The Betfair Trader / Editor / 18 October 2007 /

The Betfair Trader incurs a huge loss on the 7th ODI as India beat Australia; this is how it happened

Biggest trading loss

Yesterday's Result: £2910.43

Ouch. That wasn't in the script. And it hurt. Sure it may not be my biggest single market loss on Betfair ever. But it's certainly the biggest since I started the blog. And is also way over my max loss limit per event.

I've tried to justify this loss to myself. Truth is though I can't. Sure there are reasons for it but I can't consider them excuses. So the bottom line is I fucked up. All a bit obscene really - losing more in a day more than some friends make in a month. Sure, those same friends, intrigued by what I do, point out that the loss isn't even half this month's profit. Well yes. That's true. But it isn't really the point. I shouldn't be losing this much on a single event. Plain and simple.

So what went wrong? How did the loss get that big - nearly double the max loss size I've been operating to recently? Well I guess the short answer is lots! But there were a few key areas I'm going to mention. Out of interest I made the loss on the 7th India v Australia ODI Match Odds market.

Firstly I just got large areas of the match wrong and ended up with an all red book very early that simply seemed to increase each time I got involved further. No worries with that. It happens. And I'm perfectly happy to trade away as long as I stay within my limits. Which is what I did. Crunch time came just before the Russia v England football match. At the time I was a four figure green Australia, a much larger 4 figure red India and the price was mid 1.6x. Crucial. Because 1.72 was my cut off point. At that stage I was going to cut for an equal red book and leave the game.

A couple of quick wickets fell though. On the fall of the 6th the Aussie price plunged into sub 1.1 territory and I suddenly found myself being able to go all green! Talk about a totally undeserved miracle escape. Unbelievable stuff. Unfortunately so was my behaviour. I didn't green out. I thought the game was Australia's, kept my position, let a friend in for the football and fixed some drinks.

On returning the price had drifted a little but nothing too bad. However, I still didn't get out. And remained in as the price continued to drift having decided what I was willing to lose. (Yes, I know.) Basically I needed a wicket. It didn't come and I ended up cutting for an all round red book above my max loss limit. I knew where I wanted to bail but simply couldn't get everthing matched. The market was getting increasingly volatile and I ended up chasing the price trying to bail. Ugly stuff. And expensive. As is often the case in these circumstances the wicket I so badly needed came the next over. But by then I was equal red and it was too late.

From there I just watched the game and decided to try and save a little when a winner had emerged. Wrong again. I should have just left it. I ended up adding around £350 to the red right at the end. Looking at my book, and the price, I decided on an escape bid. India needed around 12 runs, had two wickets in hand and were around 1.2x. I layed. India scored runs. And, lol, I backed it back. More red. :-(

The other thing I should mention is running concurrently to all this were some value bets along the lines I mentioned in the previous blog entry. These lost. And that additional money is what took the final red figure to what it is. Though even those bets got messy. I ended up cutting them too. Things got confusing. I was mixing up outright value bets and trades. It really wasn't a pretty site. Thankfully the one glass half full moment in the whole sorry episode is I managed to the temptation raised by a friend to use my account balance to "buy" my way out of the situation and back Australia in the 1.4x range shortly after the 7th wicket fell.

So there you have it. A max loss that went over the limit with volatility and me chasing prices to bail. An unsuccessful escape bid at the end and a few losing bets that I considered value. Tot that lot up and it comes to a loss of just over £2.9k. A horror story all of my own making!

Where now then? Well, I traded a little on today's Pakistan v South Africa ODI today and made a small profit. I've decided to keep those figures separate from this post though simply because of the scale of the loss. But it does show it's trading as usual as it were. And I will be posting on that later.

Aside from that I have decided to stop this outright value betting experiment for the time being though. I over staked on it and it got confusing having it sat on my trading book as well. I'm still convinced it will be a beneficial addition to my activities long term but for the time being I'm going to switch to paper trialling it for a while with some variable spreadsheet betting stakes to see exactly what the variance can be like. I'm sure some clever mathematics along the lines of standard deviations could also help me out. One successful fellow punter I speak to on MSN recently had a 27 value bet losing run - and not all of them at long odds. I don't like the idea of that. It's a very long term approach. I've always been more comfortable with the more consistent approach trading enables. And, of course, it doesn't require you to always be right about the value aspect of it all.

Right, public flagellation over. Loss booked. Attention fixed firmly on the future. I've withdrawn some money from my Betfair account and put a new money management system - more of which later - in place. This has been a set back. A bad one. But not catastrophic. Here's hoping the future is a green one. :-)

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