1. Sports trading approach
The XG12 approach aims to sports trading is to estimate a probability distribution of future outcomes for a given match which is more accurate than the one derived from the odds available in the betting market. We do this to find operations that yield positive expected value. If you want to learn more about our trading approach have a look at our Methodology page.
2. Betting markets
At the moment, Mercurius’ technology operates on eleven football leagues. The automated strategy is executed within Betfair’s exchange betting on the back side of the “Home-Draw-Away” market. Although the core principles of the strategy are the same for each of the leagues it considers, the triggers for placing orders and the type of outcome it bets on vary. This is the case because our AI confidence in its estimates is different for each league it monitors. Therefore, it needs a higher expected value in leagues where there is a more significant margin of error in the estimates.
On the right: The eleven leagues ordered by degree of positive expected value needed to place an order. The lowest level is at the top.
|Chinese Super League||10%||
3. Staking plan & order execution
The staking plan is Kelly’s Criterion capped at 1%. This means every bet will be 1% of a compounded bankroll. We know execution is crucial. Since Tradr handles many accounts simultaneously, and to accommodate all the liquidity it needs to place bets, we have adopted some key features.
To ensure the desired amount is allocated in the value zone, the algorithm splits the wagers over time to ensure the market is not harmed, and also to reduce slippage.
This feature is built to give priority to higher bankrolls, and efficiently place all the liquidity demanded by our clients.
Dynamic value detection
When slippage occurs, if the value moves from one outcome to another, the algorithm will wager the unmatched liquidity on the new outcome as long as it has a positive expected value.
4. Expected performance
Daily profit and loss
As shown, the performances although yielding an impressive ROC are extremely volatile. As a consequence, to have a statistically significant performance within a confidence interval of 95%, Tradr needs to place around 1,700 bets. This figure translates into a time interval of 3 years, given the state of the tech and the market. When enough bets are placed, the user should expect a yearly return on capital (ROC) of 36%, net of all costs, our fees, and Betfair commissions.