How to work out ROI ?

[oscar123]

I read some old blogs where ROI is talked about, I was just wondering how I would go about working this out.

With traditional betting I can do this more easily.

ie I have 100 bets for £100 each. 10 winners all at 12/1.

So I stake £10,000. The returns are £13,000. Leaving a profit of £3000.

That gives an ROI of 30%.

How do I work out a comparison for trading? What are my stakes?

e.g. If I back a horse for £100 @4 and lay off at 3.8. ( giving £5.26 profit).

And in the same race lay a horse for £100 @4, then back at 4.3. (giving profit of £ 6.98)

My total profit for this race is £12.24 (minus commission). But how much have I turned over?

Is it simply £200? (the back and lay amounts added together?)

Is it £ 400? The most that I could lose in a worst case scenario? ( -£100 from the back losing + -£300 from the lay winning).

Though as I would take a loss, the £400 is never really at risk?


Any ideas on how the turnover and ROI figures should be calculated? I have seen that betfair will provide 'volume' figures on how much is being turned over, how are these figures calculated?

[Bet Angel]

Others views may differ but I view my return on percentage of turnover which for trading is usually tiny. I download my betting history from Betfair add up all the stakes and divide the profit into that. If you do the same calculation on stakes it can be misleading as the figures are often enourmous, so using total turnover gives me a more consistant view.

[oscar123]

Hi BetAngel,

Thanks for the reply,

So for the above example, you would be counting your turnover as £200 ?. The £100 back and the £100 lay both the same?

So your profit on turnover would be (assuming no commission) 12.24/200 = 6.12 ?

[oscar123]

I just downloaded my p+l from betfair and only had the columns with the p+l in. I didnt have any stakes.

I suppose its a grey area, and it doesnt really matter how you calculate the figure, as long as you calculate it in a consistent way for future comparisons.

Comparing my traditional betting ROI to my trading ROI isnt really possible, as they cannot really be calculated in the same way.

[npatel999]

ROI is used as profitability of an investment. Profit seems to be easy to measure when putting in to betting context as it's merely net return (after your commission and initial bet) but investment is what causes most issue. As a regular better or trader you put more than money. In that you're investing your time which could be more than say you may spend on deciding which shares to buy. Therefore to work out ROI in betting context is to take opportunity cost of your time spent in achieving that profit. I would use the following formula:

net profit - (hours x £/hrs)
________________________ x 100 = ROI
Investment

So to apply to your example if you achieved a net return of £12.24 using £100 & your wage is £10/hour & you have spent 10 minutes executing this transaction then:

£12.24 - (£10 x 1/6)
__________ = 11% for this particular transactions
£100

If you spend spend 8 hours in a day using £1000 bank & you achieve say £100 then your ROI will be 2%.

It seems to me, having spent some in this area, that it takes more than money to achieve result and therefore ROI may be not a good measure of return in this context.

[Bet Angel]

Here is how I would assess my return.

I went to Betfair visited the 'my account' area and downloaded my 'bet history' for yesterday. I totalled up all the stakes in the J column on the spreadsheet. This totalled £236,000. I made £652 net yesterday so my return on turnover before commission was just short of 0.30%.

However, you could also look at it a different way. My net exposure in the market never breached £2000 yesterday so I could have traded with only £2k in my account and still returned £652 which would have been a 32% return on my bank. I prefer the former measure though.

[oscar123]

Thanks for the working example.

When i download the figures from betfair I have nothing in the J column, so cannot access the stakes.

I go My Account>Betting Profit & Loss> Get P&L, then click the download to spreadsheet link.

I just get 4 columns opening in excel, Market, Start Time, Settled date and P/L.

How do I get the stake data in the spreadsheet too?

[andyfuller]

I go My Account>Betting Profit & Loss> Get P&L

How do I get the stake data

I went to Betfair and downloaded my bet history

[Fidib665]

My hunch is, you need to consider 2 factors independently:
a) the risk capital you need for your strategy
b) the maximum amount of money you need to cover your stakes in order to allow your participation on BFair (this would be the 400 you mentioned, as long as the first bet and the second lay are open simultaneously and not yet covered by the corresponding opposite transactions)

Now, assuming that you are running a maximum of 10 equal strategies in parallel. According to criterion b, you need to hold 4000 on your bet fair account in order to cover those bets. This is the minimum amount you need in order to be allowed to participate in BFair.

On the other hand, you will need some risk capital for your strategy to cushion potential extended downward trends in your time series of profits. If that number is higher than 4000 then this is the amount you need to relate your ROI to.

Obviously, this is a largely simplified example, as you will not have exactly the same quotes on all of the horses and neither will there be exact simultaneousness. In order to come up with a good understanding of the actual amount needed, you will need to come up with some good proxies or even Monte Carlo simulations and according VaR calculations.

Hope that makes sense.
Cheers, Fidibus

[oscar123]

Ha! Thanks for that andyfuller,

Sometimes I cant see the woods from the trees, or the Betting History from the Betting Profit and Loss !