Wednesday, 8 February 2012

PC Bother

Wednesday is PC day, or alteast it is for some; I’m lucky enough to still have a reasonable margin until I hit that magic 20% barrier. However that margin won’t last forever (at current rates c. 6 or 7 months) and if I want to avoid it I really need to start soon. In fact I probably should have started a while ago but, like any deadline I’ve ever had, I’ve left it up until the last minute.  My current charges are still in the mid 30s and so it feels like I still have a fair while to go which is the main reason I’ve been able to put it off but the longer I leave it the harder the job is going to be.

The next biggest reason I’ve put it off is that I simply don’t know what I can do to avoid it. I have several large hurdles to get over. Firstly, I gamble part-time as a hobby, some weeks I’ll trade a lot, some weeks not so much and some weeks not at all depending on both the tennis and my own schedules. This makes it very hard for me to keep my commission rate low, I’m generally able to keep it closer to 4 than 5% but as far as commission generated (CG) is concerned I am essentially wasting money. Secondly, my core tennis activity has far too low a CG figure and a large bottom line meaning that boosting the overall CG figure is going to be difficult. Lastly (and most importantly!) I don't have a profitable, high volume, high churn strategy. This problem is exaggerated by the fact that I don't have a sub 3% commission rate which means that the edge needs to be even greater to overcome the commission. The large CG gap caused by my main activity also means that it literally would have to be very high volume.

There are a couple of things in my favour though, as I mentioned, I do have about 6 months before I hit 20% and even then I will have the buffer of a £1000 ‘allowance’ and further more at first the charges will be relatively small. So its not as if I have literally left it to the last minute. Perhaps more important is the fact that avoiding the PC when you’re not already in the danger zone is probably cheaper than trying to do so once you’re already in it. My reasoning behind this thinking is that with the PC being charged weekly winning weeks are punished much more than losing weeks where there is no rebate. When you don’t have this enforced upon you, I suppose the main challenge is not getting carried away with large winning periods and conversely getting too dejected with long losing periods.

It is the ultimate aim of anyone who gambles on more than a £1 accumulator on Saturday’s football to one day win money on a regular basis. The sad fact is that, for most, doing so at a conventional bookmakers isn’t possible (although there are some operators where you won’t get easily restricted such as pinnacle – but then again there’s a reason for that) and therefore betting on an exchange is the only real way forward. Betfair were the frontrunners in this area and are still by far the biggest exchange and if you want to win there you have to pay them at least 20% of your profit in commission. At the end of the day they are a business and they now have shareholders to please. Anyone who doubts that Betdaq or any other exchange wouldn’t inevitably follow a similar path only need see my last post.

Those of us that did spend years and years plugging away without getting anywhere, either losing or essentially treading water do have a small advantage over someone who gets it much quicker because we should have pretty high CG amounts. If you’re not quite there yet perhaps that is at least some consolation J

As I see it I have a few options:

1)    Attempt to dump as much profit as possible from Betfair into an account somewhere else (like Betdaq). Thus reducing over profit and at the same time increasing total CG. I suspect though that this would be significantly harder to do efficiently than it at first sounds

2)    Develop a high volume, low edge profitable system the net effect of which would be to slowly increase gross profit but increase CG quicker. I suspect good candidates for this would be either football or horse racing, neither of which I have any particular edge on. Ofcourse, I could always pay someone else for their expertise but I suspect that whilst the CG % might be high enough the volume wouldn’t be unless I subscribed to multiple services. I also don’t know that I’d have time to manage a ‘portfolio’ of services. The other option available under this heading as I see it is to stick with what I know and take as many pre-event tennis prices as possible. This is looking to be a more likely candidate as I already rate players and keep a wealth of statistics which I’ve been using to help assist in-play trades. There’s no barrier to this other than an initial time commitment, but whether or not I could beat commission over a large sample of matches is debatable.

3)    Develop a high volume, low edge unprofitable system with a similar effect as 2) except for there would be a slight reduction in gross profit. Now I could do this one with my eyes closed as could almost everybody, the trick would have to be to not lose everything! In some ways this is essentially 2) and I could probably have a decent go at losing to commission on the football as well.

4)    Assuming either 2) or 3) fail or I don’t bother then I can always suck it up and pay the PC. However, I’d rather not do that if I can help of it.

5)    Move my business elsewhere, such as Betdaq. I tried this last year with moderate to little success – the platform sucks and the liquidity was patchy, sometimes decent, and sometimes dire. This would be the ultimate solution but its not a viable one now and there’s certainly no guarantee that they wouldn’t introduce a similar scheme, except then I wouldn’t have any room to manoeuvre.

6)    Give up gambling and find a new hobby.

It looks like I’ve got a fair bit of work ahead of me if I am going to steer clear and I need to start being a little more proactive in planning that work. Even on ‘bad’ weeks like the last one I only managed to get my CG up to 15% which really does illustrate what a monumental task it will be. If anyone has any great pointers they want to share then I’m all ears!


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