Tuesday, October 22, 2013

Question from a reader

"Hi Sammy! I'm from hungary and can't speak english very well, but I hope you will understand me. :) I am trading betfair for 5 years. Greyhound and horse racing: scalping.

I began trade tennis for 2 months. I think, I know, where there are my entry points.
double break, if the price nearly set price.
My stop loss: set price
But I can't decided, where is my green?
Break back liability off, duble break back hedge?
Or be happy that I got such a good price and let the end of the game?

Can you give me some instructions?

Best Regards, Tamas Keller"

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Hi Tamas! Your english good...I hope you will understand me now though =)

The easy answer to your question is the boring but still so true: It depends...

Every match and market is different so there is not a guide how to trade a double break or trade any given scenario in a tennis match. It always depends on the market and how you think it will react.

Ok, so im going to make an example here before it gets really boring. Tomorrow we have a match between Feliciano Lopez - Julien Benneteau. Odds are att 1.95 - 2.04 just now when I write this. But to simplify we say an even match, 2.00 - 2.00 for both players.

So this gives us that the market estimates each player chances to with the match to 50% and therefor 50% to win a set. So theoretical setprice for each player is 1.33 if they win first set. But if you have traded tennis for sometime you would probably have noticed by now that a match with 2.00 starting price seldom end up @1.33 after first set. Its usually more like 1.27ish  or even lower depending how the first set ende (double break, tiebreaker etc). More than often lower than higher than the theoretical price. Probably due to momentum and market pressure and so on.

Lets say Feliciano Lopez takes a *4-1 lead with a double break. and market is really favoring Lopez. and 1.30 is trading. Now you might think, Hey! That is lower than the theoretical price, and we should lay Lopez! Very good observation! Yes its true and in a vacuum if you thought the market had a correct starting price for the match it's a easy lay of Lopez......... Unfortunately it's not this easy. We always have to consider the market and what we think will happen if X or Y or Z happens.

This could turn into a very long post but i'll continue the example and hopefully you will get my point. We lay lopez 1.30 and our intentions is to trade out at set price or if benneteau levels the set.

So how will we know if this is a good trade or not? Ok so current price is 1.30 and if match gets back to even odds will be 2.00. So we have to estimate what the set price will be if Lopez wins first set.

Set price: 1.18 | Current price: 1.30 | Match leveled: 2.00 ->  1.28 = 77%

Set price: 1.22 | Current price: 1.30 | Match leveled: 2.00 ->  1.19 = 84%

Set price: 1.27 | Current price: 1.30 | Match leveled: 2.00 ->  1.07 = 94%

As we can see its pretty big difference between these three examples. And its up to you and estimate both the likelyhood for Lopez to win the set compared to what the target price will be for set and when the match is leveled.

So to wrap this up...

I hope my little explenation made some sense and this is why I started off with the boring "it depends". But it really does as I have pointed out. Laying double break is usually a good trade but not always and when to take "green" also depends on what kind of odds you get in a certain situation against the probability on a given scenario.

Stay Sharp! /Sammy

4 comments:

  1. Hi Sammy and Tamas - just my 5 cents here:

    Sammy is, of course, 100% right. But a simple rule, that got me pretty far in the beginning, was that i sort of kept a 1 to 3 winning ratio. This meaning that when i entered I estimated how many ticks my loss exit would be, and if it was 10, I was looking for 30 ticks etc. This is VERY loose, and you need to figure your own win/loss ratio out, but as a rule of thumb, it worked for me.
    Good luck
    T

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