221.14 Lay 221.14
*Average odds: On Off Back subtotal: 64.97
Lay subtotal: 59.81
Market subtotal: 124.78
Commission @ 2%: 2.50
Net Market Total: 122.28
hehe
Politics > State Voting : Florida Showing 1 - 4 of 4 Selections
Selection Odds Stake(£) Bid type Placed Profit/loss(£)
Democrat * 1.92 236.41 Back 217.21
Democrat * 1.81 200.32 Lay -161.33
Republican * 1.86 152.24 Back -152.24
Republican * 1.82 221.14 Lay 221.14
*Average odds: On Off Back subtotal: 64.97
Lay subtotal: 59.81
Market subtotal: 124.78
Commission @ 2%: 2.50
Net Market Total: 122.28
hehe
Also depends how much time you want to spend sat at the screen. Letting value bets ride will give you a lot more free time :) If I could lay coin spins at 1.8 they would all be left to ride!
this presupposes you will have the option of going back for more.
I'm talking more about modelling how you should lay off a one-off value bet at prices between the price attained and true value.
I'm talking more about modelling how you should lay off a one-off value bet at prices between the price attained and true value.
Viva it depends on your stake. 50p and i think i would just leave it, £20,000 and I would be looking to do some laying off.
Also it isn't the prices that determine the laying off it's the time before the event start that is more important. Say I had layed 1.8 on a coin-toss, I would be tempted (depending on stake of course) to leave it until about 1 minute before the actual toss and lay off then rather than laying off at particular prices. Of course there is also the question of trying to feel which way the price is going and where it will end up at the event start time which will also determine when you lay-off if looking to do so.
Also it isn't the prices that determine the laying off it's the time before the event start that is more important. Say I had layed 1.8 on a coin-toss, I would be tempted (depending on stake of course) to leave it until about 1 minute before the actual toss and lay off then rather than laying off at particular prices. Of course there is also the question of trying to feel which way the price is going and where it will end up at the event start time which will also determine when you lay-off if looking to do so.
viva el presidente! 10 Jan 13 17:46 Joined: 10 Jun 06 | Topic/replies: 13,336 | Blogger: viva el presidente!'s blog
this presupposes you will have the option of going back for more.
I'm talking more about modelling how you should lay off a one-off value bet at prices between the price attained and true value.
OK, as a one off, take Kelly as a starting point, then increase it based on how likely you are to be able to get out and at what price.
this presupposes you will have the option of going back for more.
I'm talking more about modelling how you should lay off a one-off value bet at prices between the price attained and true value.
OK, as a one off, take Kelly as a starting point, then increase it based on how likely you are to be able to get out and at what price.
"how likely you are to be able to get out and at what price"
this explains why the answers vary so much.
The usual 'how much should you bet on a coin flip' question has one decision to be made (ie how much do you bet), then the coin is flipped.
I read the question as being two decisions to be made (how much you bet, then how much do you trade out (/in further!)), then the coin is flipped.
The answers assume that you can wait longer and watch for a better price improvement, and the coin will be flipped later.
Also, there is this assumption that the odds will tend to move towards 2 (the correct price). If we are happy taking this risk (ie locking in a loss if they go against) then my original 1.8 lay would be a lot bigger but I think it would be a different question.
this explains why the answers vary so much.
The usual 'how much should you bet on a coin flip' question has one decision to be made (ie how much do you bet), then the coin is flipped.
I read the question as being two decisions to be made (how much you bet, then how much do you trade out (/in further!)), then the coin is flipped.
The answers assume that you can wait longer and watch for a better price improvement, and the coin will be flipped later.
Also, there is this assumption that the odds will tend to move towards 2 (the correct price). If we are happy taking this risk (ie locking in a loss if they go against) then my original 1.8 lay would be a lot bigger but I think it would be a different question.
"I'm talking more about modelling how you should lay off a one-off value bet at prices between the price attained and true value."
Assuming you're a kelly better:
Place your original bet (use kelly)
Work out the new kelly bet at new price
Trade out to get yourself to the new kelly position.
Assuming you're a kelly better:
Place your original bet (use kelly)
Work out the new kelly bet at new price
Trade out to get yourself to the new kelly position.
Yeah, my answer is anchored to how I deal with this kind of situation on Betfair.
There is a lot of uncertainty involved. Let's say you lay the evens shot for 2x Kelly stake at 1.8, subsequently it goes to 1.78-1.79 and stays there. You would have to trade out of a chunk of your position at a loss. Obviously a 1.8 price that should be evens, is on average much more likely to move toward evens over time than go the other way.
So my understanding of what to do here, is to have a Kelly bet and embed another bet on being able to trade out of part or all of the position at a better price.
------------
If someone has a balance that is not big enough to take advantage of all good opportunities it can make sense to give back value to make money available. Someone with a big bank that bets Kelly at 1.8, and can trade out at 1.95 and 1.95 only, will keep the position (or at least they should). Someone with a smaller bank might trade out at 1.95 and look for the next 1.8 to put their money on.
There is a lot of uncertainty involved. Let's say you lay the evens shot for 2x Kelly stake at 1.8, subsequently it goes to 1.78-1.79 and stays there. You would have to trade out of a chunk of your position at a loss. Obviously a 1.8 price that should be evens, is on average much more likely to move toward evens over time than go the other way.
So my understanding of what to do here, is to have a Kelly bet and embed another bet on being able to trade out of part or all of the position at a better price.
------------
If someone has a balance that is not big enough to take advantage of all good opportunities it can make sense to give back value to make money available. Someone with a big bank that bets Kelly at 1.8, and can trade out at 1.95 and 1.95 only, will keep the position (or at least they should). Someone with a smaller bank might trade out at 1.95 and look for the next 1.8 to put their money on.
yes, the whole situation is massively complicated by factoring in expected market action and broader opportunity cost.
to take a simple, extreme example, if you lay at 1.8, but the coin toss is a year in the future, plainly it makes sense to lay back sooner below true odds. even with an unlimited bank to take advantage of other opportunities, you would lay back at 2.0 minus the interest rate you could get over that year.
to take a simple, extreme example, if you lay at 1.8, but the coin toss is a year in the future, plainly it makes sense to lay back sooner below true odds. even with an unlimited bank to take advantage of other opportunities, you would lay back at 2.0 minus the interest rate you could get over that year.
Although you then have to factor in missing the opportunity of a better price. Backing 1.95 immediately, and maybe you could have got 1.98 two days later.
I made a nice profit out of this kind of situation. It was something that couldn't happen anymore, however due to a technicality the market wouldn't be settled for a time that could be 1 day or 2 weeks. I was just laying between 100-300 and backing between 800 and 1,000 continuously. Turned over enough to make a few hundred on that. I was desperate to get out, but I also knew there were other people more desperate and less price sensitive. Some guy will have layed £1k at evens and now he can back 300, he might not care whether he gives up 3 quid or 1 quid to get his money back. And paying 1 quid instead of 3 is more work.
So clearly in this scenario, I could have loaded up to a £500k red if I had the money, just taking the price to 1000. But my return on capital would be very low. Tying up money for an expected time of about 5 days, gives an annualised return so low, it's a waste of time (even if you can risk it).
I made the £200 with a max risk at any time of £15k over about 3 days, which is a much better return on capital
The good old days.
I made a nice profit out of this kind of situation. It was something that couldn't happen anymore, however due to a technicality the market wouldn't be settled for a time that could be 1 day or 2 weeks. I was just laying between 100-300 and backing between 800 and 1,000 continuously. Turned over enough to make a few hundred on that. I was desperate to get out, but I also knew there were other people more desperate and less price sensitive. Some guy will have layed £1k at evens and now he can back 300, he might not care whether he gives up 3 quid or 1 quid to get his money back. And paying 1 quid instead of 3 is more work.
So clearly in this scenario, I could have loaded up to a £500k red if I had the money, just taking the price to 1000. But my return on capital would be very low. Tying up money for an expected time of about 5 days, gives an annualised return so low, it's a waste of time (even if you can risk it).
I made the £200 with a max risk at any time of £15k over about 3 days, which is a much better return on capital
The good old days.
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