2008-04-12

Details of tennis hedging strategy

Hello,

today I want to go into detail on tennis hedging strategy.

1. What is the tennis hedging strategy?

This strategy tries to make a profit on tennis matches inplay. You lay a player at certain odds and back him at higher odds to hedge the profit on each player.

You might say "That's nothing new for me!" and you are right. Inplay trading means lay low, back high. The question is how to identify matches or situations inplay where you have a high probability of odds movement in our favour.

I try to find matches where I lay the favourite pre match and back him inplay at higher odds.

2. What is the goal if this strategy?

Very simple: Making profit! You have to define how much profit you would like to achieve with this strategy. I try to make 20% ROI on every match with this strategy, that means I need a strike rate of 80% to break even and I need more to make profit.

3. How to select matches for this strategy?

You should not select every match. Generally matches in early stages should be avoided, because favourites smash their opponents very often.

In women's tennis matches you have a strike rate around 83% when having an aim of 20% ROI on every match if you select every scheduled match.

In men's tennis matches you have a strike rate around 75% when having an aim of 20% ROI on every match if you select every scheduled match.

4. How to improve this strategy?

I would suggest to apply a stop loss. Will give you an example:

max liability: 100€ -> target profit: 20€

favourite's odds pre match: 1,4

required backer's stake: 250€

pre match stats:

favourite -100€

underdog +250€

I need to back the favourite 230€@1,52 to gain around 20% ROI.

What if the favourite smashes the underdog?

I would use a stop loss at 1,05:

Back favourite 333,33€1,05, so inplay stats:

favourite -83,33€

underdog -83,33€

We "only" lose 83,33% of our liability. Let us combine the stop loss with the strike rate in women's and men's tennis matches:

women's matches:

100 matches with stop loss:

-we win on 83 matches around 20€ => +1660€

-we lose on 17 matches around 83,33€ => -1411€

total profit with stop loss: +249€

100 matches without stop loss:

-we win on 83 matches around 20€ => +1660€

-we lose on 17 matches 100 => -1700€

total loss without stop loss: -40€

men's matches:

100 matches with stop loss:

-we win on 75 matches around 20€ => +1500€

-we lose on 25 matches around 83,33€ => -2083,25€

total loss with stop loss: -583,25€

100 matches without stop loss:

-we win on 75 matches around 20€ => +1500€

-we lose on 25 matches 100 => -2500€

total loss without stop loss: -1000€

Using this strategy without any selection criteria we make a small win on women's matches:

total ROI: staked: 10000€ returned 10249€ -> ROI: 2,49%

In men's tennis matches we produce a big loss.

First conclusion: Use a pre defined stop loss!

Without knowledge of players it is not possible to make a decent profit with this strategy. So I think we need to identify matches where the odds are low but where the underdog does not lose 6-1, 6-1 or anything else.

There are many web sites where we can find free statistics and historical results of every player. Take advantage of this.

http://tennis.matchstat.com/

http://www.tennisinsight.com/

I think it is possible to achieve a strike rate above 90% when being very selective with the matches we apply this strategy on. Imagine a strike rate of 90% of all matches, women's and men's matches:

max liability: 100€ -> target on every match: 20€

90 wins -> +1800€

10 losses (apply stop loss) -> -833,30€

total profit in 100 matches: 966,70€

total ROI: staked: 10000€ returned 10966,70€ -> ROI: +9,67%

This strategy is not a quick rich scheme, but if you select your matches carefully it is possible to make steady profits.

5. Conclusion:

  • Select you matches carefully
  • Apply a stop loss
  • Track your results to improve your selections

In less than 15 minutes it is possible to identify matches to trade on with this strategy so it might be a good hourly rate.

It would be great to get some feedback and thoughts from you about this strategy via comments or email.

All the best, Loocie

3 comments:

Alistair said...

Hi Loocie

Very interesting reading as ever. However, the Tennis Hedging Strategy your are describing here is not what my strategy is about, or it is but only in part.

You will find a more detailed explanation of my original proposal in the post Tennis Hedging Strategy - Revisited.

The most important point in your post though is the need of careful selection, particularly early on where strong favourites generally thump their opponents. I'd also suggest that matches that appear close prior to the match starting also be avoided. The tick movement required to make one's target profit is much great than say laying a short priced favourite. One might as well toss a coin.

You rightly suggest that careful study of the stats is essential before selecting which game to get involved in. However, the whole thrust of Peter Webbs article was to suggest that a high hit rate, and by implication a profit, is possible by blind selection. The salient point here is NOT to be greedy.

My Tennis Hedging Strategy as described in my blog is an attempt to capitalise on that whilst spreading the risk across a number of matches.

I'd make one final point. The Tennis Hedging Strategy as I first put forward is NOT about trading. It's an accumulator type bet that makes use of trading/hedging techniques to guarantee (as much as possible) a winner. In the case of a 20% target, it's an accumulator made up of 1.20 shots.

Thanks again for taking the time to at all your stats with the strategy in mind. I hope that you and your readers will be able to profit from it.

Alistair

Loocie said...

Hi Alistair,

thank you for your comment. You are right, Your approach is different to mine.
I have read your post Tennis Hedging Strategy - Revisited. I am really interested to see how profitable this could be.

Good luck, Loocie

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Always yours,
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