Good question; and not one I really know the answer to at this stage. To be honest it may die on its arse after a few posts but let's see how it goes.
A bit about me. I have a background in derivatives trading and swapped life in the City for life on the betting exchanges a few years ago. No matter what anyone tells you trading principles apply equally across all risk markets whether you are looking at the LIFFE or the match odds market of a game of cricket.
Fear and greed drive all markets. Humans are subject to a number of cognitive biases and heuristics (mental shortcuts) that make trading risk markets an alien concept. It is as a result of these shortcomings that rational, emotion-free traders that take a quantitative approach gain an edge. That is not to say that the quantitative approach is the only way to make money, the legendary Warren Buffet demonstrates as much, but for those of us below the genius IQ level the qualitative approach is very difficult to master.
There are of course differences between the sports and financial markets, the most significant being the interrelationship between prices in sports markets. In these markets, on the betting exchanges at least, the prices will almost invariably result in a near 100% book. This means that if the odds of one selection shorten the odds of one or more of the other selections must drift to maintain the 100% book.
My approach to trading is generally contrarian or "going against the crowd" usually in-play. By doing this at the right times it is possible to take advantage of overreactions (the "fear" and the "greed") in the markets.
I will talk more about each of these subjects in future posts.
No comments:
Post a Comment