Interview With A Tennis Trader


today I will publish an interview I had with a tennis trader:

Hi PR, thanks for taking the time to have this interview. Tell us please a little about yourself.

I am early 30’s and live in the Asia region but was raised in the US and have started various businesses on my own. My current full-time "job" is my own company that is based in the Asia region and that is my first priority with some new businesses on the way. This fund I started is dedicated to trading on Betfair as I believe Betfair trading deserves a serious look, so I have committed the funds (and have some prelim investors) to do a test run where I test different approaches and also the depth of the liquidity on a daily basis. Academic background wise, I have degrees from U Chicago and an from MIT where I did extensive Excel and similar programs doing statistical analysis, financial modelling, and data mining.

What was your first experience with betting or trading? How did you become a trader?

I was with friends watching a soccer match and in an attempt to impress the girl I was with, I laid a ~$200 US bet on a team (which subsequently lost). It probably was a great hint that I should have stopped outright betting at that moment.

Did you had a mentor when starting trading on sport events?

I did not, but I have contemplated being a full-time trader for investment banks, so I have friends who run their own trading firms or have their own trading desks in investment banks. From there, I was able to get a bit more info on the trading life and the mechanisms behind a profitable trading operation.

How much time do you spend each day on Betfair?

Too much time. I think right now if there are events running, about 6-7 hours. My entrepreneurial life allows me to basically focus on Betfair full time. But I think an important aspect that is often overlooked is to have the stamina and attention span to give it your all for the full trading session when you are seated. You don’t want to just miss opportunities because you are unfocused. At the same time, too long into a trading session and you (well, me actually) will get sloppy.

Which sports do you trade on?

Primarily tennis, but running some tests on footy as well as one of the xcard games.

Do you use any trading software?

I use Bet Angel. I think it’s a good product, but I will probably switch after I am done with this current subscription because there are some limitations to it that annoys me and for tennis trading, the functions needed are simple so there’s no point paying for the excess features I don’t use. There are a lot of formulas and functions that are based off excel I use, so it would be best to find a way to integrate it into my future program of choice. I imagine I will probably hire a person to integrate the excel code into a Betfair API for our use.

Would you describe yourself as a sports trader or punter?

I started as a punter because I didn't realize that the idea of "trading" existed. Even though I sometimes saw the opportunities to move positions off in-play, the vig on the bets were so large that it was not worth it. I also happen to have friends that work in the bookmaking industry where they set odds and they had mentioned that many bookmakers sell their risk to others and adjust odds to hedge risks. I thought it would be a good idea to start a site where you traded risks amongst bookmakers thinking it was an unknown business, but then I took a closer look at Betfair and realized that’s what they ultimately did (I imagine some of the market makers in Betfair are probably themselves and other bookmakers). Making the transition to trading was easy as I use to bet 200-300K USD per week , so the swings of going up and down 10-30K US a week was very normal. Now, with per bet maximum risks at about 250 USD – 300USD (as I am still perfecting the trading model), the biggest down is relatively negligible in my mind.

What is the most costly lesson you made during trading sports?

Too many. I was up $20,000 US from outright betting after basically having a perfect day. Thinking I was invincible, I didn’t do any research the next day and basically brought that figure right back to 0. I think the name of the game is always discipline in money management. You need to always hold your money with a clenched-fist so that you don’t drip profits by being sloppy. Beyond that there have been more than a million occasions – it seems – where I held onto a bet too long while trading.

Do you remember your best trade you ever had?

Not really, because it’s a repetitive move. You buy low, sell high, and the idea is that you do it well enough so that it’s about the same result all the time and that it should keep happening. If there are memorable trades I don’t know if it’s good. Because it usually means something unexpected happened in the result where the trade came your way when it shouldn’t have, or you were trading an obscene amount for the risk (not as planned).

Are you reading other blogs about sports trading? Do you have a favourite blog?

I read most of the blogs linked through your website and the others. I really like Juicestorm and F1 Flutterfly (sp?) because they really take a more professional approach to it and have made it a science. I am of the opinion that Betfair will see a bigger influx of “professionals” who will treat Betfair –rightfully so – as a typical marketplace and start running models on the stats and trends and bring more quantitative science to this market.

Do you only trade in play or do you also make straight bets?

I trade in-play more, I think the swings are faster and there are more opportunities. This as oppose to staring at candlesticks and trying to pick up a few ticks pre-match. However, this is not to disapprove of those who do that. I think some have great capacity to do that, and they have clearly demonstrated it through their blog posts. For me, I don’t have the patience to grind out mini-ticks as that was one of the reasons why I didn’t even bother with working at a normal trading desk where stocks still moved too slow. I might sometimes take a trade pre-match thinking the odds will rocket down, but more often than not I am wrong.

Can you tell us something about your risk management?

I am still learning it. But basically there’s never a bet beyond 2% of my bank (which is currently around $20,000 USD), basically I always keep in mind the maximum exposure at any time and make sure it’s under 2% if it’s in correlated bets (2-0 set betting and set winner are correlated bets). But the problem is that different bets have different probabilities of winning and losing part-to-all of the amount. So there has to be further adjustment. For example: Laying 1.9 with $1000 US does not have the same risk as laying 1.03 with the same amount. In the first case, a 10 tick slide is acceptable, about 10%, in the second one you lose 1/3 in just one tick down.

What are the rules you follow to get into a trade? Is it weight of money, following a trend, trading within an odds range etc?

I look for value, but it’s usually based on odds that deviate largely from their original starting position. You need to have faith in that bookmakers know their odds well, so even though a match may start with the underdog wining the first set, probability says that the outcome is likely to gravitate back to normal (or at least try to – where you would still capture profit). Of course, it’s a bit more than that, but that would be a summation of the basic strategy (a common one). You can’t apply central limit theorem to an individual player as he is a player, and not a number, but when you consider the consistency of bookmakers to find the odds where the value is 50/50, then you can apply CLT to the probability of the performance running as planned (by the bookmakers).

How do you handle losses?

Poorly. But I think I am getting better at it. The idea is to keep the amount small enough where it doesn’t impact your ability to make decisions. This is critical in trading, as when you lose your “feel”, it affects your ability to function and decide as your normally would.

Do you have any contact to other traders via email, msn or something else?


It seems that you are trading with large amounts on Betfair, so I assume you are affected. What do you think about the new premium charges of Betfair? Have you thought about moving to other betting exchanges like Betdaq or WBX?

I think the premium charges are stupid. It is, as others have already said, Betfair bullying their customers since they have a virtual monopoly. I think it would be great if the big traders and market makers actually talked to each other and then made a concerted move to Betdaq or another exchange – I actually didn’t even know of WBX. The problem now is that to move to those exchanges is suicide because the liquidity is well short so it causes problems in trading with the gaps between bet and lay.

There is no intelligent way Betfair can justify the increase. They can argue you take money from the market, but that happens anytime someone bets (one person has to win, and one has to lose. In that sense, the suggestion that traders taking away money (and thereby discouraging punters from staying) is false because we traders help generate large purchasing in the markets. The only way Betfair really loses on this model was if Betfair itself was the market maker on both sides, and hence takes a loss once we arbitrage our position out. Anyway, long story short. If this was in a business where the customers were bankers and ivy league/Oxbridge types rather than “gamblers”, there business image would have been permanently tarnished and numerous complaints headed straight to the government for monopolistic practices.

In just one sentence: What do you think is the secret of successful trading on Betfair?

Solid strategy with discipline.

Thank you very much for taking the time and answering all the questions.

Cheers, Loocie


Anthony said...

An interesting read. Thanks.

Brian McGregor said...

Great interview. Very useful for all of us.

Bet Angel Basic