Punt.com - A Blog About Gambling by a Professional Gambler.

"Chance favours the prepared".

I love this quote from Louis Pasteur, "In the field of observation chance favours the prepared mind".  I'm probably going to take this out of it's context, but I think the sentiment applies in many ways to trading and gambling.

I've been reading a fantastic book lately called "The Black Swan", by Nassim Taleb (links to be added later).  A man rather a lot cleverer than I, with a clarity of thought on the subjects of randomness and prediction which is superior to most.  I won't turn this into a book review, but I recommend everyone read it, the humour might not be to everyones taste, particularly the French, but it's extremely worthwhile.

Central to his theme is our inability to predict.  Especially things which are extreme or unimaginable to us.  It left me with a very healthy respect for randomness and much less respect for 'opinion'.  I was a big fan of his previous book too, (link on the left side of the page half way down) "Fooled By Randomness".  Taleb's background is in options trading, he specialised in setting up positions which exposed him to randomness well beyond the expectation of the market.  The payoff for which was vastly beyond what anyone could imagine the probability of it's occurance was.   Simply because it was unimaginable, the bets he was making were of fantastic value.

This was a new idea to me, a sort of 'exposure to randomness'.  Getting the unexpected, 'onside', in a cheap or even free way, that would pay large dividends if these unexpected events ever occured.  Conversly, the people trading in the opposite direction had no clue to the downside of their options and bets.  These were people who focused on small, repeatable profits (read short odds) which crucially, were "expected" to happen.  The lesson, never expect anything!  Especially profits.

Back to the quote.  He is not talking about taking your chances, or predicting your chances, or spotting a chance and predicting whether it will happen or not.  It's about being exposed to chance in the right way.  There is no expectation or prediction involved here.  Prepare yourself / your position so that chance's happenings pay off with the most reward. 

Taleb says, "you do not look for something particular every morning but work hard to let contingency enter your working life".  This is wonderful advice. 

On a practical level, I've been doing a lot of work on my trading to do with this.  Specifically the realisation that I am reliant on the market to allow me out of a position, really I've not been giving enough priority to this... I hesitate to use the word respect in this instance, having read The Black Swan, I'm fairly convinced the market as a whole underestimates many unexpected things.  What I am talking about is the fact that if I am to trade out of a position, then it is the market's position that allows me to do so, not me somehow bulldozing through it or willing it to get to a certain level before I can close.

How does this tie in ?  Basically I am allowing market contingency to enter my trading.  I'm exposed to the unexpected and thus, ultimately - panic and over-reaction.  My reward is greater than it should be, the risk (downside) is minimal.  These are the best trades you can have.

A lot of people use the term 'free lay', a bet with no downside and all upside should the unexpected happen.  Taleb calls these, "free lottery tickets" and suggests we collect as many of these as we can.  He's right you know. 

Most of all, look for situations where the unexpected will hurt you, and ones where it will reward you.  Minimise the former and expose yourself in as cheap a way possible to the later.

Can we still trust Betfair?

...Should we trust Betfair? Or indeed, any betting exchange?

Trust is such a powerful concept, a search on wikipedia says that a "trusted party is presumed to seek to fulfill policies, ethical codes, law and their previous promises."  The degree to which we trust is a measure of honesty and competence, and the degree to which we forgive broken trust is reliant on whether trust failed due to an issue of competence or honesty, the later being rather harder to forgive.

This is going to be a lengthy entry.  But I owe it to you, it's been a while.  This entry is not going to talk about tennis, or my performance, which has been fairly unspectacular but steady (the bank roll is up a further 29% on the year).  I'm going to post about an issue doing the rounds right now, and that is whether the recent actions of Betfair (the leading betting exchange) have caused us to lose trust in them.  Do we believe they have our best interests at heart, further to this, should we?  Why did many of us blindly trust them for years, were we naive?

Some of you noticed I made a post (and withdrew it) a few weeks ago about the recent bet matching controversy at Betfair.  It was a strong entry, I was pleased with it, but I took it down, people wanted to know why.  Sometimes it is better to hold your cards closer to your chest, to withhold judgement for as long as possible... I decided to give Betfair a few days to sort things out, given what I had been hearing, there was a good chance things would change, and outdate the post.  In fact they did change not long after that..

Without going into too much detail for those that don't know, Betfair changed the way they matched bets 'in running' for a while.  They did this secretly, and they did so in a way which made them around 15-20% extra profit.  Profit, being the critical element here, (previously Betfair made no profit at all from the bet matching process) when you match bets and profit from it, you are in fact trading on the exchange.  A concept that Betfair clearly didn't grasp.

The term 'exchange' no longer applies in this case, because you are in fact dealing with the exchange themselves.  This method of profiting from the bet matching process was only open to Betfair, because it was done using it's own platform software and technology.  ie. it was automatic and without choice, part of the site.  If you used Betfair during this period, you would have been vulnerable to this occuring, there was no way around it.

If an 'exchange' profits from the process of matching bets (buy and sells) then it is insider trading.

How on Earth did Betfair think they could do this?  Well, probably quite easily I'm guessing.  In the betting exchange market, Befair are by far the biggest, and for good reason - the liquidity exists there.  As a punter and trader, you go where there are people to bet against, where competition and liquidity offers up sizable bets at good odds.  Everyone feels the same way, and so you end up with an exchange that has the vast majority of the action.  Indeed, this is the ideal scenario for people looking to use 'exchanges' of any sort.  You welcome the liquidity.

This puts this particular exchange in a position of extreme responsibility.  It effectively declares them the custodians of our marketplace, this is a great deal of trust to place in one company.  Particularly a 'betting' company.

Betfair is a registered bookmaker.  Without rehashing the issues of their license and whether this is really right or not, whether they like it or not they are also an 'exchange', running an exchange brings a higher level of responsibility that is perhaps not best bestowed upon a 'betting' company, but a 'financial' one.  Not just any financial one either, an 'exchange'.

You see, as a business, having the vast majority of customers turns them from not just any company, into a monopoly.  Monopolies have massive power over the market, indeed they control it, the customers are at their control - more so when this issue of liquidity is involved.  Rival products cannot  gain any share of the userbase without taking them away from liquidity.  Who wants to populate an exchange with no liquidity?  No one!  The customers hurt themselves here, but are beyond blame.  It's chicken and egg stuff.

Monopolies have little competition by definition.  Competition is good for customers, they get fair deals, they have choice and they can vote with their custom.  They don't have to put up with the decisions made by a monopoly.

Why would a 'financial' company be better?  FSA (Financial Services Authority) Regulation.

No one expects Betfair or any other betting exchange company not to do it's best to make profits.  They are a business afterall.  But an 'exchange' has responsibilities to it's users, which restrict some of the ways in which it could make profit.  There are ethical and moral (and legal) issues that come into play.

You would never for example see the London Stock Exchange trading on it's own platform, let alone profiting from the way it's software worked.  Such actions would have severe consequences for those involved.

Betfair has many times the transactions of the London Stock Exchange per day.  Something which amazed me when I learnt of it.  They have hundreds of thousands of registered users, matched volumes on the biggest tennis matches are well into 10s of £millions, you can imagine what horse racing is like.  All of these transactions have to take place in a fair way, speedily and transparently between customers.

Is this the sort of thing best suited to a betting company?  A business with a very strong desire to grow, and to continue growing.  Can you imagine the potential conflict of interest at play here.  With so many people making deals on their platform, millions of transactions per day, this must seem like a goldmine to some at Betfair.

Indeed, given they make the rules, they own the technology and platform software, the temptation must be huge.  Further to this, they are regulated as a betting company, to a large degree this gives them a massive freedom to run their product as they see fit, including the ability to change the rules, the way bets are matched or the degree to which they seem like a bookmaker and not an exchange.

Lets throw in the size of the company and the amount it's grown.   Betfair is now in all likelihood  a 1000 person plus company.  All of these people to be managed well, to tow the company line... and all of those bonuses to pay.  It's unlikely most of the company know what is going on elsewhere at HQ, there's hierarchy and politics at play, agendas form and the company comes under the influence of various departments and the way they view the direction of the company. 

The attitudes of employees is now quite random and unpredictable, given the nature and size of the company.  Employee attitudes are going to be very different to that of a 'user'.  They are concerned with internal issues, politics, climbing the company ladder and getting their bonus.  Does fairness and 'exchange' ethics, play an important part for them, perhaps not.  How many people go to work thinking about such lofty ideals?  Yet the question of fairness is not one that is thoroughly regulated.  Regulated to a sufficient degree where it becomes unquestionable, and a matter of legality, rather than company direction and temptation.

Many of these employees will be privy to the sorts of knowledge about customer accounts that might best be protected.  Many know for example how much some of their users are making, and it's rather a lot more than their pay packet.  Money talks, and it does strange things to people..

Which brings us back to the original question.  Can we trust them?  And, should we?  In my opinion, no and no.

2 or more years ago I would have unquestionably trusted them.  Why though?  They have a great product, it's innovative, I enjoy using it and yes I can make a living.  I was naive enough to think this was enough.  They also acted differently, the company was smaller, guided by different people with no evidence that they wanted to run anything other than a fair 'exchange' between punters.  In hindsight, this was not particularly clever from myself..

Why would a company regulated as a bookmaker, wanting to grow rapidly, never think about the goldmine on it's doorsteps.  Especially when a point is reached where it becomes harder for them to continue to grow as fast.

This applies not only to Betfair but all betting exchanges.  I began by saying 'trust' is a strong word, but lacking trust in someone does not incriminate them, it just means we must keep a close eye and remain healthy skeptics given the lack of proper regulation in this area.

I also said the ideal is to have all the money in one place.  That is common sense, but the responsibility placed upon the people running that company is huge, and it's not one we should simply give to a business without strict rules to ensure absolutely no potential for conflict of interests in the future.

January roundup.

Well, I did say once a month didnt I...

The Tennis..

We started the year in Qatar, it's always good to catch as much early action as you can before the Aussie Open, or indeed the rest of the year and there were a few notable points that came out of this one (all my opinions of course).  Firstly, Ivan Ljubicic looked out of sorts, looked slow and inaccurate, based his entire game on his serve - nothing unusual there, just more so than normal. He'll need to sort himself out to stay somewhere near the top of the game..

Andy Murray won the tournament, but more than just playing great tennis, he was also looking considerably leaner and fitter than I've ever seen him.  Clearly putting on some muscle and losing any shred of fat he had last year...  his speed around the court was unbelievable at times.

The Aussie Open was fantastic this year.  Loads of great matches, even on the first day which is usually awash with one sided, boring matches.  Plenty of matches went the distance, it was great trading and surprisingly - good liquidity too during the night, very happy to see that.

Murray will be gutted he went out first round to Tsonga, I'm sure he fancied a very good run after Qatar.  Tsonga was unreal however, we all know that if he hits it inside the lines, he's fairly unstoppable..  huge forehand, big serve.. anyone who watched him go close to beating Roddick in the first round of the Aussie's the year before knew what he could do.  A breath of fresh air.

Fed looked slow and out of sorts, I'm a Fed fan, so I'm hoping it's just a result of his pre tournament illness and not the beginnings of a decline..   

Roddick had a huge match with Kohlschreiber which went deep into the 5th.  Personally I felt he had little game in that match and lent on his serve to get him out of all sorts of trouble..  the match stats suggest a very high quality battle, my opinion is they flattered Roddick hugely, the winners were coming from the German's racquet, Roddick simply far too passive.. no attacking intent from his ground strokes.  Massive improvement needed from him in this area otherwise I see him doing nothing this year.

Nadal looked pretty sharp, not something I was fully expecting given something of a flat finish to last year.  He looks ready to go, but was beating by a man playing out of his brains.

We haven't mentioned the winner yet, Djokovic.  I think a fair winner in the end, his level was above that of Tsonga in the final...  most noteworthy point on the Serb..  backhand down the line!  where has that come from ?! 

On the Womens side, although I dislike Maria, it was good ot see her come back and play perhaps the best she's ever played..  makes this year very interesting, with pressure back on Justine Henin now who was head and shoulders above everyone last year.  Maria's got herself a new set of wheels to get around the court it seems.  Gone is the heavy goods vehicle reverse beep..  impressive change in her movement, credit to her fitness coach, she was getting balls back that previously she had no hope of getting close to.

Wierdest match of the tournament, Serena Williams v Jankovic.  What the hell went on here ?!  Serena was playing some reasonable tennis before this, and Jankovic could barely run with all the injuries she has been accumulating recently.  Williams looked in pieces on court, serving at 75mph, hitting 25 backhands into the net and moved like the Sharapova of old.  She goes a set down, and suddenly, it's 110mph serves and the odd lashed winner...  but alas, the effort was too late, Jankovic fell over the line, almost literally.  I did a packet on this, but I'll live.. and learn.

The trading..

It was a good month.  The first good one for a while actually, I've been treading water for a while, but December's month off gave me a chance to reassess, and to work on everything I've been doing over the previous year.  A lot of experience had been accumulated which needed processing, experience with various ways of approaching things.  December gave me the chance to put a lot of things together into a clear structure.

Really I think the best thing to have come out of this month is the importance of the work I've done away from trading.  The preparation of my strategy, the work I've done on spreadsheets and the maths and continually thinking about and improving these things as I went along, between trading sessions.

As things stand now, I have a spreadsheet telling me what I should be staking and when, and you might think that sounds like something I should have had before..  you'd probably be right !  I certainly know now how much help it is being able to know without thinking all of the numbers that are important to me during a match.  I feel this has helped me massively.

I've said previously how important just acting out a plan is, well now the thought process has been distilled to it's simplest form - seeing numbers and acting on them.  Not just seeing numbers, but being told how much and at what price..  I'm faster than before, and I'm not making the errors of judgement I was.  In fact, "judgement" itself has been removed from the equation and that is the error I made in the Williams match.. a mistake I won't be wanting to make again.  That was my one screw up of the month and my biggest loss.

My biggest win was Djokovic beating Federer.  Incredible value on Djokovic during this match, infact it kept growing bigger and bigger and for a while I thought the market might get away with it, but in reality, there's only so much pretence the market can maintain - if one player is out playing the other then it will go his way eventually.  I remember one instance of laying Fed at 1.8ish with the belief that the right price was 1.7 on Djokovic. 

My big loss took 13.2% off the bank,  the big win added 13.8% on and for the month, it finished up 38%.

If you fancy reading more, Paul at Selectabet has been interviewing me and has recently posted the first part of it on his excellent blog.  Here's to a good Feb.

Update: I notice Part 2 is also up over at selectabet.

A punt.com Christmas message & review of 2007.

Well, it's been a while.  Apologies and also thanks to those that have so clearly continued to check back to this page for new entries in the time I've been away. 

Another year has passed us all by, and what a year it has been..  I don't think I've ever crammed as much into 12 months as I have done this year.  Many trips away, all over the world, New Zealand, New York, Portugal (twice), Sweden..  all for pleasure I must add and not work.  Some may think I've taken it easy this year, and although at times they could be right, in the times I have worked - I worked very hard, and not always with satisfying results, though certainly with many lessons.

Although I've spent many times on the blog bemoaning the solitude and boredom of working alone and being something of an outsider, I do know how lucky I am to be in this position and to continue to be in this position.  This year has had some stark reminders about how fragile an existence the professional gambler's career can be.. it is said by some that all gamblers / traders are terminal, we fight a continual battle within to keep this termination from occuring.  Many it seems succomb eventually, it serves to pay close attention when it does, no one is safe.

The idea of having 'time off' for the pro gambler is perhaps one that displays the relative health of ones mentality (and probably ones bank account too)..  though without one, you don't achieve the other.  Time off is essential to good performance, time off is also tricky to manage when you have a near constant stream of gambling opportunities coming at you.  The gambler in you wants to stay home to trade, sense, mental and physical well-being dictates otherwise...  it's for this reason that one might call 'time off' one of the fairest indicators of a gambler's psychological health.

More critical is the  relationship between time off and losing runs..  Do you follow a losing run by working harder, or do you restore mental balance with some time off ?  If you work harder and continue to lose, the pressure of having put in more hours will only hurt the cause more.  There's something special about the Human mind when it's given time to mull over the experiences you've fed it recently.. particularly if you are looking for answers.  Never giving yourself and your mind the time to perform this function will inhibit your chances of learning greatly.  I don't claim to understand what's going on here, but I think most people will have appreciated at times the positive effects giving something some time to settle, the mist can mysteriously clear without you actually doing much at all.

This year more than any other re-established for me the importance of process over profits (or losses).  I had a lot of streaks (good and bad).  I put this down to a few things, thinking about money and also spending a lot of time learning, testing and changing strategies.  This takes a lot of time, as a gambler you don't really know if something is working until you have a decent set of data - and even then you are at the mercy of randomness.  Data in this case being your P&Ls, the tendency to watch them perhaps a little easier when trying or changing strategies and in large part - watching profits and changing strategies tend to cause each other.

But, I think it's been worthwhile, come November I felt I could settle on something which encompassed all I had learnt in the previous 12 months.  November not really being the ideal time to become settled with the season finishing at the end of that Month.  Still, it has me looking forward to next year, the season being only a week away.

Not only did I settle on a strategy, but I defined all my risks and come up with a fool proof method of handling my risk point by point... a defined risk should be the backbone of any trading plan..  I have one, finally.  Had I been naive to not have one before ?- definitely, I don't mind admiting that.  I've always been a sensible person (my nickname is 'steady' afterall), but having all of these things defined really does take the pressure off and focus the mind on the process of executing the plan.  2008, will hopefully see my direction head firmly away from chopping and changing, and turn towards working hard and carrying out what I have planned.

It's been an interesting year on the blog too.  I began this blog one year ago, not knowing what to expect from it or myself writing it.  I have to say I've enjoyed it, though as my out of head post suggested, I think it's occasionally a hinderance writing about what I'm learning all the time!  I'd like to thank all of the people that took the time to comment on my postings and email me too, I really appreciate that..  also the other bloggers that have been writing steadily online, you are a constant source of interest, some of you have done very well this year, I wish you continued success.

So what of the blog in 2008?  The frequency of postings slowed towards the end of this year, partly due to me taking time off and partly because it was time for me to focus solely on producing a more complete plan of my strategy.  I didn't want to have to think much about anything else and this is probably going to be the case in 2008.  Expect fewer postings next year, perhaps one a month or one every fortnight to be the norm.  I expect these will be longer pieces though with plenty of good food for thought.  I may well post something in between if I really need to get something published. 

A couple of figures from 2007 seeing as people ask me a lot..  Largest win of the year; £37000, Serena Williams beating Hantuchova at Wimbledon, largest loss in 2007; £31000 Henman beating Tursunov at the US Open (win rounded down, loss rounded up as I don't have my spreadsheet through from Betfair yet..)

Time now to relax and enjoy the festivities (and my Betfair hamper;), all the best to my friends out there, and good luck for 2008! 

Matt

Out of head and onto blog = empty head?

Just a quick post this evening about something I've been noticing more and more each time I make a blog entry.  What I'm writing is not necessarily staying in my head once I've written it.  Not exactly an ideal situation, and not what I had in mind when I began the blog at all!  What I'm writing here is supposed to help me as much as it seems to be helping a few of the readers, lately it's been more of the opposite. 

What seems to be happening is that once an idea has been published, it's leaving my head, and has to be re-learnt again!  I actually seem to drop the ideas on a personal level once I've put them online!  Crazy.  I need to give this some thought, why is this happening?..  First thought: perhaps the blog is appealing a little too much to my ego than it should.  Am I feeding my ego too much here?

A lot of people think gamblers and big egos go hand in hand..  the stereotypical high roller is what they picture the professional gambler to be.  Successful gamblers and traders know the dangers of the ego, I would say those that do win are much more likely to have humility, and be willing to admit they are wrong much sooner than the ordinary punter.  They don't see this as anything to do with pride or shame, as is the case in so many walks of ordinary life... definitely pencil this topic in for another posting.

A few things to ponder anyway, not that it spells the end of the blog, but I certainly need to be more careful about dumping ideas here and not being focused on retaining them for personal use!

Idea for the week - you can't beat good pricing. (note to self:  don't forget this!)

Keeping the work / life balance, pressure avoidance.

..Or should I say, the gambling / life balance.  I've always known there was an importance to maintaining a good balance to life, but I hadn't realised the real reason why, how the mechanism works, until this week.

The importance of how I live my life away from the computer and how it affects my gambling and trading has always been obvious to me.  Having a life away from gambling keeps perspective and reality in check, staying healthy and fit maintains trading stamina and a clear head.  The importance of how and when I should take time away, and why that matters has been less than clear, in fact, not something I've spent much time considering. 

I've always been into figuring out how our heads work, how the various thinking mechanisms tick, inputs and outputs.  Though obviously nothing is ever clear cut with the human brain and our emotions, we're hardly a rational species at times.  But happenings this week made a few things clearer as to why it's important to do things away from gambling, and I'm not just saying this because I had a few losses!  ...I have losses every week...(though fewer than my wins - if I'm fortunate!)

This week saw plenty of work on offer, and I was in the mood to work, but I've had my eye on an event I wanted to attend this week in the city, nothing to do with work at all.  Now I could have gone on Thursday, in fact I had planned to do so when I woke up, but of course, there was work available, good work at that and so I stayed home thinking I would head out later... time kept ticking of course and I ended up staying in later and later, in the end, not going out at all.

All the while, it was playing on my mind that I really wanted to go out.  As I worked I had a few losses - the quality of which got worse as the day progressed.  The first losses were of the acceptable kind, good bets, well thought out and staked accordingly, fortune transpired that my player simply didn't win and that's fine.  But as time progressed, and I began thinking more about wasting my time staying in (especially as the sun was shining), I became distracted. Unknowingly, I was becoming more preoccupied with making my day pay it's worth for staying in.

Whenever you want to make gambling pay, more specifically - the time you spend gambling, you are instantly going to commit a heap of mental errors.  You place impatient bets, you get concerned about losing, enough to be tempted to chase losses, decisions aren't arrived at in the same way they would normally be, the list is endless.  We all know there's a million ways to lose in this game, not many ways to win, this situation is not exactly helping your cause.

The more I reflected on this on Thursday night, the more I realised how simple this really is.  If you don't want to work, if there's somewhere you'd rather be, stop working and go!  Clearly "work" in this case means gambling, I'm not suggesting you leave the office because you'd rather be playing golf, not unless you want to lose your job.  What I am saying is, if you'd rather be doing something else than gambling, you should do it.  The alternative opens the door to too much concern with time and it's wastage.

Come Friday morning, I decided a clear plan was called for.  The event I wanted to attend was still going on, I decided I would work until midday, then go, regardless of work.  Maintaining my life balance was of higher priority than placing a few more bets.  I have to say, it worked great, I was relaxed in the morning, I knew what I was doing and had a few hours in which to focus properly.  Equally as important, I avoided betting in a weakened mental state in the afternoon - avoiding losses.  Not only this, but my work / life balance was restored, perspective regained and I was ready once again to focus on Saturday morning with a clear mind.

There's two parts to this then, the 'time' element - anytime you are placed in a situation where you feel you 'have to' make the time you spend gambling pay, you are operating in less than optimal mental state.  And the other part is to do with maintaining perspective, recharging the mental batteries and reminding yourself of why you work, and why you focus properly when you do.  So much of our gambling and trading mentality is about positioning yourself in the right situations to think properly, doing stuff you want to do away from gambling, when you want to do them, is vital to our success.

Time, in gambling, is to be spent doing things properly and not meant to be used as some yard stick to measure whether you are finding it worthwhile or not - you can figure that out after a meaningful number of bets have been placed or time has passed, ie. several months.  Kind of paradoxical I know, but that is the correct attitude - 'staying in the present' is a more commonly used, easily understood description.   If you find you can't spend time doing the right things, then reduce the time you aim to spend, and commit to work properly for the entire time.

The difficult thing in gambling,if you are losing then you feel like spending even more time, working even harder until you have the money back.  But where does it end?  To what end are you going to spend all this time?  I have a friend who after having some losses, withdrew himself into work to such an extent that he stopped going out, ceased to keep up with friends and worryingly, was close to not even looking after himself.  Clearly, it could be easy to say he has a problem with his gambling, I'm not really commenting on that here - he may or may not, I'm reserving opinion, but what is apparent, when you analyse the time spent, is that he is not making any progress at all - just the opposite.

He was going round in circles, he would win for a while, then the amount of time he was spending gambling would begin to preoccupy his mind and add 'pressure', he would then begin to rush to make money, sure enough, losses would follow - more than he won previously.  He would then work even harder than before and so on, in an ever deepening circle. 

As silly as this sounds,  it's probably unnervingly easy to get involved in.  We've all got to be smart in this regard, keep a balance between gambling and life, overbearing pressure coming from spending too much time gambling will then cease to be a potential problem.

The fixed tennis match, that never was.

It's a funny thing, the power of suggestion.  How someone or something can suggest it is one thing, only to be something else entirely.  Multiply this effect when basing judgement upon prior experience.  Now add in to the mix a few hundred people, all thinking or wondering the same thing with all the persuasive and herd like properties that carries, and you have a nice recipe for chaos and pandemonium.

Yesterdays match between Elena Dementieva and Patty Schnyder was one such affair, but crucially, only for those of us participating in the Betfair market.  You see, in the real world, there was nothing about this match that suggested anything strange at all. 

The match was conducted fairly on all real evidence.  It involved the usual amount of closely fought service games, double faults, tension and breaks of serve that you would expect from a match between these two players.  Dementieva running out the winner in straight sets 6-3 6-4.

Yet on Betfair, you could have been forgiven for thinking there was another match going on somewhere else between two players of the same names.  The odds bore no relation to what was really happening, just as they had in the Davydenko v Arguello match, and in another strange match between Mariya Koryttseva and Tatiana Poutchek (the Davydenko match is under investigation).  If you knew what you were looking at, the Betfair market for this match was probably as equally entertaining as the match itself.

Dementieva opened at a very approximate 1.75 - a slight favourite, rightly so, though perhaps not as strong a favourite as she might have been if it wasn't for a lacklustre win against Molik the round previous. 

What proceeded to happen next was a real mystery, and still is.  A procession of money for Schnyder began early in the match, and continued through the entire match pretty much.  Even when Dementieva went a break up in the first set, the extent to which the money had come for Patty meant that Dementieva was now odds against, even though she as ahead!   This was still the case after winning the set 6-3, aparently she was 10% less likely to win the match according to the odds, even though she was 1-0 up!  Very wrong odds indeed.

Bets of £20,000, £30,000 and £40,000 appeared numerous times backing Patty and laying Elena.  It's bets of these sizes which cause chaos in weak 2nd round tennis markets, getting this sort of size of bet matched is not an easy task, and they really did want to get them matched!  Offering odds against on a favourite who is winning, will do that to some degree.  People like myself will feel unable to pass them up, the rest of the people in the market will be scared into believing the money knows something and that it is fixed.   And indeed, in light of  the amount of money yesterday, this is what the majority of ordinary punters believed was happening.

Tennis is a nice sport to bet on, but it's equally attractive to those that like to trade odds back and forth.  (Traders far out number punters in general on Betfair these days.)  Most traders, especially those with lesser experience and knowledge, rely upon the (normally fairly predictable) reactions of others to the scoreline  - tennis' scoring structure  produces a rough mathematical guide to which the prices should follow to some extent, add in market supply and demand and you can come up with ball park guesses of where the price will move to next.

This is good in a perfect World, but we live in a random World, a World where one person can change the entire face of a market and throw out the expectations of a large group of people.  People who are used to reacting to prices, people who had no intention of investing for the long haul, who only have a certain amount of pain they can take from a price not living up to expectations.  Nowhere in the rules does it say someone can't come into a market and do whatever the hell they want, regardless of the level of (none)sense it would appear to involve.  Reactive traders tend to conveniently forget this.

When one person decided they would have a series of very large bets, at what were crazy odds (in the rest of the markets eyes), chaos very quickly descended upon the market place.  The first cry of "Fix" didn't take long to appear on the Betfair forum.  Soon after, those that thought the first large bet must have been a mistake were clambering to get out of their bets on Dementieva for fear of a fixed match. Now it wasn't just the big player that wanted on Schnyder, the numbers of traders fearing the worst was increasing and so was Dementieva's price - rapidly.

During the 2nd set, Schnyder's price to win the match got down to below 1.4 - 72% chance of winning, despite being a set down in the match!  It seemed the fix was inevitable to most, but the match went on totally unaware of what was happening between a few hundred people on the internet.

When Dementieva broke to lead in the 2nd set, it began to dawn that we'd all been watching something that wasn't happening at all.  The bubble quickly broke on the Betfair market and prices quickly snapped towards where they really should have been, Dem winning in the end - not without one or two more moments of market panic.

Questions remain as to what happened.  Who was the mystery punter with serious amounts of money to seemingly throw at players?  Why did they do this?

Dementieva took an injury time out in her previous match v Molik, did someone know something about the injury and it's seriousness?  Did they over estimate the impact it might have?

Is this the same person that bet on the other matches with strange betting patterns and where is all their money coming from?  They surely aren't doing very well this week...  and if you were a match fixer - wouldn't you throw in some bad looking weeks just to make yourself look genuine enough?  Fixers trading amongst themselves?

Few will ever know, but a few things are certain, this match wasn't fixed, and not every match that has strange betting patterns is fixed. 

Given this, what do you with that knowledge?  Yesterday I took on the money and gambled that the match was not fixed.  I took a good bet on Dementieva, everything I look for suggested she was a good bet, and to have such incredible odds on offer, I had to bet an amount I was ok with losing in such a situation. 

I didn't believe either Patty or Elena were players that would be interested in fixing matches, though I don't know them personally - they are two high profile players with great histories in the sport, I would be amazed if they would want to threaten their reputations.

If you are the trader type then, get out and leave alone - particularly if you are thinking 'fix', it will play with your mind and make you do things you never would normally.  Move onto another match.  The most important thing anyone (but particularly traders) can take away from this match is the fact that it only takes one person to change a market.  No one has to conform to any pattern of odds or behaviour in a free market place - plan accordingly and beware of the expected!

Wanting to win...

...is similar to wanting to be rich.  A desire to win, or be wealthy, is fine in theory, but how is this going to be achieved?  How many people that want to be wealthy actually take the brave step of starting their own business and putting their energy into the process.  A desire to win is not enough, in fact, in gambling, it can be a hinderance.

The key is what you focus your desire on.  Wanting money as a gambler can be a disasterous idea.  It can make you forget, or not focus on, the things that really matter - how to win, how to improve, what really went wrong and what you've been doing right.  Furthermore, it can make you chase the money, betting too big for your bank, or getting overly attached to the money that you have lost.  Massive mental errors (and losses) could potentially occur.

The correct thing to desire, is to 'get better' at what you are doing.  Regardless of whether you do in fact 'get better', this attitude alone will give you a massively improved chance of success.

A lot of sports commentators are quick to suggest that a player "really wants to win", or "they want it more" / "want it badly".  That works in sports, but in the market for the match, you can't "want it more" than the other 1000 people you are betting against.  What you can do though, if you really do harbour that desire, is focus that energy into how you are doing things.  Give yourself targets relating to the process rather than how much you want to make or thinking about what you want to have in the bank come Christmas.  Make 'learning' your biggest "want".  Those who stop learning, are left behind.

Someone at Betfair having a laugh.

In case you were wondering, it's a tennis match, Wang v King.

A good read...

Just thought I'd point a few readers in the direction of a really good blog written by someone making some great strides in the right direction with their trading.  Well done Mark Iverson, keep up the great work with your blog. 

A lot of what he writes reminds me of the issues and learning curve I went through a few years ago, one great thing readers can take form his blog is the importance of staying in 'learning mode'.  Remain aware and vigilant regardless of winning or losing, learn from what you did right and analyse things that went wrong - Mark's good at this, let's hope he continues to keep doing the same, the financial rewards are definitely deserved.