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Betting and trading on The Open Golf Championship

The Open Golf Championship

Golf isn’t the first thing you think of when Betfair trading. But, curiously, golf was one of my first markets on Betfair. This was somewhat accidental as back then I was arbing (or sort of matched betting) between bookmakers and Betfair. So my Betfair trading Golf heritage goes all the way back to June 2000.

My focus is really only the Golf majors nowadays. These are the markets with big liquidity and narrow spreads, which makes for a good combination when trading.

The Open Golf Championship is different from other majors in that it is played on a rotation schedule across a number of courses in the UK. It is also played on a links golf course which is traditionally near the sea, are near or on dunes, have an uneven surface and sandy soil.

This is in stark contrast to a lot of ‘modern’ courses or your local golf club which are often set in parkland or woods and carefully manicured. The rotation schedule ensures different links courses such as the famous St Andrews course, considered the ‘home’ of golf, get to see the worlds best get the chance to lift the claret jug.

I have to admit The Open is one of my least favourite tournaments as I have traditionally underperformed here in comparison to other Majors. That’s generally because I have to juggle my time on the Golf with other things that are happening. When the tournament is on the other side of the pond I can trade it in isolation.

Playing links Golf

Links golf is very different from traditional golf in that it’s a bit harder to play consistently, especially if the weather is poor.

Open championships will see the course set up for greater difficulty and poor weather can make things even harder. Links courses are best played by hitting the ball low and accurately. Being able to belt the ball a long distance isn’t so important. It’s a real test of your playing abilities, especially if you end up in the rough.

Players who have a long drive will not benefit from it at The Open as your ability to stay on the fairway and scramble comes to the fore at The Open. Course management and experience will win you a lot of strokes gained at The Open and therefore the average age of the winner at The Open is much older than other majors.

Seven of the last ten winners were over 32 years old!

Finding a winner!

There are some general pointers you can get to find a winner at The Open Golf. Since 2006 there has only been one favourite go on to successfully navigate all four days at The Open and lift aloft the claret jug. The average price of the winner is over 100 and that includes a few ‘shorter priced’ winners like Spieth and McIlroy in the last six years.

Golf is a game of confidence as much as anything, so players who are playing well tend to carry that form forward. But that said, US-based players, tend to suffer from the long trip to Scotland. US Golfers are also not used to playing links golf as well. But players who arrive early and play in local tournaments tend to perform better.

Nearly all winners had played the week before and finished well. Because of the nature of a links course, the vast majority of winners have finished inside the top ten in a previous Open championship. Couple this with plenty of experience, regardless of age, on links courses and you are likely to find a winner.

Cover a range of selections

With 150+ selections in the field, I tend to not focus on who will win, as that’s an incredibly hard thing to do. It’s pretty obvious that it’s quite easy to find a winning lay. That will work, but it also carries a lot of potential liability at the prices you need to lay at.

A winner is hard to pick, so backing just one is a tough ask. Of course, on a betting exchange, you have many options available to you other than backing a winner.

I tend to pick through players that I think will be in contention or big movers at some point in the tournament and back a selection of them. If you use the dutching tool in your Bet Angel trading software, this means you can do this to a fixed liability.

Out of that group you will very often find somebody who performs well and shortens up significantly which will most likely generate a profit if you are trading. If you catch a cluster of decent selections at large prices, when the price shortens, you can trade out of a profit or leave a bit on them for the title. You don’t need all of your selections to shorten in price to profit. You only need one good move to cover your losses on your selections that don’t progress during the tournament.

A difficult course set up will also provide opportunities, as could the weather. The leader after round one has historically only won the title 10% of the time. The leader in round two and three, 26% and 46% of the time.

As we get towards the business end of the tournament, turn your focus to the front of the field. Dutching the front of field within a certain number of shots of the leader has generally been a value bet. We looked back all the way to 1957 and nobody has won the Open after being more than six shots from lead after end of the third round. Even if you narrow that to three shots from the lead you still find a winner 83% of the time.

Good luck!

A combination of experience, confidence and tricky conditions can set up the perfect opportunity to catch a bigger price at The Open. But with benign weather conditions forecast this week, it’s likely some of those factors may be nullified this week.

But as always, good luck whatever you do this week!

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How to avoid Cash-Out confusion

Cash out

I’ll never forget the joy of discovering greening-up, as I called it, hedging as you may call it in the stock market, or cash-out as the industry chose to adopt. The ability to win whatever the result was a real game-changer.

Nowadays, it’s accepted as a standard feature on betting exchanges and sportsbooks, but this wasn’t always the case. Betfair didn’t introduce the concept of cash-out, which was then widely copied by the industry, until 2012. This was a full ten years after it was first commonly being used on betting exchanges.

Cash out is just another bet

It’s easy to misunderstand how cash-out actually works. It’s not some magical button or Betfair procedure, it’s really just another bet. So it’s important to understand that, so you can account for that when trading.

Most cash-out features with sportsbooks are simplistic and geared towards their providers. But when trading you have a lot more flexibility in terms of how you use it, but that carries additional risk if you use it incorrectly.

How does cash out work

To explain how cash out works, let’s look at a simple trade: –

A simple trade

  • We open a trade by backing £100 at odds of 4.00
  • To close the trade we lay the same selection with £100 at odds of 3.75
  • Our profit from this trade there is 4.00-3.75*£100 or £25

That £25 profit is ONLY if that selection goes on win the actual event. We have created a free bet with no loss if any of the other selections go on to win. We have made £25 because that is the difference in profit between backing £100 at odds of 4.00 and the liability of laying at odds of 3.75.

To hedge that position you would press any of the various ‘greening’ buttons or options in Bet Angel. But what that does is actually place another bet in the market.

So to hedge that position so that you win whatever the result, Bet Angel places another lay bet into the market at odds of 4.00 for £6.67. Our profit has reduced from £25 to £6.67 but that means we win regardless of how goes on to win.

The importance of trading correctly

The process of trading is simple, you lay at a lower price than you back at and cash out / hedge your position. Simple. As always the reality is different.

I often see people, including ‘professional’ traders who seem to follow the wrong trading process. If you trade correctly, you will use the same stake on each trade, open a trade, close a trade, possibly repeat that trade, and then hedge when you are finished.

You do this because you can control your risk and manage your trade effectively. It brings your focus to the trade at hand and controls your money management of that trade. The hedging position should be the last thing you do on a trade, not part of the trade.

Let us examine why that is the case.

What happens if you don’t trade correctly

If you try and make the closing trade and hedging position at the same time, you can do that. But it’s very unlikely that you will win every trade you do on any specific selection. When you trade in and out then finally hedge, you hedge your net profit. If you trade and hedge out, you skew your individual trade in a market to that closing trade and tend to blow up your trade and money management.

You also have this problem that the final hedging position will be large and that could influence the trade or cause additional problems that I will touch on in a minute.

The second image illustrates this point more clearly. The total amount of bets on the lay side are £106.67. If you trade in and out then the final bet that spreads your profit across all selections is just £6.67. If you wait till the last moment to hedge your position and do so without trading out first your final bet will be £106.67

I know which final position I would prefer. So I trade in and out and the very last thing I do is to hedge that profit or loss at that point.

When cash out can cost you a profit

When you trading you should find yourself clean out of a position and the final action you should take is to hedge that profit. Then give yourself a pat on the back for a nice trade!

If you wait till the last moment to hedge and your closing trade includes that hedge you could find yourself in trouble. That last trade will be comparable to your open position and it may mean that you end up chasing that final closing position, including the hedge, and it may not fill. Things can be worse though.

Let’s say that your WiFi freaks out, the Betfair API freaks out or something else happens that interrupts your communication to Betfair. Suddenly you have a large liability outstanding and rather than just having a free bet, you may actually just be having an outright bet on the next event.

So it always makes sense to trade ‘correctly’. As in, focus on the trade and then hedging is the final you do. Don’t be tempted to just slap the greening button. While it can hedge, it’s actually a closing and hedging position combined if you haven’t completed a trade.

Why hedging in-play carries much more risk

In the section above, I touched on what could happen if your connection to Betfair is interrupted. There is one time when your ability to cash out correctly will be interrupted by default.

When the market is in-play Betfair apply a bet delay by default. The market will feel very different from its pre-event state. Pre-event there is no bet delay, so you can open, close and hedge positions quickly and with ease.

It’s important at this stage to re-appraise what we have covered above. If you open and close a trade, you simply hedge the profit you have made. If you open a trade then fail to close it and just attempt to hedge that position, your hedged bet includes your closing trade as well!

The most common mistake we see is that somebody has a profit and then, without placing a closing trade, the greening button is pressed. This dumps a large position in the market and because of the bet delay, it will take a while to reach the market. By the time it has reached the market the price has moved and the position is unfilled and remains in the market.

What was a nice £25 profit or £6.67 whatever the result is probably now slipping into a losing position? In a panic, the greening button gets pushed again but at that exact moment the market shifts and fills your old position and the new lay bet for £106.67 enters the market and also gets filled. You have managed to turn a profit whatever the resulting trade into a thumping loss. Things generally get worse from there!

You can use features like ‘with greening’ to ensure any in-play trade is limited to just two positions. But if you do attempt to hedge inplay our advice to you is to ensure your trade is closed before hedging to substantially reduce your risk.

If you can’t do that or make a mistake, then when that initial hedged position goes into the market, give it time to get matched and then calmly cancel and re-apply it if needed. But always keep an eye on your overall position via the profit and loss column/number to ensure you understand what is happening.

What you need to know and what you should be doing

We have seen people repeatedly click the greening / heading features in an attempt to get out of a position. This is not the way to use this feature.

If you have not closed your trade properly you will be essentially placing a lot of new bets into the market. You will not actually be attempting to hedge that position. You could find yourself in a world of hurt.

If you experience a timeout to the Betfair API, the Betfair API has a problem reporting data or you are clicking that button during an inplay bet delay, Bet Angel can only act on your instruction and you could be adding to your liability in the market. Therefore always check what is happening and be aware of that.

But the moral of this story is, that you should never find yourself in that position in the first place!

Follow a predetermined trading plan, execute it well and do everything to minimise your risk and exposure in the market. That’s the best way to trade!

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Alice in Wonderland and Wimbledon

Here a curious story I learnt when research Tennis. It starts way back when Tennis was ‘real tennis’ and not ‘lawn’ tennis. Now Tennis comes in many forms, but its origins have long since be lost in the mists of history.

Real Tennis

Wimbledon’s official name is ‘The All England Lawn Tennis Championships’ hence the reason for this explanatory blog post. But like most things, that original name is somewhat in the background now. But let’s explore what it means and why Alice in Wonderland has a role to play in Tennis.

As we know it today, Tennis came from a root called ‘lawn tennis’ to differentiate it from the older indoor version, “real” or royal tennis.

When the All England Croquet Club set a field aside for the new game and held a championship in 1877 — the first Wimbledon Championship — they combined the new and old rules and modern Tennis was born. Part of that change was a reversion to the “real” or medieval tennis scoring system: 15, 30, 40. Prior to that Tennis was easier to understand just used a basic incremental points system.

The rules for scoring have remained almost entirely static ever since, despite some attempts to simplify it. A major change was the introduction of tiebreaks in the 1970s.

Seeded tournaments

As you are probably aware, most major Tennis tournaments are seeded. This means that the top-seeded players are much more likely to meet in the latter stages of the tournament. This is helpful from a number of aspects. A top player who has trained hard doesn’t really want to go out to the world number one in the first round.

But from a sponsorship and commercial perspective, a tournament that builds to a clash of the titans in the final few rounds, is exactly where you want to be. But the fairness of a tournament is where Alice in Wonderland comes to meet Tennis.

Lewis Carroll

We have to thank a man called Charles Dodgson, more commonly known by his pen name, Lewis Carroll. Author of many books including Alice in Wonderland.

Curiously, the man who created this famous book was also interested in lawn tennis.  He wanted to make them fairer, more logical, more mathematically perfect.  Carroll wrote about the rules of lawn tennis tournaments after talking to somebody who was upset after he lost in the first round and then saw a player much weaker than himself make his way into the finals.  Of course, they didn’t have seeding back then.  Draws were composed randomly, so the best and second-best players could very easily meet in the first round. 

Carroll offered his solution in an essay named, “Lawn Tennis Tournaments, The True Method of Assigning Prizes with a Proof of the Fallacy of the Present Method.”

While novel his system wasn’t as simple as the method in use today. He created a complex tournament structure in which players could not be eliminated in the first round.  Losers kept playing until they had three superiors, three people who had beaten them or beaten someone who had beaten them.

I think I prefer the current structure. While not mathematically perfect, it’s a bit easier to understand but Carroll did come up with a system that would decide a true champion.

If you are interested you can read the article here, buried deep in the collected works of Lewis Carroll.

http://www.gasl.org/refbib/Carroll__Works.pdf

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How to use the Draw bias in horse racing markets

Photo finish

What is draw bias?

Draw bias is the tendancy for horses at some tracks to win more often that horses drawn in different stall positions. To understand draw bias, we need to look at the starting stalls.

To be fair to all horses over shorter distance races, typically all flat races, stalls are used to ensure no particular runner gets an advantage at the start. A 5f race can be over in less than sixty seconds, so stalls are used to confer no advantage to any runner.

During the flat season, where timing is much more critical, it is common to load the horses into stalls. The stalls are numbered from the rails outward, with the lowest draw being near the rails and the highest draw being furthest from the rails. There are some anomalies, though, and the stalls’ failure to operate correctly could see a flagged start. At Salisbury racecourse, it’s not possible to put stalls at the 1m6f start, so no stalls are used.

In much longer races, like those during the jump season, horses will be gathered together in some kind of order before they start. Because these races are over much longer distances and include fences, any advantage at the start is considered minimal and starting stall unnecessary.

With stalls it’s important to note that on both sides of the courses you have rails and the stalls will sit on one side of that, depending upon the way that the course goes round. As a consequence, a horse that’s near the rail will tend to do a little bit better, it is said to have a ‘favourable stall draw’.

The outperformance exists because not only can the horse follow the rails easily, but it will also run slightly less distance than some of the other horses as well. To fully understand how the draw bias works and how the stalls will affect the draw bias, what you need to do is to actually look at individual courses.

How the course can effect draw bias

There are some courses where there’s virtually no draw bias and there’s some courses where there’s a very high draw bias. The easiest way to understand this is to actually go on to Google Maps and have a look at the courses.

Ascot Racecourse

When you look at races like Ascot that are over five furlongs to a mile, the horses will just belt down that course as it’s simply a straight line! In fact, when Ascot was redesigned, the course was made to be relatively flat and drain well, so the going is pretty consistent across the entire flat racing track. Extending the course to run flat over even ground has balanced out the racing from the round course.

This means there isn’t a significant draw bias at Ascot when run on a straight mile as each horse in the stall has a roughly equal shot due to the lack of curves in the course and the consistent going.

It’s important to note that going can affect the draw bias. If you have a front runner that is drawn away from the good ground, you may find that they try and find that ground at the start of the race. Big fields will also affect the impact draw bias as horses shuffle for position and are further from the rails.

In comparison to Ascot, Chester is a course where the bias is really well understood.

Chester Racecourse

If you look at the circuit on Google Maps you can see that it’s almost circular. Unlike staggered starts in athletics, they don’t stagger the stalls to balance out the inefficiency of running on the outside of the track. Therefore Chester has a really strong draw bias, especially over shorter distances.

At Chester, you can see that the draw bias on somebody in a higher stall is significant, whereas somebody’s drawn on the low end of that is obviously going to benefit from grabbing the rails and running a shorter distance.

So when you look at individual courses, each of them have their own specific draw bias. So how could you use this?

Using draw bias to your advantage

A helpful tool to understand what courses have the strongest draw bias can be analysed on a website called: ‘https://www.drawbias.com/‘. It talks through all of the individual courses, all of the individual races and the different lengths which is very helpful when exploring this phenomenon.

But don’t forget that field sizes, the going, running stels and different parts of the course can affect the exact impact of the draw. Esssentially you are looking at draw and pace most of the time. You can see how I use pace heat maps and run style combinations in other blog posts.

If you look specically at the automation within Bet Angel, we do actually allow options to use the stall draw. The reason we put the stall draw in there is so that you can actually take advantage of draw biases.

There is no question that certain courses produce different results to other courses and that will manifest itself in a number of ways. The winners who are likely at to win those courses, the percentage off set that you can do when you’re looking to Dobb or things like that, they all vary according to individual courses and to trading strategies as well.

The important thing to realise is that in UK horse racing, there is no standard type of course. When you look at the courses in the UK they’re wildly different. They produce different results and favour some horses more than others, whether it’s across certain distances or certain biases .

Understanding draw bias is very useful as it can be used within any specific trading strategy especially in-play Betfair trading strategy If you want to learn more about taking advantage of applying automation to courses that have a very strong draw bias, then watch this video.

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