There is no such thing as a perfect trade or one that is completely riskless. So the next best thing is to find the best place to be in a market adn when.
Volatility in Tennis
When you are looking to trade Tennis you are effectively selling volatility. Markets are generally priced efficiently before the start of a match, but trading is all about exploiting how a player goes from that point to closing out a match. That progression can follow a huge number of paths in Tennis and is helped by the fact that Tennis can go on for infinity, in theory. In the battle of tactics, it’s typically rare for a straight forward victory. While the market may be priced at 100%, volatility rarely is.
To back this up, I looked at a sample of 60,000 recent matches. With a starting price of 1.05 only 42% of matches headed to lower odds without meandering upwards at some point. Push that out to starting odds of 1.10 and that number sinks to 20%. Raise the odds further and it gets more and more certain that the market will not go in one direction only. Start qualifying things a bit and it throws up more opportunity as the price meanders around that path to the finish of the match.
By weighting your position at an optimal price on that path, you can exploit that characteristic of Tennis. When we created Tennis trader it was set up to allow you to look at those paths so you can decide when you feel would be a sensible point to get involved.
One process of selection that you might consider is to split matches by gender. The ability to win a point on serve varies quite a bit by surface type. Grass in the easiest surface to win a point and clay the hardest. On the image below you can see the ability to win serve and the variance by surface and gender. You can see female players are much less likely to hold serve and can conclude that those matches will be much more variable.
My starting point
When I first started messing around with Tennis I did a simple thing. I would lay the favourite and offset it by a certain amount. My aim was to understand the average point in the market where the trade would hit a strike rate of 50%. I started low and went higher and higher and higher, till I the strike rate started to drop off. Once I achieved that I started looking at when that was reached and the score lines. From that, I was able to join up the mathematical model I had with the underlying activity in the market.
There is a direct correlation between the starting price and how variable the market is. Rather obviously, close competitive matches tend to produce the highest variability but even at shorter odds, the market can be pretty variable. But if you use the rule of thumb that opponents whose odds are closest together are more likely to produce highly variable matches you won’t go far wrong. It’s more complicated than that of course, but that’s a nice one line summary.
I found that by pitching the opening and closing orders in the market in advance I could break even at worse in the long run. All I needed to do was find precursors to that movement and / or make better selections to pull off a decent trade. It was also possible to repeat it in the same match as well. The benefit of this strategy is that the more unpredictable the match, the more you will benefit. Try and do more than one trade in a match, preferably lots. On the downside, if you pick badly, your loss is limited as long as you don’t chase it.
You will see quite a few matches that just result in a loss, there isn’t much you can do about that. But if you are actively trading the market when the winners come they will help offset those. When I tested the idea with £10 stakes over a large number of markets, it lost £5.21 on (small) stakes for a total staked of £1,800. A worthwhile expense to understand the structure of a market.
Entry and exit points
If you watch a typical Tennis match you will notice something. When the ball is in play there is little money at the touch price. It’s been common in Tennis for a long time that this is the default mode of operation. People don’t want to be picked off by people with faster feeds. So the money vanishes as the ball is about to be played. Fire up a market and watch yourself. Nobody plays ball when the ball is being played, which is quite sensible.
Therefore most Tennis traders will trade game to game, break to break or between key points. Exit trades are often placed in advance of the match reaching that point. Often, a potential break is all that is needed to bring a reward. So exits are pitched near that level.
Between each point, players get 25 seconds to compose themselves and serve. So if a potential break is on the cards, you get the chance to exit then without any play underway. Players like Nadal and Sharapova always use this period to the fullest extent. Sharapova always turns away from the opponent to stop them from speeding up the game. That 25 seconds has become tactical. You also have plenty of time between games and during the breaks or at the change of ends. There are many breaks in play in modern Tennis now, probably too many.
Anyhow, I’ve got terabytes of data and information on Tennis. If there is enough interest I can post up more facts and figures from various aspects of the game. But a lot of that is already encapsulated within Tennis trader inside Bet Angel Professional. This will allow you to experiment with and understand a lot of what I have said here, without having to sit through five hours of Tennis. It’s worth playing with if you want to get a deeper understanding of Tennis.
Good luck with the rest of the Australian Open.