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Daily Fantasy Basketball 101: TradeSports Real-Time Trading Contests

Jerry Donabedian

Jerry Donabedian

Jerry Donabedian writes about fantasy sports for RotoWire.


Last week, we introduced daily gamers to TradeSports.com, a site with skill-based trading games that allow users to buy and sell stock in the outcomes of sporting events. Each contest corresponds to one real-life game, with a variety of different stocks to choose from based on both team and individual performance.

TradeSports offers two different game types, pre-game contests and real-time contests. The former has stocks that close with the opening tip/first pitch, while the latter allow gamers to continue trading until the conclusion of the corresponding sporting event. The pre-game contests are simpler and perhaps the best place for a new user to start, while the real-time games offer a more interactive trading experience that doesnít end at tip-off.

Today, Iíll be discussing the real-time contest I participated in Wednesday night, which was based on Game 5 of the Eastern Conference Finals between the Miami Heat and Indiana Pacers.

I started off by going to the contests page and looking for options for the Heat-Pacers game I was planning to watch Wednesday night. There was one spot left in a 10-entrant, $22 entry-fee contest, and I was fortunately able to grab it about 30 minutes before the tip. The payout structure was similar to what you might see in a 10-person contest on any daily gaming site, with $100 for first, $60 for second and $40 for third. The structure was perhaps a bit flatter than what some people are used to, as third place still essentially doubles his/her money.

The eight stock options to choose from were:

- Heat to win
- Heat to win by more than 4.5
- Pacers to win by more than 4.5
- More than 183.5 total points in the game
- LeBron James to have more than 24.5 points, 4.5 rebounds and 4.5 assists
- Chris Bosh to have more than 17.5 points
- Dwyane Wade to make more than 7.5 free throws
- Paul George to have more than 19.5 points and 9.5 rebounds

Each user gets a $50,000 budget to work with, and you can align yourself with either side of any of the eight stocks, as you donít need to actually own shares in order to sell them. For example, if I donít believe the game will go over 183.5 points, I can ďsellĒ shares in that stock to someone who is looking to buy. Each stock can be bought at a price between 0-100, with a price of 40 indicating that the market says the event is about 40% likely to occur. At the end of the game, each stock will settle at either zero (outcome didnít occur) or 100 (outcome did occur).

So, if you buy a stock at 40 and hold on to it until the end, youíll realize a $60 profit (in your budget) if the desired outcome comes to fruition. Conversely, if you sell a share at $40, youíre hoping the outcome doesnít come to fruition, and youíll gain $40 should things go your way. However, if you sell at 40 and donít get the desired outcome, your budget will take a $60 hit.

Because none of the stocks settle until the game finishes, you can only risk up to $50,000 in losses. However, you can realize profits before the stocks settle by selling shares at a higher price than you bought them. For example, if you have shares of 'Heat to win' and the Heat start out on a 15-0 run, other contestants will be willing to pay a much higher price for those shares than what you paid just minutes earlier. While that's obviously an extreme example, it was interesting to see how quickly the price changed on 'LeBron James over 24.5 points, 4.5 rebounds and 4.5 assists' each time James got further into foul trouble.

Of course, James' foul trouble can also affect the price of other stocks, as his extended absences from the game left more shots to go around for Dwayne Wade and Chris Bosh, while also making life a bit easier for Indiana's Paul George. My favorite pre-game play was selling the 'Wade over 7.5 made free throws' at a price of 37, but I wasn't feeling quite so good about it once James picked up an early second foul, followed by early third and fourth fouls.

As it turns out, Wade still didn't come close, which isn't too surprising given that he's averaging just 4.6 free throw attempts during the playoffs. The pre-game trades of the Wade stock mostly sat in the 35-40 price range, indicating that Wade had approximately a 35-40 percent chance to top 7.5 made free throws. Heading into Wednesday, heíd done that just once through the first 13 playoff games, after doing it only four times during the regular season. Even with the low price limiting the upside of selling that stock, it seemed like the pretty obvious play.

Ultimately, I finished the contest with $17,428 more than I started with, yet that was still only good enough for sixth place. My mistake wasnít the stocks I was picking, but rather that I didnít trade enough, and placed too much weight on selling the stocks of events that were unlikely to happen. Selling the unlikely to happen stocks (think Wade) doesnít have a ton of upside, as a price of 37 says that youíre risking 63 for the chance to win 37. Conversely, if you buy at a price of 37, youíre risking 37 to potentially gain 63. In a contest where only the top three finishers get any money, it makes sense to take a riskier approach than one would if the $50,000 budget were real money rather than a virtual budget.

As for my other mistake, by holding on to many of my stocks throughout the game, I once again placed a cap on my upside. You canít risk more than the $50,000 budget you start with, so selling a stock shortly after you bought it for a slightly higher price may be the right play, even if you still like the stock. Say you bought ĎHeat to winí at 50, and the price rises to 60 after a fast Miami start. You may think the price should be higher than 60, but if you sell at that price youíll secure a profit of $10 per share, and also free up that part of your budget for further trades. The user who won the contest I played in more than doubled his initial budget. Itís probably safe to assume that he was more proactive with the in-game trading than I was.

I wasnít too disappointed with the result of my first real-money, skill-based trading game, but itís quite clear that Iíll need to do more than predict the correct outcomes if I want to win in the future.

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