I am at an airport, and have 90 mins .. So forgive me, but this has been on my mind for a while.
Am reading .. How to find a black cat in a coal celler .. And it's basically about a sports tipster proofer.
Thou the data is maybe 5 yrs old, he makes this point :
Basically, backing sub 2.00 chances, that are steamers, in 100% markets, is +EV.
So, we know there are lots of 100% markets on exchanges .. And it should be
possible with automation to check an event 30 mins pre in-play, and see if it's shortening.
So, if someone is a PC payer .. My mind starts to thinking, is it better to take a green of say £1 on 50 markets, a red of £1 on 50 markets, for a small loss after Comm, or, have maybe a £20 liability/potential profit, on these 100 markets?
Overall, the even money chances will even out, but, maybe the green-up slippage, and implied comm on losing bets, make it better to 'gamble'
I would likey to have excel handy (even thou I am a numpty)
Let's assume .. Individual is a 2.5% normal comm payer, and 50% PC payer.
Let's assume he can find 100 markets, where the price is 98/99 to back.
50 win, 50 lose.
//
It's occurred to me, this is the wrong approach .. As, to get the greens/reds, we need to be in the market, for some time.
So, let's focus on 2.08 chances, which have shortened .. From 2.10.
We back 100 of them.
50 shorten by 2 ticks, for greens, 50 lengthen, for reds.
I need something to calculate how much this is ...
.......
I need to open BA in practice mode .. Not sure I can do this, now ..
£30 back at 2.08 gives potential return of £32.40
£30 lay at 2.04 is £31.20
£30 lay at 2.12 is £33.60
So, the 50 that shorten, gives a £1.20 free bet, or a green (layed back at 2.06) of 60p .. Pre comm .. (( dunno if figs are right.. Have to check later)
50 that drift, show a loss of £1.20, for a red (at 2.14 of 65p)
So, 50 greens at 60p = £30 , less 3% comm = £29.10
50 reds at 65p, = £32.50
Implied comm on £32.50 @5% = £1.62 /2 = 81p
So, red real cost = 32.50-81p = £31.79
Net loss on strats £2.69, of which u would get £1.35 notional PC credit.
If, instead, 100 @ £30 backs at 2.08
Let's say, 47 win. 47 * 30 =£1410 @2.08 = 1522 less 3% comm (45.70) = £1476.30
53 losers, * 30 = £1590 . Implied comm £1590*5% = 79.50/2 = £39.65 .. So,
Real loss, £1590-£39.65=£1550.35
Winners £1476.30-£1550.35= loss of £74.00 .. Gambling .. Of which u would get £37.00 notional PC credit.
It's clear, both strats are net losers to the pocket .. But, if the strats find 48 winners, u would be break-even.
It's becoming clearer to me, the effort u have to go thru, to churn etc, is marginal, unless u can find a high turnover, break even, slightly +EV strat.
Anyone disagree or have comments ?
/// tbc
/// tbc
Automation .. Break-even strats .. Green or Gamble for PC
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I didn't check / follow all of your calculations, but where you were heading seems reasonable.
At one point I also investigated a similar "commission churning" idea. Look at all markets on Betfair priced close to 2, offer money on one side, take it on as a bet, try to place as many bets as possible so as to be close to break even as possible but generate commission in the process. I didn't try it for long as it seemed to be a gross profit losing strategy, or at least with a large enough drawdown than I was happy to handle back then.
In the end, I think there's only a few things to consider as a PC payer:
1. It can be beneficial to even use a gross profit LOSING strategy to move from 5% to 10% commission paid in total, since that moves you from 50% PC to 40% PC. That 10% you can take back retrospectively too, so you can potentially take back 10% of your total ever gross profit (which if you're a higher level PC payer is likely to be quite a lot).
2. You can simplify calculations taking into account PC by just looking at gross profits (i.e. ignore the fact that you're paying commission and PC). Calculate your gross profit across any markets then multiply by your PC level - that's all that matters.
3. One minor caveat is your commission discount rate. Implied commission is calculated as 3% on any losing bets - And therefore you need to be at a 40% discount rate (40% of base 5% = 3% on the win side) to make a £100 win and £100 loss a perfect £0 net profit. A lower rate and you lose a tiny amount - but a higher discount rate and you're actually MAKING money.
Conclusion - they made it far too complicated
I now have a few gamble-y strategies in my portfolio. All that matters is they are gross profit +ve in the long run. If after paying base commission they become net -ve, I know it's just offsetting my PC. At the same time they keep me above the 10% weekly commission threshold, plus they put me above the 40% discount rate so that £100 win £100 loss makes me money (again through PC offset). I can also easily reach my Cash Race points targets!
At one point I also investigated a similar "commission churning" idea. Look at all markets on Betfair priced close to 2, offer money on one side, take it on as a bet, try to place as many bets as possible so as to be close to break even as possible but generate commission in the process. I didn't try it for long as it seemed to be a gross profit losing strategy, or at least with a large enough drawdown than I was happy to handle back then.
In the end, I think there's only a few things to consider as a PC payer:
1. It can be beneficial to even use a gross profit LOSING strategy to move from 5% to 10% commission paid in total, since that moves you from 50% PC to 40% PC. That 10% you can take back retrospectively too, so you can potentially take back 10% of your total ever gross profit (which if you're a higher level PC payer is likely to be quite a lot).
2. You can simplify calculations taking into account PC by just looking at gross profits (i.e. ignore the fact that you're paying commission and PC). Calculate your gross profit across any markets then multiply by your PC level - that's all that matters.
3. One minor caveat is your commission discount rate. Implied commission is calculated as 3% on any losing bets - And therefore you need to be at a 40% discount rate (40% of base 5% = 3% on the win side) to make a £100 win and £100 loss a perfect £0 net profit. A lower rate and you lose a tiny amount - but a higher discount rate and you're actually MAKING money.
Conclusion - they made it far too complicated
I now have a few gamble-y strategies in my portfolio. All that matters is they are gross profit +ve in the long run. If after paying base commission they become net -ve, I know it's just offsetting my PC. At the same time they keep me above the 10% weekly commission threshold, plus they put me above the 40% discount rate so that £100 win £100 loss makes me money (again through PC offset). I can also easily reach my Cash Race points targets!
Thx .. I sorta feel, bigger churn is better than smaller .. but, am slightly worried most of the sample files provided by Dallas etc, have Green all conditions.
Maybe, this is a less aggressive approach, BA are trying to instill in newbies .. for a while, I am happy to find liquid mkts I know, and just churn stuff/try and learn.
Maybe, this is a less aggressive approach, BA are trying to instill in newbies .. for a while, I am happy to find liquid mkts I know, and just churn stuff/try and learn.
I think you need to be clear with what you're trying to achieve.
If you're out to develop a trading strategy, then greening is a given. If you want to generate lots of commission, trading and greening isn't easily going to achieve that.
The things I mentioned in my earlier post are more risky than trading, but I expect any higher PC trader should have the experience to start exploring riskier strategies without losing their shirt.
As a side suggestion, you could investigate cross-market trading as somewhere in between. Sports like football will have many markets which are either directly or indirectly correlated. So you can open a position on one market, and close or hedge it in another. Overall you'll be gross profit zero (or near zero), but generate commission on both markets. I hear that Betfair are planning (or already are) implementing cross-market cross-matching themselves though.
If you're out to develop a trading strategy, then greening is a given. If you want to generate lots of commission, trading and greening isn't easily going to achieve that.
The things I mentioned in my earlier post are more risky than trading, but I expect any higher PC trader should have the experience to start exploring riskier strategies without losing their shirt.
As a side suggestion, you could investigate cross-market trading as somewhere in between. Sports like football will have many markets which are either directly or indirectly correlated. So you can open a position on one market, and close or hedge it in another. Overall you'll be gross profit zero (or near zero), but generate commission on both markets. I hear that Betfair are planning (or already are) implementing cross-market cross-matching themselves though.