You've probably heard people talking about the Poisson distribution in relation to football trading.  But, why is that?  And, is it actually any good?  Let's find out in this video ...

First, we consider the concept of the Poisson distribution - its shape, and why it lends itself to modelling the number of goals scored by a single team in football matches.  Next, we consider the tools available to us in Excel to model the Poisson distribution: yes, a =POISSON formula is available, but a formula to 'invert' the distribution like =NORM.INV is not.  This poses a problem: how to 'sample' the Poisson distribution, as we did for the Normal distribution, in the previous video?

The answer lies in Monte Carlo simulation and custom probability distributions in Excel.  Understood correctly, this bundle of techniques opens up a world of possibilities for football traders.  That's because a custom probability distribution allows us to 'tweak' a conventional distribution to optimise 'goodness-of-fit' (how well it replicates what we're trying to model in the real world eg. no. of home goals).  Moreover, using Monte Carlo simulation, we can create our own 'bespoke' probability distributions from scratch!  Let's see how in this video ...

Tools And Techniques

- Poisson Distribution
- POISSON Formula
- Custom Probability Distribution
- Monte Carlo Simulation
- VLOOKUP Formula with TRUE
- Implied Ranges