Monday, 7 April 2008

More on my decision to stop trading the horse-racing….

I’ve been sent a few texts from friends and family asking me why I’m stopping and Leon has also asked that question on an earlier post. I’ll try to expand on my decision now.

Basically, as you all know, I love horse-racing and I’ve got a really keen interest in understanding form and trying to pick winners. I also have a keen interest in gambling in general and understand a great deal about odds and probabilities etc. Therefore, when I stumbled across Betfair and started to understand how it works, it was a natural progression for me to try my hand at trading horse-racing as I thought I had the relevant skill set to enable me to do well.

2 months on and I’ve decided that I don’t have the necessary skill set to enable me to succeed at trading and I’m sure that if I continue to trade, it is inevitable that I would lose in the long-term. I have no doubts about this.

So, why can’t I succeed at trading on the horse-racing?

One issue I’ve always had with horse-racing for years is that as long as you give me the lifetime form of every horse in the race (or last 3/4 runs in particular), I will be able to form an opinion on the race. This could be the Gold Cup or it could be a 6f seller at Southwell. It makes no difference to me. As long as I have access to every horse’s form, I’ll form am opinion on the race.

My issue lies with the fact that I will form an opinion and whatever anyone says, it will not sway me from my opinion. Sometimes, I look at the trickiest 5f 25 runner handicap I can find and by the time my analysis is over, I’ll be convinced I’ve picked the winner. This can be a 25/1 shot that hasn’t been placed for years but if I think it will win, I’d be willing to back it.

When I first started to think about trading on Betfair and how I can make money from trading, I thought that my appreciation of form and BHA ratings would enable me to gain an ‘edge’ over other Betfair traders as I would have more knowledge than them (apart from the stable insider’s obviously!). This was my worst piece of thinking ever and I couldn’t have been more wrong.

I’d go as far to say that my appreciation of form has ultimately led me to make this decision to stop trading.

Anyone who has read my blog from day 1 will remember my very first day of trading on Betfair 2 months ago and even the very first race I traded on.

There was a Paul Nicholls horse in the race called Rippling Ring and in my eyes, from what I read and heard from Paul Nicholls, this horse was an absolute certainty. It was a very decent flat horse in France and there was nothing in the race that could get near it.

So, Rippling Ring opened up at 2.8 on Betfair and I placed a back of £60. I expected this horse to tumble down in price. As it drifted, I took the loss and then backed again. The market was wrong I was telling myself and it would change in price. At the off, Ripping Ring was 6 on Betfair and I had a £60 red on Rippling Ring. I took a £10 loss and watched the race as Rippling Ring won on the bridle and ended up going off as one of the favourites in the Supreme Novices Hurdle at Cheltenham!

Even on that first race of the first day of my training on Betfair, I should have put a stop to the whole horse-race trading idea. Someone like me who is a gambler and has unbelievably strong opinions about horse-racing would never make it trading odds on Betfair…….

OK, I could now discuss about 60 races over the last month where I have been caught out trading the odds when I’ve thought the market had the horse priced wrongly but I’d put everyone to sleep…….

Let’s fast forward to Thursday at Aintree last week.

I had read the RP cards at home on the Wednesday evening and I knew what horses were running on the Thursday. At work on the Thursday morning, I was chatting to colleagues who were asking about Kauto Star and whether it would win and I got speaking to someone about the first 3 races.

I basically said that Aintree is a graveyard for short-priced horses that have run at Cheltenham and I would lay short-priced favourites all day at Aintree.

That Thursday morning at work was tough for me as I had the gambler in me telling that when I go home at lunchtime to trade, I should lay Inglis Drever, Kauto Star and Celestial Halo for large sums. I had valid reasons for all 3 and I should follow my instincts.

The other part of me was telling me to trade these horses as I could generate riskfree lays and I could win smallish amounts by not gambling. Anyway, in summary, the trader in me won and I went home and traded these horses.

Since I was convinced that each of these horses would lose, I was always going to put in a lay first and then back at a higher price. Even though the market showed that they were coming down in price, I subconsciously thought that the market would think these would lose and they would drift accordingly.

You all know now that these 3 lost at short prices and I won a total of £12 on these 3 races. Kauto was well backed which meant I couldn’t generate a riskfree lay on it, Celestial Halo barely moved in price and Inglis Drever did drift but not by as much as I though it would.

That was difficult for me to take and probably set the scene for Friday. I was really annoyed I didn’t follow my instincts and I was thinking about stopping the trading there.

Anyway, on Friday, I was convinced that Master Minded was far too short a price and would drift alarmingly. My first entry into the market was a lay of £500, the horse then contracted in price and I took a loss. I then had to sit and watch the race as the horse failed to stay (it didn’t stay 2m 4f in a weak race in France) and instead of collecting £500, I had a loss of £4.67. This was the final straw, I then went on ‘tilt’, trading far too much on every race, accumulated a loss of £52 and then decided that was the time to stop.

Overall, I think the fact that I have strong opinions on horse-racing and I think I know which price each horse should be, I am unable to trade horse-racing on Betfair. As I said in an earlier post, the best traders must be the people who know nothing about horse-racing form and who will follow the market odds regardless. I’d love to be able to do that but I’ve tried and I can’t. I can’t pretend that I don’t know the form of each horse that is running and that I don’t have a view on the race. I always have a view on every race!

Therefore, I’ve given up trading horse-racing!

Like an Alfred Hitchcock film, maybe “I’m the Man Who Knew Too Much.”

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