 |
In his latest instalment on trading the exchanges, Peter Webb opens our eyes to how volatile tennis odds can be – perfect for finding an edge
Making money by trading sports is all about volatility, the movement in odds. Lay at a lower price than you can back at and you will make money. The bigger the gap between your lay bet and your back bet the bigger the profit. One of the most volatile, potentially profitable and therefore most popular in-play trading sports is tennis.
There are many reasons why tennis odds are so volatile. One key reason is that the scoring system lends itself well to significant changes of fortunes for the players. You can go from being 2-0 up to 2-3 down just by failing to hold your serve once. There are also lengthy rallies, unforced errors, thundering serves and injuries. But matches can also last, in theory at least, for infinity. One of the longest matches in recent times went to 102 games before a victor was eventually found and there have been many matches lasting over six hours! The upshot of this is that the chance of a large shift in odds is much more likely.
To help you profit from these swings in odds it is helpful to understand how tennis odds are determined and what creates such volatility in a match. Knowing the rankings of the two players in a tennis match, while important, isn’t the best way to predict who will win. The key factor to predicting the winner of a tennis match is actually quite simple, the probability that each player wins a point against the other player when they serve. If the server has a 65 percent chance of winning a point on their serve then you can calculate, subject to the current score, the chance that the server has of going on to win the game, set and match.
The problem with this statistic is that it assumes that the serve-and-win-a-point probabilities remain the same throughout a match. This is obviously not realistic. When you look beyond statistics you would have to say that there is definitely a lot of psychology in play during a match. You don’t need to watch many matches to realise that players do not feel the same after each point. I have experienced it first hand myself. Struggling to hold serve then seeing three aces blasted past you in the next game is very demoralising no matter how well you have played or how unlucky you have been. Therefore, probabilities of winning a point on serve can vary quite a bit from game to game and this is where your edge will lie.
There is clear evidence that winning the previous point, game, or set increases the chances of winning the next. This statistic is no doubt generated at least in part thanks to the underlying psychology of getting the upper hand over your opponent. There is also strong evidence of a ‘first game effect’. More specifically, the first game of a match is the hardest one in which to break serve, therefore backing the first server in the right match for a small profit isn’t a terrible idea. Lots of sports related guidance is based more on myth than reality but this fact is academically proven. It’s also interesting to note that players who have conceded the first two sets tend to consistently perform better at the start of the third set. At that point it’s a ‘do or die’ situation so any energy our player has is directed to giving it one last shot.
If you want to profit from tennis then the best entry into the market is a break of serve. Breaks of serve are obviously key turning points in a match and if the break occurs the odds will move rapidly. If two players are evenly matched then they will priced at evens, or 2.00 in digital odds. If the server wins his first game in the match their odds will drop to 1.91, if they lose serve the odds will drift to 2.53. I have based these odds on a five-set tiebreaker match. Wind the model forward to the fifth set and if the server is broken the odds will drift to 4.56.
You can see that anticipating what will cause that break of serve is the key to successfully trading a tennis match. Whether your cue is fitness, psychological or statistically based; a break in serve is always going to be significant. As you can see, breaks of serve occurring later in the match have a much more pronounced effect on the market odds, especially when the match is a close one. So if you are aiming to get the largest possible movement, a close match in the final set is where you will find the biggest opportunities. Earlier sets also present opportunities but these are much less profitable as they are less volatile, but you are likely to be taking on less risk at this point in the match. Ultimately your activity in the market should be dictated by how much risk you are willing to take.
There is clear evidence that ‘reading’ the match, watching it closely and understanding all the dynamics, allows you to pinpoint key moments more precisely. A lot of tennis traders carefully examine previous rounds and performances, which can give clues to players’ state of mind at certain points in a match. Seeing how often a player who loses their first set goes on to win or vice-versa can tell you a lot about their ability to fight back or snatch defeat from the jaws of victory as well as identifying slow or fast starters.
You also need to look at the court surface. The three most common surfaces used to play the game of tennis are clay, concrete and grass. Surfaces vary from each other greatly in terms of how they play and they can cause one style of tennis player to have an advantage over another. Research by the ATP in 1992 showed that the average length of a point on grass was just 2.7 seconds versus 8.2 seconds on Clay. Clay favours fitter, younger, players who are shot makers. Grass would appear to favour a power game.
As tennis is one of the most volatile sports in terms of odds movement, it makes for an excellent trading market. The only downside you have with tennis is that matches can last for very long periods of time. However, tennis still remains one of the most popular sports trading markets. |
