If you stick your results into excel you can use the STEYX function to find the standard error and CORREL for the correlation to trend, from there you can find the error significance. <5% is a start but <2% and you're getting somewhere.
For example this trend shows and error significance of just 6.7%....looking promising eh ?
...nope, it's a coin flip, no edge, just a random 50/50 on 1000 flips.
Trading at Random Question
- ShaunWhite
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- ShaunWhite
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That error significance is something I made up, it's the proportion the StdErr is of the total pl, ie 1-(pl-StdErr/pl). So a £2 stderr on a £500 pl would be 1-(498/500) = 0.04%
The others are just normal Excel things..
StdErr = STEYX(Values,SampleNumber)
Correlation ( R ) =ABS(CORREL(Values,SampleNumber))
R squared =R^2
I'm a loooong way from knowing much about stats though so don't quiz me too much on what that tells us.
After 1000 flips it could go anywhere. All it says is that the previous 1000 flips when that way. I had to hit F9 about 20 times to get a random test that produced what looked like a strong trend. It was just to show how easy it is to see trends where there isn't really an edge. I guess that's why Peter is always so keen to try and understand why it might be the case rather than just showing it is in the data.
Agreed on the last point. I think the challenge when starting out is learning- or even approximating - the value of variance and not seeing something that isn’t there. Confirmation bias has to be a real danger in this analysis.
- ShaunWhite
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Absolutely, the whole area is a minefield.
This 'finding the reason why' is so easy to say and so hard to demonstrate unless it's something that's physically happening at the course. The confirmation could easily be made to fit the results if you're not careful.
It's as though you need a double blind test, one looks at the results and guesses a reason. The other starts with that reason and tries to find it in the results. I might have a dim memory of hearing Peter say he's given stuff to statasticians to look at, maybe that's the type of thing he's been doing?
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When I tried this I found the answer to be b).....sorry!!
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If you trade at random (or not), you will not only lose commission, you will also lose out due to the spread ie the gap between the back and lay price. In my opinion, there is no way round this, because any edge will already have been squeezed out by Betfair's software. If I'm wrong about this, could somebody please show why in mathematical terms? Perhaps Peter will take up this challenge!
Offer your bets to the market to benefit from the spread rather than paying it.oscarweazel wrote: ↑Sun Jun 03, 2018 12:49 amIf you trade at random (or not), you will not only lose commission, you will also lose out due to the spread ie the gap between the back and lay price. In my opinion, there is no way round this, because any edge will already have been squeezed out by Betfair's software. If I'm wrong about this, could somebody please show why in mathematical terms? Perhaps Peter will take up this challenge!
You will find the distribution of gains and losses is often unequal at certain points in the market. So trading at random at these points still ends up at break even. But if you pick a weak favourite and trade off the crossovers it can be pretty effective. But that's not random but is generally a straightforward position.
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And if your bets are taken the momentum of the market will usually be against you, when it's in your favour, and drifting, your bet will be left unmatched on the shelf. There are rarely unfilled price points within racing markets to take advantage of.Euler wrote: ↑Sun Jun 03, 2018 10:23 amOffer your bets to the market to benefit from the spread rather than paying it.oscarweazel wrote: ↑Sun Jun 03, 2018 12:49 amIf you trade at random (or not), you will not only lose commission, you will also lose out due to the spread ie the gap between the back and lay price. In my opinion, there is no way round this, because any edge will already have been squeezed out by Betfair's software. If I'm wrong about this, could somebody please show why in mathematical terms? Perhaps Peter will take up this challenge!
My advice would be to stop thinking entering at random is a break even starting point , it isn't.
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Are you referring to the bookmaking function?Euler wrote: ↑Sun Jun 03, 2018 10:23 amOffer your bets to the market to benefit from the spread rather than paying it.oscarweazel wrote: ↑Sun Jun 03, 2018 12:49 amIf you trade at random (or not), you will not only lose commission, you will also lose out due to the spread ie the gap between the back and lay price. In my opinion, there is no way round this, because any edge will already have been squeezed out by Betfair's software. If I'm wrong about this, could somebody please show why in mathematical terms? Perhaps Peter will take up this challenge!
- ruthlessimon
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What's your opinion on the following advice? Cos this geezer (not me btw) rocks a totally different opinion to yourself. A synergy here could be quite powerful though. I totally get why offers are a natural edge, but it's a double edged sword; & I think this paragraph succinctly explains why (in a swing scenario).
"At this point, putting an limit back @ 2.34 would not be a good move. You'd be at the back of the queue. Also, there is no sign the backs will weaken. At the point you put the order in (say £300), you would need £1500 to be traded into your price AND then for it to not trade any more, because then it'll tick through you. That's a very specific scenario, isn't it? You aren't just saying you need it to go down, you are saying you need it to trade £1500 at the offer and then go down. You want £1500 against you and no more! You'd need crystal balls for that. Remember also, the touch prices are a bit more reliable than the other areas. Pulling will very often occur as soon as the fakers move out of the way. As money trades into those two prices, it will often become very apparent, with a fair degree of certainty (60-70%) which side is going to lose out. Now is when you execute."
I'd need more context TBH, but fast-moving markets were you 'know' direction it would make sense to jump in. But as a rule I'll always offer because it gives you the change to get out at break even. You will gain 0.5 a tick on average and if you trade a large number of races, that's worth a fortune. The average price move on a favourite is zero, so that's why it's important. You flip the risk to whoever wants to take. I'm happy that people recommend that.