Reading a Book about Day Trading

I've been reading a book about day trading and its really gotten me thinking about sports betting as a market, the spread as a "price", etc.  

I also had a very intriguing conversation with my Dad and we happened upon a great idea.  

Essentially my theory (which is not backed up with data yet) is that a team won't cover the point spread for ever.  A team might under-perform a long time if everyone is quitting or they are disorganized (applies more to football).  Now a team in college basketball might win 30 in a row (Memphis 2007-2008) but I can be damn sure they didn't cover the spread thirty games in a row.  

Because the spread relates to expectations instead of skill, the spread will grow and grow (what kind of growth?  interesting question) until it surpasses even the best performance of a good team having its luckiest night.  The Patriots went 16-0 bit didn't go 16-0 against the spread.  

So essentially, a Martingale style system betting against a team to cover the spread could very well make consistent money long term because of the impossibility of a long, long losing streak.  A team might go 30-0 but they won't cover the spread nearly that many times.  And the advantage of the Martingale system is that it doesn't require you to win more than you lose, it merely requires that you win before you run out of money.

Now even ten iterations of the Martingale system (starting on a ten dollar bet ) exceeds $1,000.  That is a pretty steep climb.  But I would love to see what the chances are of a team pulling off a ten game spread-beating run. 

I tried the Martingale system in roulette when I was younger.  Obviously, my results were mixed.  

But the Martingale system applied in a human-expectation system will have a natural counter built in because its humans who make the spread and they will over-expect.  Turning the behavior of bettors against themselves.  

Likewise, with enough statistical data, one could wait for a three or four game covering streak to start betting against that team to cover as a means of decreasing instances bet and decreasing the preceding "tail" of a run.  

Elliot Wave Theory Part Deuce

The attractiveness of Elliott Wave Analysis is : Three impulse wave forms and six corrective wave forms are conclusive. All we have to do is to identify which wave form is going to unfold in order to predict future market actions. This is a bold statement, needless to say, knowledge of market historical wave patterns and experiences in wave count are of paramount importance. 

I've had musings about the important of lag between bettors knowledge ofa  team and its actual skill.  Wave theory could replace all that.  Instead of analyzing the teams, I simply am analyzing the bettors.  Instead of watching the games, I'm watching the people watching the games.  This means that there is no team.  There is no game.  There is only a market of people watching the game.  This stuff could be truly ground breaking in nature.  

I really think this stuff is dead on and I need to analyze it stat.  This taps into the greatest weakness of the sports betting market that I've bemoaned repeatedly.  Namely, there is no historical data available.  As soon as the game happens the spread disappears and never comes back.  One has to record the spread or lose it forever.  Maybe if I wrote a casino I could get the answers from them.  Who knows?

Fibonacci sequence and Elliot Wave Theory

I just read an interesting article about the Fibonacci sequence and Elliot Wave Theory.  These are some very interesting subjects.  They may pertain to sports betting.

Here is a quote from Wikipedia:  "Elliott argued that because humans are themselves rhythmical, their activities and decisions could be predicted in rhythms, too. Critics argue that the Elliott wave principle is pseudoscientific and contradicts the efficient market hypothesis."

Now I couldn't agree more with Elliot's premise that human beings are rhythmical.  In fact that is basis of a lot of my observations and research so far.  That indicates to me that there may be some useful information in Elliots Wave Principle techniques.  Also, the criticism that it contradicts the efficient market hypothesis is easily discarded when applied to NBA betting.  I don't think anyone else is researching this so no one else takes it into account.  the efficient market hypothesis implies that everyone knows the information available and can take advantage of it.  

I've been reading about fractals in the Black Swan and have a limited knowledge of them.  Essentially, Elliots Wave theory finds graphs of stock market prices to be fractal in nature and similar patterns can be observed on any timescale.  

Applying what I learned in the Black Swan, scoring in the NBA is from mediocristan.  A player may score 1000 points in a season.  That would correspond to roughly 12 points a game for an 82 game season.  However, he will not play in all 82 games, score 1000 points in one night, and score 0 the rest of the season.  

Same applies to all statistics.  Cumulative totals increase fairly linearly.  

Another quote from Wikipedia:

"Elliott Wave analysts (or "Elliotticians") hold that it is not necessary to look at a price chart to judge where a market is in its wave pattern. Each wave has its own "signature" which often reflects the psychology of the moment. Understanding how and why the waves develop is key to the application of the Wave Principle; that understanding includes recognizing the characteristics described below.^[2]"

Interesting.  This material is really right up my alley.  It talks about how psychology affects behavior and motivation is a subset of psychology.