Difference between "trading" and "gambling"

A place to discuss anything.
Post Reply
User avatar
Derek27
Posts: 23477
Joined: Wed Aug 30, 2017 11:44 am
Location: UK

LeTiss wrote:
Tue Oct 10, 2017 11:21 pm
I've told this story before, but 25 years ago I was a betting shop manager for Ladbrokes. I befriended a customer who was quite a big punter. He told me that he's barred from many casinos, due to his constant wins on roulette. Luckily, he wasn't banned from Tiberius in Southampton (now closed).

I met him for a few beers and we went into Tiberius.

It turns out he did have a massive edge over the house. He had mastered the sequence of numbers on the wheel, in fact he could instantly tell you how many numbers black 31 was from zero, both clockwise and ant-clockwise. He was targeting croupiers, not sequences of numbers. Croupiers are supposed to vary the spins, but they are only human, they get into routines and ruts. Apart from mixing it clockwise and ant-clockwise they just throw the ball in at the same speed. This guy would closely watch what number was in line with their hand when they threw the ball in, noted where it finished and then calculated how many numbers apart they were. Casinos offer that small window between the ball entering the wheel and the croupier saying "no more bets" - it was that window which gave him the edge, because once he saw patterns emerging he could strike. He predicted with amazing accuracy the range of 5 numbers where the ball would end up.

He did get banned from Tiberius, and he moved on, so I never knew what happened to him
I find it really hard to believe that anyone could do this. If you're bad at darts, you'll probably hit a 17 when you're aiming for a treble top, but you won't a 17 every time. I don't believe the croupier could push the ball with a velocity so similar each time, that it could be predicted to within 5 numbers.
User avatar
ShaunWhite
Posts: 9731
Joined: Sat Sep 03, 2016 3:42 am

Derek27 wrote:
Wed Oct 11, 2017 12:26 am


I find it really hard to believe that anyone could do this. If you're bad at darts, you'll probably hit a 17 when you're aiming for a treble top, but you won't a 17 every time. I don't believe the croupier could push the ball with a velocity so similar each time, that it could be predicted to within 5 numbers.
Even the right half of the wheel 60% of the time would be enough. You can bang the bets on quickly too using call bets aka 'French bets'. Two bets can cover just over half the wheel, one bet on Orphelins and one on either Voisins du Zero or Tiers du Cylindre. And if you predict it's midway then just sit it out.
User avatar
MemphisFlash
Posts: 2126
Joined: Fri May 16, 2014 10:12 pm
Location: Leicester

the house edge for roulette is 5.26% compared to approx 0.5% for blackjack using basic strategy and card counting
User avatar
LeTiss
Posts: 5386
Joined: Fri May 08, 2009 6:04 pm

Derek27 wrote:
Wed Oct 11, 2017 12:26 am
I find it really hard to believe that anyone could do this. If you're bad at darts, you'll probably hit a 17 when you're aiming for a treble top, but you won't a 17 every time. I don't believe the croupier could push the ball with a velocity so similar each time, that it could be predicted to within 5 numbers.
I never said he won every spin. Example every time the croupier threw the ball in clockwise, he may have noticed the ball consistently ending up between 8-13 numbers from where she threw the ball in, so every time she went for a clockwise spin, he would watch what numbers were in kine with ther hand and place 5 chips onto the 5 numbers that were 8-13 numbers from there. That window before they said "no more bets" allowed him to get his bets on. Don't forget, when the house is paying 35/1 for a winning number, he only needed to be right every 7 spins to wipe his face. I reckon his strike rate was somewhere between 25-33%.
THENUTS
Posts: 152
Joined: Mon Sep 10, 2012 9:05 pm

LeTiss wrote:
Wed Oct 11, 2017 7:43 am
I never said he won every spin. Example every time the croupier threw the ball in clockwise, he may have noticed the ball consistently ending up between 8-13 numbers from where she threw the ball in, so every time she went for a clockwise spin, he would watch what numbers were in kine with ther hand and place 5 chips onto the 5 numbers that were 8-13 numbers from there. That window before they said "no more bets" allowed him to get his bets on. Don't forget, when the house is paying 35/1 for a winning number, he only needed to be right every 7 spins to wipe his face. I reckon his strike rate was somewhere between 25-33%.
To get a quarter to a third of all spins right without a computerised aid is highly unlikely.

Read this https://www.amazon.co.uk/Man-All-Market ... 1400067960 and you will understand why

Ed Thorp is one of the smartest guys of all time and he needed a computer to tell him where the ball was going to land. This is a man who worked out how to beat blackjack in the 1960's when is was accepted to be impossible to do so. He then told everyone after he worked it out instead of taking millions out of the casino's. He then went on to take hundreds of millions out of the stock market. A fabulous read.
User avatar
LeTiss
Posts: 5386
Joined: Fri May 08, 2009 6:04 pm

That strike rate I quoted was obviously just a guess, as it was a long time ago. What I remember though, was that he definitely walked out considerably up, and his system was targeting the croupiers on the basis of his knowledge of the wheel, plus not all croupiers were worth targeting. It was only the ones where he noticed patterns after they had done a few spins
User avatar
Dallas
Posts: 22674
Joined: Sun Aug 09, 2015 10:57 pm
Location: Working From Home

Derek27 wrote:
Wed Oct 11, 2017 12:26 am
I don't believe the croupier could push the ball with a velocity so similar each time, that it could be predicted to within 5 numbers.
Many professional croupiers are capable of spinning a ball onto certain sections of the wheel with a high level of accuracy

Even though they are suppose to vary it as much as possible others just through repetitiveness they can subconsciously start doing this - allowing players to pick up on it even when they dont mean to, that's one of the reasons why they get rotated so frequently by the pit bosses - so no one can figure out any patterns.

There was a documentary i seen a few years ago about a guy who made a mini speed camera device which he had up his sleeve when the ball was released it measure this and the wheel speed and sent it back to his mate in a van outside with a computer were its showed the approx area it would land, he then quickly sent this info back via a relay or something in the guys shoe who then placed his bets in that area!
User avatar
Kafkaesque
Posts: 886
Joined: Fri Oct 06, 2017 10:20 am

Derek27 wrote:
Tue Oct 10, 2017 12:37 am
ruthlessimon wrote:
Mon Oct 09, 2017 10:50 pm
Derek27 wrote:
Mon Oct 09, 2017 10:02 pm
I can easily imagine a scenario where two highly successful gamblers have a completely different view of a race; one thinks the favourite has a 6/4 chance, the other thinks it's not worth backing at 5/2 and is more interested in a longer shot. One of them may be right and the other wrong in this particular race, but they could both be right for the majority of races and continue to be successful.
But in your example, if fair value is 11/8 & price touches 6/4 - gambler 1 is desperate to get his back filled. I'd imagine gambler 2 would be the one filling his back orders, considering he's unhappy backing @ 5/2. I think this is why the SP is so accurate. The bad traders are killed off.. well their banks are killed off - just like natural selection (an argument in favour of PC). Lets say in your example price currently trades @ 6/4. Gambler 1 is happy executing at this price & will get filled as much as he can. Whereas gambler 2 disagrees & thinks this is an extremely good lay price. The two battle it out & price their knowledge into the market. If trader 1 is correct with his analysis & others agree 6/4 is cheap, he will move the market back to fair value. Gambler 2 now has a huge loss, his knowledge was incorrect - & the market takes his money - & he is removed from the game.
In my example, it doesn't make any difference what fair value is. It's a question of what gambler's think a good bet is. You need to bear in mind that 'fair value' is a matter of opinion, both, before and after a race. It's not like we're rolling dice where we know what the probabilities are. The fact that the Betfair graph looks like a heart beating is proof that nobody can or will ever agree on what fair value is.

Gambler 1 won't be desperate to get his back bet filled and certainly won't get as much as he can filled. He will simply say, I want £500 on at 2.5, no more, no less. If it all gets matched, great. If it doesn't, it doesn't; I don't want 11/8 because that's poor value, or not the profit margin that I desire. I don't want £1000 on at 6/4 because even though it's good value it's disproportionate to my capital.

Gambler 2 would not be interested in laying at 2.5 because he's a gambler and not a trader! He's interested in another horse in the race, if anything.

If a gambler has £1000 on a horse at 3/1, he needs it to win 30% of the time to make a 20% profit on turnover. Whether it's one of the 30% that win or the 70% of losers, he could't care any less whether a trader takes it and trades it at 4.5. He can make an overall profit and so can the trader.

It may be the trader that lays it at 4.5 and then greens at 4.2 that loses. Then again, it could be a gambler who backed it at 4.5 and the horse wins, in which case it would be the layers who laid it at 4.0 and let the bet run that lost, but not the ones that laid it at 4 and traded at 4.5!

Traders win and lose in individual markets but gamblers do not, because the aim is to achieve a percentage of winners.
As far as I know, there's been several studies showing that the Pinnacle closing prices are extremely close to a fair price, so I'd say, you're off on that one. Call it wisdom of the crowd (with sharpies being a more significant part of said crowd) or whatever, but there does seem to be a fair price. Otherwise Pinnacle's business model wouldn't work imo.
User avatar
Derek27
Posts: 23477
Joined: Wed Aug 30, 2017 11:44 am
Location: UK

I suppose there may be something in it, but I'm still sceptical.

When I watched roulette on the bookies site, admittedly I was more focused on the girl spinning the wheel than the wheel itself, but I noticed there are a few studs that the ball has to hit before it drops, which causes it to move in a random direction like a pinball. I'm sure these studs would interrupt the smoothness of the calculation.
User avatar
ruthlessimon
Posts: 2094
Joined: Wed Mar 23, 2016 3:54 pm

(tangent incoming) I define fair value as simply the price which facilitates the most trade. Markets are complex & as new information gets priced in, fair value shifts around. But I'm sure there's almost a 100% correlation between fair value & highest volume. All of my trades revolve around this price point 1 way or another
User avatar
Derek27
Posts: 23477
Joined: Wed Aug 30, 2017 11:44 am
Location: UK

Kafkaesque wrote:
Wed Oct 11, 2017 2:19 pm
As far as I know, there's been several studies showing that the Pinnacle closing prices are extremely close to a fair price, so I'd say, you're off on that one. Call it wisdom of the crowd (with sharpies being a more significant part of said crowd) or whatever, but there does seem to be a fair price. Otherwise Pinnacle's business model wouldn't work imo.
Kafkaesque, I think you may be confusing fair price as in close to 100% overround and fair price as in true chance of winning. In any case, I never said there wasn't a fair price, I said it's not relevant to where a gambler enters the market: if he wants to bet at 2.5 he will bet at 2.5 regardless of what a fair price is.

It's mathematically not possible to calculate the true chance of a horse. You can prove that on average for a collection of runners that they are fair prices, but if the overround is close to 100%, you know this anyway.
ruthlessimon wrote:
Wed Oct 11, 2017 2:30 pm
(tangent incoming) I define fair value as simply the price which facilitates the most trade. Markets are complex & as new information gets priced in, fair value shifts around. But I'm sure there's almost a 100% correlation between fair value & highest volume. All of my trades revolve around this price point 1 way or another
I was referring to fair value as the horses true chance of winning, so there may have been a slight misunderstanding.
User avatar
Euler
Posts: 24701
Joined: Wed Nov 10, 2010 1:39 pm
Location: Bet Angel HQ

I can prove the market is efficient and inefficient at the same time, it just depends on how you look at it and how you measure it or what you want to prove. Racing is full of biases most of them psychological, I suggest.

Essentially, traders sell volatility and that's where your edge should be. While punters are trying to work what the price is traders don't particularly care, generally, as long as somebody else takes their positions.
User avatar
ruthlessimon
Posts: 2094
Joined: Wed Mar 23, 2016 3:54 pm

I was thinking about that the other day, as more traders enter the game (get wise & profitable). That 'should' mean volatility decreases year on year, as the markets become more efficient. But it just doesn't seem to be happening. Although this would be an ultra slow process - something like climate change probably would be a good analogy
User avatar
Dallas
Posts: 22674
Joined: Sun Aug 09, 2015 10:57 pm
Location: Working From Home

ruthlessimon wrote:
Wed Oct 11, 2017 3:04 pm
I was thinking about that the other day, as more traders enter the game (get wise & profitable). That 'should' mean volatility decreases year on year, as the markets become more efficient. But it just doesn't seem to be happening. Although this would be an ultra slow process - something like climate change probably would be a good analogy
Its the steady stream of new ppl entering the market replacing those that have given up (traders and punters) that keeps the volatility and opportunities there
User avatar
Derek27
Posts: 23477
Joined: Wed Aug 30, 2017 11:44 am
Location: UK

ruthlessimon wrote:
Wed Oct 11, 2017 3:04 pm
I was thinking about that the other day, as more traders enter the game (get wise & profitable). That 'should' mean volatility decreases year on year, as the markets become more efficient. But it just doesn't seem to be happening. Although this would be an ultra slow process - something like climate change probably would be a good analogy
As more traders get wise and more profitable, is it possible that they get hit by a 40-60% premium charge, decide to find another way of making money, and then get replace by new traders who don't know what their doing ? ;)
Post Reply

Return to “General discussion”