I’ve really struggled with this over the past 5 months. Being honest, form knowledge is slightly misleading in many races. It’s more the concept of value that I adhere to more than anything as this is inherently built into any successful gambler.
For example, take a horse that is trading at 5.2 on Betfair and 4/1 on the course. I think it has a 20% chance of winning the race in my opinion based on the strength of the opposition and the horse’s recent form.
At the moment, this horse is priced correctly and I wouldn’t look to trade this or bet on this. However, as is usually the case with anything I fancy (partly joking!), it starts to drift on Betfair. As it drifts on Betfair, I see it remains a solid 4/1 chance with bookmakers.
This is where the trouble starts for me. Now the horse is 6.4 on BF and still 4/1 with bookmakers. I see two things here. Firstly, it’s a value price on Betfair now as bookmakers aren’t offering these odds, so the law of arbitrage tells me that no one is going to bet on this with bookmakers when they get better odds on BF. It must shorten surely?
Secondly, 6.4 is a good price for me to bet at since I think it has a 20% chance of winning but 6.4 indicates just over a 16% chance of winning. Hence, if I am right and I think it really has a 20% chance of winning, I should bet on it. If my opinion is the market consensus, this must shorten from 6.4 surely?
Here, no matter what the indicators are telling me on Betfair, I would bet on this horse and hope to lay off lower pre-race. Say I put £100 win at 6.4. It continues to drift on Betfair and reaches 7.4. Interestingly, it drifts from 4/1 to 9/2 on the course now.
What should I do? Well, about 1% of me looks at the market indicators on Betfair and says “Graeme, this is looking very weak and could reach 10, exit the bet for a guaranteed loss NOW”. However, the other 99% of me says “Graeme, if this was a bet at 6.4, it’s an even stronger bet at 7.4 and lump on it”.
Now, I have a dilemma. I face this at least every second race I trade at the moment and as last month showed, when I get it wrong, the consequences are a massive loss!
What do I do? Do I bail for a loss and assume that the Betfair market has priced it correctly and myself and the bookmakers are wrong or do I stand my ground?
I have no rules or procedures here and I usually end up just going with a ‘gut’ feeling. If I really think I am right, I will increase my investment on the horse and end up digging a hole for myself. Many times, I stand my ground here and increase my stake which that helps change the direction of the movement and I end up with my riskfree bet. Too often last month, I ended up with far too much on the horse and it continued to drift causing me to take a substantial loss before it went in play.
Some of my largest wins on Betfair have come when I’ve backed a horse that has drifted and I’ve continued to back it. It then changes direction and I end up with a massive riskfree bet as it reduces in price past my opening price.
The above scenario is a simplified version of what happens many times in practice and importantly, it happens very fast at times. When drifters drift on Betfair, they sometimes go wild and I end up with a £200 win at 13 which I think represents value but the horse is trading at 22. Here, I lay off some and take money in running and when I’m right, I get out and make a profit and when I’m wrong, I lose a fair amount.
To get back to Stan’s initial question, does my knowledge help or hinder me? Personally, with my current strategy, I’d say it hinders me and that’s what I’ve got to change. I need to change my strategy to fit my knowledge. To try to forget about racing form and the concept of value is just silly and doesn’t make any sense. I need to find a strategy that allows me to maximise my knowledge.