Pages Navigation Menu

Trading Bases: From Stocks and Shares to Bats and Balls

Trading Bases: From Stocks and Shares to Bats and Balls

At first glance you could be forgiven for thinking trading on Wall Street and professional

gambling were essentially the same thing. Comparisons are easy to come by and

speculatively buying and selling stocks based on the prediction that the price will either

go up or down is, in some ways gambling, albeit on a different playing field. Many highly

successful traders started out as professional gamblers and it’s not uncommon to see

world famous traders such as Seth Klarman and David Einhorn competing in major poker

tournaments.

It’s far less usual for a trader to quit Wall Street to become a professional gambler. But it

does happen. Take the story of former Nomura Securities trader Joe Peta. Shortly after

being hit by a car he was laid off, as he was recuperating he started working on a strategy

for betting on baseball games which would employ the data analysis techniques he used as

a trader. His theory was that these techniques could be used just as effectively for sports

betting as they were for trading.

Once he started putting his strategy into practise he found he was right. In the first year

he finished the season with a return of 41%. He didn’t do as well in the second year due

to a disappointing second half of the season but still managed a return of 14%. To put it

into context, very few traders will ever see returns like that and there weren’t many hedge

funds that posted returns that beat the stock market gains of 25. Which is why he was

compelled in 2013 to put everything down in a book called Trading Bases which outlines

how he built up his Wall Street rivalling sports-betting strategy.

In the book Peta describes how he based the strategy on a data analysis method known

as Sabermetrics, which uses raw data on the performance of individual players and teams

rather than relying on traditional observational analysis. Baseball analytics has been around

for decades, since Earnshaw Cook, a baseball analytics pioneer, put all of his research and

findings into his book, Percentage Baseball. The term Sabermetrics wasn’t coined until the

1990′s when Bill James, the father of Sabermetrics used it.

The fundamentals of Peta’s strategy are fairly easy to understand if you have some basic

knowledge of trading and baseball, but he goes into a lot of detail and takes a lot of time

to explain the intricacies, making sure that even beginners will understand how everything

works, you can find a review of Trading Bases here

Peta started out with a cool million dollar account but you really don’t need that much to

begin trading bases yourself, if you want to get started click here for baseball odds with

Betfair.com.

The technique was first brought to the public by Michael Lewis in his book Moneyball

which was about Oakland Athletics manager Billy Beane’s use of sabermetrics to build the

team. The book was subsequently made into a major motion picture starring Brad Pitt and

Jonah Hill.

Related Posts Plugin for WordPress, Blogger...

Comments

comments

Join Our Yahoo Fantasy Baseball Leagues and Win