Trading rule #1 - Secrecy

Your system is your income and should therefore be a secret otherwise you will not gain the full value of your work. So why do so many people want to talk about their systems?

How many fools do you see on websites discussing a great system they have just discovered? Too many! If a system is worth anything then you keep it to yourself and maximise your profit.

Even the professionals are sometimes guilty of it. Nick Mordin, author of Mordin on Time, used to broadcast little anomalies he had discovered in horse race betting. Blabbed in a newspaper or in one of his books, the systems no longer work. Nick knows that he could have been a much wealthier person had he kept his mouth shut or left his pen in his pocket.

More often that not, people in forums discussing systems are beginners who have seen something that is too good to be true and want to validate their lack of knowledge on a forum. Those systems usually are too good to be true and are strewn with loss making errors. Assuming your knowledge improves then the last thing you want to do is discuss your work with others.

I guess that for some males of the species, bragging about a success when their life has been one of anything but success is a way of feeling better about themselves. It is a truth that many successful gamblers are abject failures in all other aspects of life and so the need to tell everyone that you have succeeded at something is great. That desire should always be repressed.

The only time you would want to broadcast a system is when it is a bad system. That is why the web is full of charlatans trying to sell you systems. Amazon is full of betting system books that are not worth the paper they are printed on. The only way you can make any money from a bad system is to sell it to someone gullible.

If you do have a winning system that has been properly back tested and tested again on future events but you don't have the money to invest in it yourself then, and only then, would you want to discuss it with potential backers. But do not tell them your trading rules, you must only tell them of the potential returns. In effect you are no different to acting as a money manager for a hedge fund.

There are a few investors on LinkedIn who will invest in your system or take you on as a proprietary sports trader but be wary of being ripped off. You will need to do your own research into who you are dealing with. I have changed my LinkedIn entry to stop the weekly emails from people wanting to invest in me but I do recommend the site for advertising your skills.

In conclusion. Sports betting is an arms race. You need good tools and good strategies to make a profit. And as in the millitary, you need to protect your assets with the utmost secrecy.

5 comments:

  1. I agree.

    But... Do you think that have some strategies that could be benefit from "not secrecy"?

    Example:
    - A trader who back @2 to lay @1.8 in Under/2.5 at soccer... if more people do that the odd can move faster (It is just an example)

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    1. You are supposing that someone knows the true price.

      What if inside traders got together to create a strategy that pretended to back at 2.00 knowing that inside information suggests the price should be 3.00?

      All the naive traders would then be matched at 2.0 only to see the price drift out, which was the original intention of the insider traders.

      Not all trading is based on true knowledge. Spoofing is common in all trading. The idea is to take each others' money in any way you can.

      Creating false signals is all part of the game. Betfair does it all the time with its bots, in pre-market trading, taking naive traders for a walk and cleaning them out in the process.

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  2. So if a strategy go to the public maybe there are some possible reasons:

    1) Is a losing strategy;
    2) Is a winning strategy and the author is giving away his edge;
    3) Is a strategy to delude more people to put money and create value for another trader get the value on reverse side.

    ?

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    1. Sounds reasonable to me.

      1) There are many companies and people selling systems because that is the only way to profit from them.

      2) Nick Mordin is a fine example of a system builder who published his systems and saw them lose value as people used his systems to remove inefficiencies from the market.

      3) High-Frequency traders often use market spoofing, front-running and many other strategies to either gain an edge in the market or to send the market in a direction where stealth trades can pick up profits.

      Whatever you can imagine is possible. Too many people think that making money from horse racing is only about picking winners.

      Nobody can pick winners 100% of the time so you are immediately trying to lose less money than you win. To do that you don't need to know anything about horses. All you need is a good imagination, plenty of logic and the ability to code. Away you go!

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    2. Thank you.

      The last paragraph was inspiring. Finally seems that I will use my ability to code and curiosity for something worthy :).

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