July 30, 2008

The Profit Place System

Final Review

I started using Profit Place about two weeks before I began this test.  I was very impressed with just about everything about it: this system appeared to be something out of the ordinary.  I tested it for a short period using very small stakes – I prefer this to paper trading as it is impossible to inadvertently “cheat”.  I’d checked past results on the website; encouraged by that and by me having had only one losing day in over a week – and that loss very small – I began using the system in earnest.  I staked using a liability of 5% of a rolling bank: updating the stakes at the end of each day.

By the time I started the test I was already comfortably in profit and a week or so after the test began my bank had grown 60%.  Consequently, I had a definite bias in favour of the system.  However, I did have two concerns and they have both reared their heads during the course of this test.  First, I’m very uncomfortable laying £50 of a £500 bank and thereby risking up to £150 (30%) per lay.  Given that there are often multiple lays in one race and this is the place market, it could lead to a loss of 90% of the bank in one race and inevitably that would eventually happen.  If the race paid out on four places it could lead to a liability in excess of the entire bank – though Betfair won’t allow this if the system bank and the amount on deposit are similar.  Laying to level stakes, I think that for a £50 stake the bank should be in the region of £1500: in other words, maximum liability is 10% of the bank.  Alternatively – and my preference – a rolling bank with a liability of 5-10% seems more appropriate and this alternative staking plan is covered in the manual.

My second concern was with market liquidity.  My worry was that there is simply not enough liquidity in the place markets to support use of this system by more than a relatively small number of people; especially as, in “thin” markets, it only takes one or two people getting greedy to ruin a system.  I will come back to this point later in my report. 

The system performed very well for a week or so and the test bank was up around 66% to level stakes.  It then started to go sideways, almost fell over, partially recovered and finally crashed and burned.  Maybe that’s a slightly colourful way to describe the test, but for a system that claims to be the safest around, this was a roller coaster ride.  Smaller stakes would have made for a calmer ride and – believe it or not – having started just a week before the test, my bank is still in profit… just: it’s literally pennies, but it is in profit!  However, from the time the test started, it would have been difficult to make a profit unless using the sort of recovery staking that would have been far too “rich” for me.

The system has been well researched; I understand it was tested for about two years before being offered to the public.  It had only suffered one bad run prior to going “live” and that not nearly as bad as experienced during my test.  The core selection criterion on which the system is based seems very logical and sound and, in theory, the current results “shouldn’t” be happening.  Some of this poor performance could be put down to the recent appalling weather: if football or cricket was played in ankle deep mud would the results be predictable?  However, (jumping from one sporting analogy to another) we may expect Murray to win the odd game from Nadal, and even the odd set, but the system results are on a par with Murray winning match after match.  Given the core selection criterion, this should not be happening.  So, either that selection criterion is not as logical as it first appears, or something has changed, because the weather no longer seems to be the culprit. 

Without having conducted any in-depth research, I wonder if the percentage of selections that go on to qualify on price is the same now as before the system went live.  If the percentage has dropped this would suggest that, with insufficient liquidity in the market, odds are being chased out by those who don’t understand how markets behave.  If this is the case then it would be probable that the prices at which qualifying selections are getting matched is also (significantly?) higher.  The result of these two factors would be a lower strike rate at higher average odds, seriously hurting profits.  I doubt that this is a definitive answer and the weather could be to blame, or it could simply be that inevitably all systems have bad runs.  I do wonder, however, if market liquidity is a contributing factor.  If it is, then as users drop away because the system isn’t working, there could be a return to profitability.

Whatever the reasons, the system has failed to perform; the test bank is standing at about £75, despite cutting stakes in order to protect it.  Had I not taken such action, the bank would have gone and there would be a deep hole in my wallet.  My own rolling bank, that had made a 60% profit, drifted all the way back to where I was about breaking even (well, about 80p profit) and, due to adopting a watching brief, I have maintained my bank at around that level.  Again, had I continued betting to a liability of 5% of the bank I would be showing a substantial loss.

Just as an aside, it was pointed out to me that there was an anomaly with the results as published on the Profit Place website – something placed and was not included in the results.  However, the author has made clear that the Profit Place team are human and mistakes are inevitable.  The results published on the site during the course of the test are very much in line with mine: sometimes they have got on and I haven’t, sometimes the other way round.  Sometimes I have got a better price than on the site and sometimes they have done better than me.  All-in-all it has balanced out and everything is clearly genuine

Given that the author and his partner have obviously worked very hard to provide a system that has been well researched (but that may have suffered from “the law of the unforeseen consequence”), that the level of support is excellent and that in all other ways this should have been an excellent product – it’s just that it isn’t working at present – I am very reluctant to give this the thumbs down.  Unfortunately, I can’t do otherwise and so I shall recommend to Graham that this goes on the Failed Systems list.  However, I am not going to give up on it.  I shall check in on it from time to time and if there is a turn round (fewer users effecting prices for instance) I shall make sure it doesn’t go unreported.

You can get the Profit Place System here:

http://www.cash-master.com/profitplace.php

 

Filed under Horse Racing Systems,Laying by Michael

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