Hi Everyone,
I'm trying a few new ideas at the moment and it got me thinking... Does value matter when you're trading volatility?
For example...
Let's say there are two football matches, both 0-0 after 30 mins.
Over 2.5 on Match A is currently 2.2
Over 2.5 on Match B is currently 4.1
Both games are quite open but the market is expecting goals on Match A, not match B.
I'm going to place a trade on over 2.5, green up after a goal or close at HT for a loss.
Do I go with Match A because I think it's more likely, or do I go with Match B because I think it's value?
If you look at pre-off horses. I'm not that bothered if the current price is value, I'm just looking at the market to try and determine which way the price is going to go.
Interested to hear any thoughts you might have?
Cheers.
Does value matter when trading volatility?
Practical example...
Currently watching Konyaspor v Genclerbirligi
The draw is 2.00 at 67 mins.
Home team have 66% possession, 11 shots, game is open.
For arguments sake, I think a goal is likely so I want to LTD and green up if/when a goal is scored.
Do I care if 2.00 is a value lay as I'm not looking to let it run until FT?
Currently watching Konyaspor v Genclerbirligi
The draw is 2.00 at 67 mins.
Home team have 66% possession, 11 shots, game is open.
For arguments sake, I think a goal is likely so I want to LTD and green up if/when a goal is scored.
Do I care if 2.00 is a value lay as I'm not looking to let it run until FT?
yes matters, higher the lay price the more expensive every minute without a goal
say you were outright laying the draw at evens its easy you just have to put less than a 50% chance on it.
if you intend to trade out after a goal, you should estimate the implied chance gain vs loss in case of goal / no goal
say you lay at evens and put average odds you get in case of a goal at 4, you lose 50% if no goal gain 25% in case of a goal so you need to put higher than 66% on chance of goal
in practise the most efficient way to trade is just to back whatever price is too high and lay when its too low
Yes, that was probably a bad example as there is a good chance this trade would run until FT.rik wrote: ↑Wed Feb 03, 2021 7:14 pmyes matters, higher the lay price the more expensive every minute without a goal
say you were outright laying the draw at evens its easy you just have to put less than a 50% chance on it.
if you intend to trade out after a goal, you should estimate the implied chance gain vs loss in case of goal / no goal
say you lay at evens and put average odds you get in case of a goal at 4, you lose 50% if no goal gain 25% in case of a goal so you need to put higher than 66% on chance of goal
in practise the most efficient way to trade is just to back whatever price is too high and lay when its too low
The Leicester game would be a better example. I expected an open start so I LTD at kick off as I expected the draw odds not to move - I would have closed for small red if they did start to move in. I wasn't laying 3.45 because I thought it was too low. I was laying it because I thought it would remain the same for the first 10-15 mins, giving me a free shot at an early goal (I suppose you could say it was too low in that case). It worked out this time but that match could still end in a draw, I've just traded that piece of volatility. Assuming my edge is the ability to pick games that have these characteristics, would you say I'm actually picking games where the draw should be priced higher?
If you take it to the extreme, do scalpers care is a price is value?
When I'm scalping the draw, as well as quick single-tick scalps I'm looking for overreactions, like a free-kick outside the box and the price moves disproportionately. As soon as the player misses/hits the wall and goes off for a goal kick, the price bounces back to where it was or below. That's value and trade profit is magnified by its bounce back to where the price should be. Basically, I'm getting one or two extra ticks.
There are lots of situations where this is not true. If the 'true' value price of something is 4 and you back at 5, you should always trade out at 3 if you have a chance (and the event start is imminent.)
In that case you have made two value bets and yes you can call it ‘trading’
True enough!LinusP wrote: ↑Thu Feb 04, 2021 7:24 amIn that case you have made two value bets and yes you can call it ‘trading’
That's one of the things that made me switch from punting to trading. Backing a value horse at 8 that steams relentlessly. Missing out on the enjoyment of backing that winner and only getting a winning trade. Then I realised the 8 hours a day I was spending watching racing, reviewing it and making notes, studying tomorrows racing, etc. could be better spent forgetting about form and switching to cold trading.
