Thursday, June 30, 2011

Tsonga Comeback

What an amazing match yesterday, an incredible comeback from Tsonga which very few people would have predicted - he was playing against possibly the best player ever and Federer has never lost in a Grand Slam after being 2 sets up.

The beauty of trading on Betfair is that you can trade in play so as the match unfolds the odds change so as you can imagine the odds on Federer had shortened from around 1.15 before the match to 1.01 when he was 2 sets to love in the lead. This meant that if you backed Federer with a stake £100 at 1.01 that if he went onto win you would win £1. No sense in that I hear you say, well you'd be amazed at the number of people that will be backing at this price as they see it almost as free money as surely there was no way Federer would lose from 2 - 0 up!

The other great thing about Betfair is you can act as the bookmaker so in effect betting against things happening so if you Layed Federer at this stage with the same stake of £100, you would only actually be risking £1 of your money if Federer went onto win but you would win £100 if Tsonga won.

However, the beauty of trading is that you are not actually betting on the outcome of the event as such, just the movement of the odds. Now in this scenario, the odds could only go one tick lower if Federer won so you would lose £1 if that happened but what would happen if Tsonga made a fight of it and won the third set, well this happened yesterday and you would then have been able to back Federer at 1.06 and green up for a guaranteed profit of £4.80, big deal I hear you say, yes but remember, the maximum you could win by backing at 1.01 was £1 so this is 4.8 times more and this is guaranteed regardless of who goes onto win.

Consider then what happened when Tsonga won the 4th set to tie the score at 2 - 2, by now Federer's price was trading at 1.5 so you could have greened up for a guaranteed profit of £32.70 regardless of who went onto win.

So you can see that most traders that Layed Federer @ 1.01 probably didn't actually think that he would lose and most wouldn't have made 100 times their stake but every one of them would have made a profit and this %profit would have been much larger than any of the backers @1.01 would have made had Federer won.

The key to successful tennis trading is putting yourself in situations where the upside is much larger than your downside and not being too greedy with profits. Yesterday's situation certainly met that criteria.

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