How would you use this knowledge?

Trading is often about how to take the appropriate risk without exposing yourself to very human flaws.
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workpeter
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Joined: Sat Jul 30, 2016 8:29 pm

Hypothetical question.

If you could predict price movement 1 tick at a time with an accuracy of 95%, how would that information benefit you in trading?

In case i am using the terminology wrong, i refer to 1 tick as breaking even. I.E. back at 4.7 then the price moves down 1 tick so lay price is also at 4.7.
At this point, you can again predict the direction at 95% accuracy however you could predict it to go UP as well as down.
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SeaHorseRacing
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I dont really understand the answer you want. Ofcourse it would benefit you massivelly.
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workpeter
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SeaHorseRacing wrote:I dont really understand the answer you want. Ofcourse it would benefit you massivelly.
could you explain why you think that?
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workpeter
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Joined: Sat Jul 30, 2016 8:29 pm

Ok, I found my answer. Sometimes i need to ask the question before my brain wakes up.

It would benefit you because the first prediction breaks you even and the second prediction helps you decide to exit with no loss or stick for a profit.

cheers
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ShaunWhite
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Joined: Sat Sep 03, 2016 3:42 am

I see you've already sussed it's an advantage but it made me think for a minute...

Even if you only stopped when you lost.. (i've started at current price rather than predicting my offer price will be taken)

Step 1 = 5% = -2 ticks
Step 2 = 4.75% (95% * 5%) = -1 tick
Step 3 = 4.51% (95% * 95% * 5%) = 0 ticks

That means you'l have an average of 1 tick loss 15ish% of the time and least 1 tick profit 85ish% of the time. A loss occurs on step n (95%^n * 5%) of the time and yields n-3 ticks profit.

An interesting question (which I can't work out at this time of night) is what the average win size would be in your scenario for any given level of prediction accuracy? I'm sure it's bread and butter to the mathsy ones here. oh errr hang on, my maths is wrong :oops: ...your 95% pick isn't always in the desired direction is it?

Maybe it's of no advantage ! if you're predicting a price will just fluctuate up and down.

It's a more interesting question than first meets the eye.
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Crazyskier
Posts: 1157
Joined: Sat Feb 06, 2016 6:36 pm

workpeter wrote:Hypothetical question.

If you could predict price movement 1 tick at a time with an accuracy of 95%, how would that information benefit you in trading?

In case i am using the terminology wrong, i refer to 1 tick as breaking even. I.E. back at 4.7 then the price moves down 1 tick so lay price is also at 4.7.
At this point, you can again predict the direction at 95% accuracy however you could predict it to go UP as well as down.
The key here would be to get matched at REVERSE prices before you enter the opposing bet into the market. Much of my penny-pinching success is based upon automation matching small stakes that are immediately submitted at the reverse price. I attain around 92% accuracy per event, not per trade. That is to say the gains (greens) outweigh the losing trades (no stop loss, I just wait until 120 seconds before event start time then hedge if unmatched).

See below for a typical no-loss events day (Ignore the £8 win - that was manual trading rather than auto).

So the benefit as you ask, is that having been matched at the reverse price, you can then confidently expect the opposing 1-tick profit stake (use smart bets) to be matched too.

I have strategies based upon 2p, 4p, 6p, 8p, and 10p per trade using liabilities of no more than £4. Below is yesterday's results which was set at 6p per trade executed.

NOTE that this sort of trading often requires long periods before bets are matched and therefore be very careful with fill or kills as when betting many markets at the same time, you can trip over the 1000 transactions per hour that will incur betfair charges.
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