Published on Feb. 3, 2020, 3:35 p.m. - Sports: Football
Lay the draw is probably the most popular trading strategy for inplay football betting markets. Some readers reported having some success when applying this strategy in the past. Based on this, we conducted a more systematic backtest to see if this popular approach is still profitable.
The basic idea of the Lay the Draw trading strategy is to place a lay bet on the draw prior to the start of a football match. You then simply wait until a goal is scored, ideally by the favourite of the match. Consequently, the draw will become less likely and the odds for the draw typically go up. In this case, you can then green your position with a back bet and you realize a profit whatever happens with the match after you greened. The problem is, however, when you pick a match where no goals occur, in this case the draw odds will decline during the match. Typically, the exit in this case is to place a back bet after around 75 - 80 minutes or when the draw odds are halved.
The following chart shows the odds against time for the football match between Liverpool and Man Utd on the 19th Jan 2020. Liverpool won the match with 2:0. In this match, you would enter the trade with a lay bet on the draw at odds of around 4.9. After the first goal of Liverpool, the odds of the draw go up as a draw becomes less likely and the trade can be closed with a profit. A back bet on the draw is placed at odds of around 8.5 which means a profit of around 42% of your initial lay stake.
Another football match we would like to look at is the game between Tottenham and Watford on 18th January 2020. In this match, no goals occurred, hence the odds of the draw went from around 4.0 before the match towards 1.0 at the end of the match as it ended in a draw. If you applied the Lay the Draw strategy in this match, it would have resulted in a loss: Laying the draw at 4.0 before the match and closing the trade inplay with a back bet at 2.0 would mean that you lose the lay stake.
If you already apply this strategy then you are well familiar with how it works in practice: You will either need to invest some time into researching which games are suitable for this strategy and you might have your own filter or criteria. Maybe you apply some kind of schema that you have an Excel file and look at different parameters that find are suitable to predict whether the lay the draw betting strategy is more likely to succeed for a particular game. Once you have identified a trading opportunity you will open the match on a betting exchange and place the lay order on the draw. Once the match is inplay you might follow along a live stream or ticker service to get updated on the match and you will then either cash out with a profit or hedge to limit your losses.
As you can see executing the lay the draw strategy by hand is really time intense: You need to do some research prior to the match, then you need to follow along the match to not miss the opportunity to close your positions. When you work with rather small stakes I doubt that you can achieve a great hourly wage. I would assume that you spend on average around 45min per match and if you achieve a profit of around 10 GBP per match you would end up with an hourly wage of around 13 GBP. Of course you can scale and use larger stakes and also apply the strategy on multiple matches in parallel but again the number of matches at any given time is limited.
In an ideal scenario you want to automate the lay the draw strategy so that a trading bot is automatically applying the strategy on betting exchange markets whilst you have time for other things. Betting automation can really help to move towards a more passive income, although you still need time to analyse and maybe adjust your system.
How the lay the draw strategy is automated depends very much on the flavour you use: You might need to scrape websites or connect to APIs to collect relevant data and apply your filter for match selection. The betting exchange API is used to place the lay order. Then you might need to collect to live-score services to get updated on the score of the match. Please bear in mind that such services sometimes publish false results so you might want to reduce such risks by using several live-scroe services if possible. Every connection to external services increases the complexity of your betting bot and for a simple backtest we will just use time-based closing of the trade.
We created a simple python script that fetches the price data from the Betfair API and saves them to a database for further analysis. The script was triggered every minute via cron and would check for markets that are about to go inplay or that are inplay already.
After collecting data for a period of one week, we did a first quick backtest on all markets that were available for inplay betting on Betfair. We did not match the odds data with any match data to know when goals occured etc, but simply greened based on the draw odds: The lay position in the backtest was closed when the draw odds increased by 10% (profit) or when the odds went below 50% of the initial value.
The test was conducted on around 1900 football matches in the timeframe between 18th January 2020 and 1st February 2020. No commission was applied on profits. The first result with profit / loss of the lay the draw strategy is:
Although the time frame is rather short (data collection continues), we would still like to draw a first conclusion: It looks like the equity curve is pretty stable showing around + / 0 profit which would indicate that both entry and exit odds are fair. Taking into account commission for profits on betting exchanges would obviously create a worse result.
Our question is now how we could modify this strategy to create some profit. A first idea would be to add a filter to only select a subset of matches to apply the lay the draw strategy. If you have any experience with filters, let us know in the comments below!
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