Wednesday, September 12, 2012

Overlay Markets And Multiple Selections

When handicapping horse races, it is critical to focus on those markets in which there is at least one overlay. However, contrary to received wisdom, the professional sportstrader does not just trade the specific overlays but instead trades one or more additional horses (possibly including an underlay) with the goal of spreading his risk while maximizing his long-term median income. An excellent worked example of this approach is detailed in Appendix V of Taking Chances.