Why You Will Never Make A Profit On Automation Alone

[lordbyron]

As a software engineer with a financial markets background, I thought I should share the common misconceptions as to why trading only using automation will never net you a long term profit.
There are in my opinion three levels to Betfair trading, of which many people only understand the first two.

1) Manual trading - Profitable: You are actively selecting markets, placing and exiting trades at pre-determined times with discipline because you have an edge. Whether you think a favourite horse is adverse to soft going, or a football team has a knack of scoring more late goals than the XG allows for example.

2) Automated Trading - NOT PROFITABLE - If you think there is a click and run automation accross all markets in a specific field, you will be sorely mistaken. The betfair market is highly inefficient, except when it comes to the macro datapoints of the entire market as a whole. You may have short term profits because you think you have found an inefficiency because nobody has thought of simply laying the favourite greyhound, or back to lay the home team in a football match, but in the long term, any minor edge you may have will be corrected due to the next layer which nobody on this forum seems to comprehend.

3) Automated Automation - Profitable - There is an entire world out there that people do not understand. The common advice on this forum is that you need to create a strategy, record the data from the strategy, refine the strategy and rinse and repeat. As a human there is simply a finite number of data points you can record. Lets for arguments sake take a strategy that you have come up with and tested it over 1000 races and it is profitable. If its a lay strategy, and you record your data points and pop them into an excel spreadsheet and voila, you have at minimum 1000 data points. YOU ARE COMPETING AGAINST AUTOMATED SOFTWARE THAT IS USING MILLIONS/BILLIONS OF DATA POINTS TO CREATE THEIR TRADING "STRATEGIES". Literally, tick by tick analysis of the market, that is automatically refined to exploit the minor inefficiencies in the market at a macro level. You making a a decent profit blindly laying at 1.06 in play for horses? As soon as a it becomes apparent this is a decent strategy, their software will pick it up, and use their bigger bankroll to wipe you off the market.

Quant traders literally build server farms next to exchanges to beat their competition by a nanosecond to a trade, do you really think when multiple markets have over 10m traded per day, will not attract professionals with real infrastructure?

Using only automation to try beat the system is a fools errand. You are a small fish in a big pond, and the main problem is you WILL be profitable, until you arn't.

BUT... You can make money on betfair.

- Be quicker - Sit trackside, using automation to trigger trades, read the news before anyone else etc.
- Be more resourceful finding your edges. Some football teams just cannot play in the rain. Some boxers just cannot beat fighters with a longer reach. Some horses do not turn left very well etc.

There is no hidden secret. There is no golden strategy. There is just hard work.

BUT NONE OF THE METHODS WILL ALLOW YOU TO JUST SIT ON YOUR ARSE AND LET AUTOMATION PRINT YOU MONEY LIKE YOU ARE SCROOGE MCDUCK.
-

[Derek27]

There are a few flaws in your post. Manual trading is profitable to traders that are proficient at it, and unprofitable to traders that haven't got to grips with it or found an edge.

The same can be said about automated trading. It's easy to declare something as unprofitable because you've failed at it rather than establishing an underlying reason why you can't profit from it.

2) Automated Trading - NOT PROFITABLE - If you think there is a click and run automation accross all markets in a specific field, you will be sorely mistaken.

If you think most botters aim for a click-and-run strategy across all markets I'm afraid you're very much mistaken. Have a good look at this forum. There are plenty of traders advising being selective with certain strategies that are particularly suited to appropriate markets.

- Be quicker - Sit trackside, using automation to trigger trades, read the news before anyone else etc.
- Be more resourceful finding your edges. Some football teams just cannot play in the rain. Some boxers just cannot beat fighters with a longer reach. Some horses do not turn left very well etc.

There is no hidden secret. There is no golden strategy. There is just hard work.

BUT NONE OF THE METHODS WILL ALLOW YOU TO JUST SIT ON YOUR ARSE AND LET AUTOMATION PRINT YOU MONEY LIKE YOU ARE SCROOGE MCDUCK.
-

What exactly is the point in sitting trackside if you're using automation to trigger trades? Does your automation have a pair of eyes?

How do you read the news before anyone else? News is made available to everybody at the same time.

I must admit, I can't read a football match, especially when women are playing, but football teams that can't play in the rain is news to me. And I doubt I'd be favourite to win a boxing bout because I've got a longer reach than the other guy, so he'd beat me.

With all due respect, the fact that you can't sit on your arse and let bots print money for you is very common knowledge here. You get the odd newbie looking for an easy way to make money but I wouldn't class it as general advice that everybody needs.

It's worth bearing in mind that for most people, manual trading will be more profitable than automation on a per-market basis. The big advantage of automation is the number of markets you can apply it to. So it's possible that manually modifying and refining your automation will be more accurate had have a higher level of control than "automated automation". If you have successful automation, bigger fish can't wipe you out because the markets are constantly evolving and automation is evolving with it. I doubt many would be using the same unmodified bot for years on end.

[Trader724]

What a mess

[Euler]

Eventually, sports markets will be updating so quickly that manual trading will give way to algo-trading, which will be perfected by quantum computing such that all markets will be efficient to the degree that only insiders and cheats can win. To disagree is to delude yourself.

This post was roughly ten years ago by somebody claiming that it was pointless trying to trade on Betfair.

I trade more markets than I did ten years ago, put more money through the markets than I did then, and have made more in the second ten than I made in the first. Lots stuff is automated for me now using Bet Angel. That's how I've managed to expand what I do.

That original quote was written by somebody who claimed to be a pro trader. It turned out he wasn't a pro trader, so didn't believe anybody else was. But he go on to offer advice to others about how to be a pro trader. Yeah, work that out.

It's been a common theme over my career. People often spend too much time looking at why something isn't possible rather than taking a step back to see why it actually is.

The quoted person claimed to show all sorts of proof it wasn't possible and so on. He had a PhD had worked in the city and was a coder. I reached out to him, but he threw that right back in my face. It was pretty much the last time I tried to help people understand. Since then I've thrown in the towel on trying to convert people who don't believe. It just seems a pointless waste of energy.

I would like to point out that I completely understand if people haven't made it work for themselves, they are naturally sceptical. But also the industry is full of crooks and frauds and that muddies the water even more.

But don't be too harsh on people that don't understand. Just realise that this is what makes the market. That is part of the reason your profit.

Stuff that seems second nature and obvious to you is just impossible for some people to understand, even if they are highly intelligent.

Feel happy that you have seen through he fog to a place where it's all clear. Many never get there.

[decomez6]

There are in my opinion three levels to Betfair trading, of which many people only understand the first two.

1) Manual trading - Profitable

2) Automated Trading - NOT PROFITABLE The betfair market is highly inefficient, except when it comes to the macro datapoints of the entire market as a whole. but in the long term, any minor edge you may have will be corrected due to the next layer which nobody on this forum seems to comprehend.

3) Automated Automation - Profitable- . YOU ARE COMPETING AGAINST AUTOMATED SOFTWARE THAT IS USING MILLIONS/BILLIONS OF DATA POINTS TO CREATE THEIR TRADING "STRATEGIES". Literally, tick by tick analysis of the market, that is automatically refined to exploit the minor inefficiencies in the market at a macro level.

-

At a Micro level you find one Truth with a capital "T".
THE ODDS
At a Macro level you find one Truth with a capital "T"
The performance of THE ODDS over a MILLIONS/BILLIONS OF DATA POINTS.

the EDGE is not hidden . its a well discussed subject in this forum and in many of peters videos.
EXPECTANCY....how well did the odds perform against their expected TRUE value ?

[Archangel]

BUT NONE OF THE METHODS WILL ALLOW YOU TO JUST SIT ON YOUR ARSE AND LET AUTOMATION PRINT YOU MONEY LIKE YOU ARE SCROOGE MCDUCK.
-

[Euler]

As a software engineer with a financial markets background, I thought I should share the common misconceptions as to why trading only using automation will never net you a long term profit.
There are in my opinion three levels to Betfair trading, of which many people only understand the first two.

Bet Angel was founded by coders with a financial market background nearly twenty years ago.

1) Manual trading - Profitable: You are actively selecting markets, placing and exiting trades at pre-determined times with discipline because you have an edge. Whether you think a favourite horse is adverse to soft going, or a football team has a knack of scoring more late goals than the XG allows for example.

I don't particularly recognise that as manual trading.

2) Automated Trading - NOT PROFITABLE - If you think there is a click and run automation accross all markets in a specific field, you will be sorely mistaken. The betfair market is highly inefficient, except when it comes to the macro datapoints of the entire market as a whole. You may have short term profits because you think you have found an inefficiency because nobody has thought of simply laying the favourite greyhound, or back to lay the home team in a football match, but in the long term, any minor edge you may have will be corrected due to the next layer which nobody on this forum seems to comprehend.

Neither that.

One of the reasons I'm bigger than I was ten years ago is that more of my trading is automated (Using Bet Angel).

Automation has become a bigger and bigger part of Bet Angel for good reason and I'm pretty sure most of our users make good use of it.

My strategies are a blend of manual strategies I've automated and also strategies I've created form the ground up just by playing around with concepts in the market.

Some of the best strategies I've found are by trying something and constantly refining it over time.

3) Automated Automation - Profitable - There is an entire world out there that people do not understand. The common advice on this forum is that you need to create a strategy, record the data from the strategy, refine the strategy and rinse and repeat. As a human there is simply a finite number of data points you can record. Lets for arguments sake take a strategy that you have come up with and tested it over 1000 races and it is profitable. If its a lay strategy, and you record your data points and pop them into an excel spreadsheet and voila, you have at minimum 1000 data points. YOU ARE COMPETING AGAINST AUTOMATED SOFTWARE THAT IS USING MILLIONS/BILLIONS OF DATA POINTS TO CREATE THEIR TRADING "STRATEGIES". Literally, tick by tick analysis of the market, that is automatically refined to exploit the minor inefficiencies in the market at a macro level. You making a a decent profit blindly laying at 1.06 in play for horses? As soon as a it becomes apparent this is a decent strategy, their software will pick it up, and use their bigger bankroll to wipe you off the market.

Quant traders literally build server farms next to exchanges to beat their competition by a nanosecond to a trade, do you really think when multiple markets have over 10m traded per day, will not attract professionals with real infrastructure?

Using only automation to try beat the system is a fools errand. You are a small fish in a big pond, and the main problem is you WILL be profitable, until you arn't.

I've collected millisecond data almost since day dot on Betfair. But it doesn't help you.

A few years back I took Betfair on a tour of city firms to discuss the exchange. None of them felt the markets were big enough to be interesting to them.

I've covered why institutional money doesn't work in sports markets in a blog post - https://www.betangelacademy.com/why-spo ... ly-flawed/

But also, all of them wanted some sort of advantage over retail punters. Something with Betfair refused to do, to their credit.

Betfair built the API so that even if you were co-located next to them, you wouldn't get an advantage. So HFT style trading doesn't work.

The fact I've managed to trade so profitability for so long, sort of tells you that ML, HFT and so on hasn't really had that much of an impact in the market. Also the markets haven't grown for a while so it sort of asks the question of where are they?

I've always felt Betfair is actually the biggest competitor in the market. Simple changes can knock out a strategy by accident and the corporate imperative means things change over time.

I've always been more worried by Betfair than others in the market.

There is no hidden secret. There is no golden strategy. There is just hard work.

I've always said that, so on this we agree.

Automation on Bet Angel isn't designed to be a one fits all, sit back and profit thing. It's been designed to help people implement something they have the best they can. Whether that's a new strategy or something they are trying to improve or automate. At which point you sit back..... and refine.

I don't particularly rely on mis-pricing. I did in the early part of my career, but I've realised things go much deeper than that.

Our business revolves around helping people achieve that, which is why we are still here nearly twenty years after we started.

I'm still amazed that people haven't or can't see the opportunity, but I've learnt that's part of an important edge in the market.

[tumby]

I am a financial markets trader that also runs sport betting algos. There are plenty of opportunities out there you just have to put in the hard work.

My system runs 24/7 all year round, I am consistently profitable and have been for a number of years, very few negative weeks. I do not spend lots of time tweaking and adjusting, I spend most of my time letting it do its thing. Same system across multiple sports. I don't make huge amounts from BF but it does provide a regular income that's very useful.

I have seen so many traders in my financial trading career that either think trading is really easy or that it's impossible. The few that sit and think are the few that survive and are long term profitable. I suggest you find some time for reflection and change your attitude. Of course you need to question everything, look for flaws and shortcomings in everything you do, but not at the expense of focusing on what you are there to do, which is to make money. Maybe after some reflection you decide that you do not have the right mind set, or maybe you try again but don't lose focus on the objective.

[Driftspite]

OP is wrong, sorry. I am not one for long posts so:

I am 100% automated and pay higher rate PC (@40%).

My code runs 24/7 and I have very little day to day input but make a decent living.

[hecojef928]

OP really caught my eye. Interesting thread. While reading posts like this can sometimes bring a hint of negativity, they also fire up my motivation to keep exploring what's possible.. My skepticism isn't just a personal trait; it's shaped by the countless similar talk I've come across over time!! It's the collective influence of these discussions and the perspectives shared by others that have led me to question certain aspects of trading.

When it comes to automation in trading, it's far from a guaranteed path to success. We know that. Of course It requires a solid strategy and a deep understanding of the market to truly thrive. However, it's undeniable that advanced automated systems, armed with sophisticated algorithms and analysis techniques, have the potential to generate profits, especially when they can adapt to the ever-evolving market.

What exactly is the point in sitting trackside if you're using automation to trigger trades? Does your automation have a pair of eyes?

I am a financial markets trader that also runs sport betting algos. There are plenty of opportunities out there you just have to put in the hard work.

My system runs 24/7 all year round, I am consistently profitable and have been for a number of years, very few negative weeks. I do not spend lots of time tweaking and adjusting, I spend most of my time letting it do its thing. Same system across multiple sports. I don't make huge amounts from BF but it does provide a regular income that's very useful.

I have seen so many traders in my financial trading career that either think trading is really easy or that it's impossible. The few that sit and think are the few that survive and are long term profitable. I suggest you find some time for reflection and change your attitude. Of course you need to question everything, look for flaws and shortcomings in everything you do, but not at the expense of focusing on what you are there to do, which is to make money. Maybe after some reflection you decide that you do not have the right mind set, or maybe you try again but don't lose focus on the objective.

Thanks for posting.

[Fugazi]

Old post, but it has got me thinking.

Some of what OP says makes a lot of sense to me.

If I am analysing data and find something I think I can take advantage of. Surely someone with a team of professionals, smarter than me, have:
- more computer power
- analyse more data than me
- analyse in greater depth
- Analyse more more frequently. Pretty much to the point they are updating the data continuously in real time?

I am currently running a profitable automation, but that logic above seems sound to me and feels like I shouldn't be making any profit?

[Crumpets]

I think people give market participants far too much credit

The markets are very inefficient on a case by case basis.

[hecojef928]

Old post, but it has got me thinking.

Some of what OP says makes a lot of sense to me.

If I am analysing data and find something I think I can take advantage of. Surely someone with a team of professionals, smarter than me, have:
- more computer power
- analyse more data than me
- analyse in greater depth
- Analyse more more frequently. Pretty much to the point they are updating the data continuously in real time?

I am currently running a profitable automation, but that logic above seems sound to me and feels like I shouldn't be making any profit?

Personal expertise, intuition, and the ability to adapt are equally, if not more important. It's about how you use the information you have, not just how much of it you possess. Maintaining a positive outlook helps me, despite all the negativity around me. Even though the big fish may seem daunting, try to stay focused on refining your strategies over time and staying ahead of the game. Finding your own path helps, or personal style as they say, and making the most of your strengths, regardless of the size of the competition.

[decomez6]

If I am analysing data and find something I think I can take advantage of. Surely someone with a team of professionals, smarter than me, have:
- more computer power
- analyse more data than me
- analyse in greater depth
- Analyse more more frequently. Pretty much to the point they are updating the data continuously in real time?

no amount of data can give you a formula to work out

FOMO . fear of missing out on a bounce , a breakout or a trend.
.fear of loosing gained profit ,hence cutting short your edge instead of letting it run.

the market is an amalgamation of all our human traits and behaviours .
and the reasons why traders take certain decisions is as hard as the "HARD PROBLEM OF CONSIOUNESS "

and no human being can solve that problem .

[Derek27]

You have to admire the title of the thread. Even people who didn't read it will know exactly what it's about.