Monday, 21 January 2013

Tennis Trading Fallacy

"This match exhibited perfect trading characteristics again.  It was another match, where if you were trading, you couldn’t lose. If you backed the outsider his price shortened considerably.  If you backed the favourite he won!"

I am really sick of reading this! Typically, it is the blogs which have tennis systems and other trading tools to sell, that trot this complete garbage out time and time again. This was taken from Peter Webb's latest blog post on the Wawrinka-Djokovic Australian Open match. Whenever there is a tennis match which swings back and forth, we never hear the end of it. All of a sudden, tennis becomes the best sport to trade, so good that you can't possibly lose no matter what you do! I'm sure most of you will already realise that this is  simply not true but I'm also sure that plenty will be taken in by this. So as a tennis trader of 3 years now, I'll make it very clear just why it's a fallacy.

Let's say you layed Djokovic at the start of the match. I don't know what the SP was as I was actually going to bed when this match started and missed out on all the fun. It will have been sub-1.05. So that's a very low risk lay of Djokovic which would have won you some money greening up at any point up to just over evens. Of course, I'm 100% certain that some people will have stayed in looking for the big win on Wawrinka and ended up losing the lot but I won't split hairs on that.

If you'd backed Djokovic at SP, first and foremost, you are a mug! But putting that to one side, at what point do you decide (as a TRADER, not as a gambler) to exit your bet? If you don't already know this, then you are not a trader with a plan and a trader without a plan is normally a loser. So let's say that you know your stop-loss point. Where is it? If you backed at SP, you would be in a lot of trouble once Djokovic hit 1.5 in set 1. You are then staring down the barrel of a rather hefty all-red screen if you didn't exit before then. Djokovic actually traded over evens later on. Surely no one at that point would have not hit their stop-loss point? If you hadn't exited your trade by then, you were really just gambling. And this is the point I'm trying to make. All traders have to have an exit point, otherwise, they are not trading.

I'm certain that lots of people who backed Djokovic (either at SP or more wisely, above 1.2) would have been in a serious quandary once he hit 2.0. I'm certain many will have redded up nice and early and taken a small hit. I'm certain others will have let it ride a bit longer than usual, just because it is the world number 1 and taken a slightly larger hit than usual. I'm certain that some will have gradually reduced the liability as the price increased. I'm also certain that many will have panicked, not exited, bitten their nails to stubs and gone through emotional torment to bag themselves a green. So to say 'you couldn't lose' is obviously a load of horse manure and many who will have won, will know deep down that they got off the hook on this one. Just as many will know that they made a loss but did the right thing in redding up on Novak. Others will learn never to back at sub 1.10 ever again, whilst some will think this is a license to do it even more!

My point is that everyone has a different strategy, different stop-loss points and different risk aversion. So there are of course, always going to be winners AND losers on every tennis match. It's impossible to guess which way it will swing and when it will happen in every tennis match. I'm sure plenty of people layed Djokovic between 1.5 and 2, when it would have seemed obvious that the market was in love with him, despite being a set and a break down. The price will have looked great value and I can't argue with that- it looked a good move. How do you think most of them reacted when the price tumbled back down to sub-1.10? It would have been different for everyone - some would have taken a small green after a few ticks, others will have gone for more and had to scratch when it reversed, others will have held on longer and taken a red.

Let's say you greened up after an early lay of Djokovic. Some will have re-invested that green by backing Djokovic, as Peter Webb did. But Djokovic then went back out to over evens - so what do they do then? It's possible they may have scratched and won nothing or they may have dipped back into the red and ended up redding-out despite the fact they'd initially made a profit. There are many scenarios which illustrate my point but I'm sure you get what I'm saying now.

A tennis match only shows 'perfect trading characteristics' when it fits YOUR strategy. Otherwise, it's only a perfect match for someone else. Of course, a match that swings back and forth and has a wide odds range (which this one didn't, ironically, as Novak barely shifted above evens) is usually a better match for most traders to get involved in, as it offers more opportunities but that still doesn't make it impossible to lose. But authors such as Peter Webb (and this is in  no way a personal attack on him as other blogs are guilty of this too) make it seem as though all these tennis matches are ripe for the picking and that you'd have to be  a complete cretin not to make money from them. But I guess that is entirely the point when you have something you are trying to sell................

Julia Goerges:


  1. Excellent post, and you are spot on with your comments. It all very easy after the fact to say that a game was a trading dream, but during a contest, decisions are made based on your entry / exit points, and everyone's are different. The exchange concept means that for every back, there was a matching lay - and not everyone ended up in profit.

    1. Cheers Cassini. Was worried I might be seen to be attacking the blog but it seems a lot of people feel the same way, judging from the response I've had. If it happened once, I would leave it but this happens during every single tennis grand slam, on every long match!

  2. Hi, best post so far, and spot on. Always laughed at "Sports trading life", which has a "system reviews" section, where some of the reviews are of, yes, their own service.

    Must say that i sometimes find that people are to non-critical (hope thats the right term) about what links you guys put in your blogrolls, as many of the links you got are promoting the s... (one of the Cassini links are promoting a casino/greenwood system, which im pretty sure does not fit into the valueterm)

    Take care

    1. Thanks for your comments. I actually like both Peter Webb and Sports Trading Life's blogs, the latter in particular, has excellent posts which I enjoy reading and I use my blogroll to access these blogs myself.

      STL are one of the biggest culprits of this though!

  3. Cheers Sultan,

    I've been reading your blog for a while, and despite not being a tennis trader, you've one of the most interesting content in the web. Congrats and keep up the good work!

    The post you mentioned from Peter's site is what I call "the easy brag". It would be a lot more informative if the eventual P&L percentages were shown for different stages of the game, and what could be achieved with a set of methods with pre-defined assumptions.

    The volatility is the easiest way to show the potencial of doing something, and that's what lures the gambler inside of the uninformed trader. Unfortunately I think it's the worst starting point for someone that wants to walk in the trading avenue.


    1. Hi Pedro, thanks for the kind words. I think if he showed P&L percentages, that would be even more bragging! But yes, I see what you mean.

      The problem is, anyone new to trading is going to read that post and think 'He is well respected, so he must know what he's talking about' , then go and buy his Bet Angel products cos he thinks tennis trading is easy. He doesn't leave the comments section open, so no one can question him on what he writes.

      I just find it strange that someone who is so well respected in this community, can continually keep saying things like this, which anyone who has been trading for more than a few months knows simply isn't true.

    2. Hey,

      I messed with the word, what I meant was return of investment percentages. For instance, if I did a back here and later a lay there, what would be my yield, regardless of how much liability was invested (for the better and the worse). And then build a set of metrics to evaluate the expected value for such approach.

      But I also believe that, when someone is doing this for so long, that person can over-simplify complex things, thus forgetting all the troubles that arise in the early trading stages.


  4. Spot on... Though even knowing he sells something, I don't have Peter as such type of person as other sellers. I think Peter mostly speaks for himself where he always says he likes uncertainty because it is where bigger opportunities show up (again, for him).

    But it's true one can see lots of videos and read lots of posts from people selling something showing how easy it is to win on Betfair. It is crazy we are not all riches now...

    Great post and great background image :).


    1. Thanks Cobo. I also like uncertainty in a market, I think that's how most successful traders work and it is indeed where the biggest opportunities lie. I don't think this post was about his style of trading, it was about saying 'Tennis has really easy matches to trade, where you can't really lose - now come buy my tennis trading gear'.

      This doesn't make him as bad as other types of sellers in the trading market, who try to dupe you and sell completely crap systems but when it comes down to it, it's still twisting the truth and some people will buy into it.

      I'm sure his tennis related Bet Angel products are great, I just don't agree with these continuous posts claiming you can't lose.

  5. Great jobs Sultan,
    I read your blogs and you did excellent work .Its amazing blog as tennistrader.

  6. Great blog!

    "traders dream", after-timing and green only screenshots are usually the sign of a true c***....most have moved away from the blogosphere and now abuse Twitter.

  7. Nice post. What you say is obviously true but I think Peter may be assuming that most people who trade, lay short and back high(er). These opportunities are much more valuable and they happen frequently enough to warrant not bothering backing low prices as a trading start point. I only take short prices on if I feel sure that they are a winner. I probably won't trade out then anyway so this would be more of a bet.

    1. Cheers Webbo. The problem for me, is that Peter says "you couldn't lose". Even if he was assuming people are just laying short and backing high, they could still have ended up losing, as I illustrated in the post.

      But he wasn't just assuming that any way, because he says "if you backed the favourite (Djokovic), he won!". As I say, if you are trading and you backed Djokovic at a higher price to go on and win the match, even if you are backing him to win, you should still have an exit point, otherwise you are gonna lose a considerable amount.

      Whilst your tactic may be to leave the bet, many others (including myself) would still employ a stop-loss and could still have activated it during this match and redded up.

  8. Sorry guys, but you have got the wrong end of the stick. Just because you trade differently to me doesn’t mean either of us are right or wrong, but perhaps you should be asking yourself why I would say something like that? It may give you an insight into how I trade? Sultan, if you live near us you are welcome to pop in for a coffee and some enlightenment.

    I would ask anybody who disagreed with my post to look a little deeper at how you trade. Tennis is a unique sport and you should approach it differently to other sports. Many sports offer the ability to profit, many, many times throughout the event, if you trade; sometimes regardless of your opening position.

    At the end of the day I blog based on personal experience. I know people trying to flog crap post up anything, but each post I make is because I was active on a market and something interesting happened. Interesting enough to think it’s of value enough to talk about it. I did post a nice visualisation for everybody as well BTW.

    I do take comments on the blog, but you are also welcome to visit the forum to chat which is where most of my interaction takes place.

    1. Hi Peter, thanks for your comments, was hoping you might pop up to respond :) With regards to comments on your blog, they have always been closed whenever I've looked, otherwise I would have responded on there instead of here.

      My response is going to be quite long, so I will write another blog post, also because I think readers will find it interesting to see your comments. This seems to have stirred up quite a bit of interest so hope you don't mind me continuing the discussion in this way.

  9. You have shared a very good source of information and it will help many of us understanding the live tennis game that is new to this field like me.

  10. Thanks for sharing such a nice and detailed post on live tennis and players.


Note: only a member of this blog may post a comment.