Beware of Price Erosion!
The world of betting and trading is ever-changing: as such it’s crucial if you are to keep your edge in this game to constantly monitor average prices returned from your chosen method or strategy.
This is to ensure you are not suffering from gradual diminishing returns over time. These can creep up on some without them even knowing, where price erosion can be mistaken for general poor form or drawdown.
This is commonplace, with widely advertised high-profile services or strategies that may have become hugely popular, especially around betting and trading forums.
As soon as others cotton on to the idea, prices can and usually do decay over time, as all ‘value’ has been eroded. The famous lay the draw method is a case in point.
In the good old days when the Lay the Draw method first appeared on the scene, traders would see a nice lift upwards to back the draw price once a goal was scored. In many cases it doubled in price, especially in games where the short-priced favourite scores first.
These days, however, you’re lucky to get 2 points higher on the back price after the favoured team scores first. Obviously this all depends on games Layed of course, but generally the edge these days has been eroded somewhat over time.
Careful match selection is now required to make it pay these days, along with balls of steel to stay in the trade hoping for a second goal to the leading team.
Some methods can be rekindled with slight adaption or tweaks here and there. I hope to do a short video in the coming weeks: a video concerning Betting Doctor reader Justin’s twist on the lay the draw method that I mentioned a few months back.
When successful services or strategies become hugely popular, you see a sudden dip in average prices returned, followed then by a gradual decay.
Many see this as a bad patch or ‘blip’, when on deeper analysis the value just isn’t there anymore for all those using the method, and is therefore doomed to failure.
Some do bounce back to value, once followers see they are no longer making profits and stop using the method/service, thus allowing value to return – but that’s only temporary as the merry go around begins again.
So my advice is to keep a strict eye on strike rates: a key indicator would be if the strike rate remains the same but the profits aren’t coming in – then you are suffering from price erosion.
Better still would be to steer away from strategies that operate at the price-sensitive end of the market, or in markets with low liquidity, as these are the most vulnerable here in terms of obtaining long-term sustainable profits.
What I mean by the price-sensitive end of the market is methods that rely on the bigger prices where usually low liquidity is present.
One guy I know devised his own ratings and made a fair few bob in the Place Only market of Betfair. He was typically getting around 10/1 on selections, in comparison to bookies who were only offering 2/1 in their own Place Only market.
Unfortunately for him, this never had longevity, as others soon cottoned on before a price correction took place and wiped out his edge.
However, concentrating on the lower end of the price spectrum where liquidity is in abundance has far less effect, even if others cotton on to the same angle as yourself.
In taking the above into consideration, I always look to devise methods that operate in Betfair markets that have no shortage of liquidity, and therefore profits are unaffected by a draught of new followers.
In the current climate, where bookmakers are quick to restrict accounts, even when winning small consistent amounts, the above has to be considered when devising a strategy. We simply have to focus on methods that have longevity or why bother?
There is a group of punters known as ‘angle hunters’ who research markets for edges they know will be short-lived, but where they milk them for every penny before they dry up, and then move on to research the next angle.
They are a very dedicated bunch, as it’s very labour-intensive to the point where it can only be done full-time.
Better still would be to follow methods that are already established and have proven to have longevity, no matter how many people are following them, or how long they have been around.
Once service that fits the bill nicely is my ‘Little Acorns GOLD’ service that has been going since 2003 in one form or another where we Lay Odds On Favourites. You can try it risk FREE for 30 days below.
Speak Soon!
