by PeteB » Mon May 19, 2008 10:26 am
The first thing is - you need an edge. You should be able to explain to someone in a couple of minutes what your edge is, and have some test results to show that it really does exist. If you can't do this, you don't have an edge, and will lose money, either slowly or quickly. You don't need much of an edge - the house edge on a roulette wheel is pretty small, but you can make a mint off it if you can take lots of bets and spin the wheel a lot.
The house edge in roulette about the same as the back-lay spread on betfair - would you rather be the house, and make the spread and make money slowly, or be the punters and pay the spread and lose money slowly?
(Of course, if your system has a good enough edge elsewhere (like you can predict outcomes better than the bookies or other betfair users), you could justify paying the spread to get your bets matched quickly - but you have to be aware that this reduces your edge)
I don't use the automated tick offset and stop loss, as I think you want more control than that. But there's some reasonably simple maths.
If you have the same number of ticks for tick offset and stop loss, then you need to be confident that your tick offset will be matched before your stop loss in more than half your trades, otherwise you have no edge. Similarly, if you use say 1 ticks offset, and 5 ticks stop loss, you must be confident that your stop loss will be hit fewer than 1 trade in 5, or you have no edge.
So it's much more about how good you are at picking the right moment to start a trade as required by your settings, rather than the settings themselves.
A few tips though. Firstly, patience is a virtue. Trading is often about waiting and waiting and waiting for the right opportunity. Sometimes this is easier if you pick a direction first - i.e. I am going to lay first - now I'm going to wait and wait and wait for the moment when the market looks most likely to go up. Secondly, don't chase - if you miss with your first lay and the market goes shooting up, congratulate yourself for spotting it, but accept that you missed and wait for the next one. If you chase, you will most likely finally get in at the top, just as it turns round and comes down again, taking out your stop loss if you have one.
(betfair commission should only evaporate profits if you are not greening up - if you are always fully green, then it is just like a small tax on profit)
