Thursday, 31 July 2008

The rules of the game are changing!

I’ve had some great advice on this blog over the past few months and none more so than in the last few weeks. My frame of mind was all wrong to be honest and having my first losing month on Betfair affected me more than I thought. I had a bad start to the month and from then on, I was always fighting an uphill battle.

I’ve haven’t even logged onto Betfair now for over a week and I’m feeling refreshed and raring to go again. I was probably long overdue a decent break as I had got into the habit of having little breaks only after I had a bad day and it doesn’t leave you in a great state of mind doing this.

I’m pleased to say that I listened to all of the advice and it has resulted in me thinking about things some more and has led to me to defining a new strategy for Betfair. Some of you will probably be saying “yet another strategy for The Experiment” but I’m confident this could be the final one!

If you think back, I started off trying to scalp and I always felt my knowledge was a major hindrance here as I couldn’t understand the short fluctuations in prices, so I was never going to be a scalper.

Then came a few months of riskfree betting whereby I was looking for longer betting trends on horses I thought would run well and allow me get a riskfree bet pre-race and then lay off for a profit in running. This worked well for 2 months but this month, it fell to pieces somewhat. I was continually getting into arguments with the market and I was on the end of a few heavy losses. Again, my knowledge and opinions were the main reason as I ended up disagreeing with the market too much and I was on the end of some massive losses on drifters.

One thing I’ve realised is that the market won’t always agree with me. I know this sounds like the most obvious thing in the world for anyone reading this but it’s taken me 26 years to realise it! Pre-Betfair, I would always place my bets in bookmakers. In addition, I would always take the board price available for my horse. I would never take the starting price since I knew that in 99% of cases, my horse would never drift. And I mean NEVER!

I’m not sure what has happened but over the past few months, I have been on the end of some massive drifters. If you remember, one night at Windsor I wrote about a few months ago, I backed an Ellsworth horse at 20 which started at 50. It drifted from 16/1 to 33/1 before winning easily.

I have come to the conclusion that I can’t trade the market purely based on value and my opinion on what price a horse should be. Andrew, Matt, Ali, Steve, John and a few others have said this repeatedly to me on here and even though I knew they were right, I didn’t have any other strategy, so I couldn’t really do anything about it.

Well, I’ve spent the last week or so designing a spreadsheet to help me cope with these drifters. As I’ve hinted at in my replies to comments, I’m going to be gambling more from this point forward. Obviously, I will continue to trade and I’ll be applying my knowledge to the market and trying to find the horse that represents value and is likely to run well. But instead of trying to get riskfree on it, I’ll back it at a price I think is value and if it shortens, I’ll lay off pre-race for my riskfree but if it drifts, I’ll continue to back it.

Now, some readers may be shaking their heads now saying, “He’s lost the plot now” but in all honesty, this may prove to be a stroke of genius. I have designed a spreadsheet and spent a fair bit of time building in my risk aversion to the spreadsheet and my staking levels along with my concept of value.

Importantly, the spreadsheet has built in rules and conditions and it is this that will help me keep my discipline from this day forward. Obviously, this assumes I don’t sway from this spreadsheet at all but this is my bible from this day forward (I swear to the Gambling Gods), so I will not disobey it!

I don’t want to spend ages describing what the spreadsheet does as it’s fairly complicated but as I’ve said before on here, I work with spreadsheets everyday of my working life, so I love building betting models in spreadsheets!

A great comment that Steve made the other day was that I should play the Betfair market at my game. I love this comment and it describes what I am going to do exactly!

If the ignorant layers push up a horse from 20 to 50 that should really be a 10 shot, I’ll continue to back it with smallish stakes as it drifts with the intention of gambling and taking money in running. When I try and trade these horses, I invariably lose as I can’t beat the market by trading it. However, I can beat the market by gambling!

If I can bet small stakes on horses that drift wildly and are overpriced on Betfair, I’ll end up in profit in the long-run. Obviously, I’ll suffer many losses but I’ll win in the end. That’s what matters from here on in!

I’ll expand more on my strategy and how it’s looking when I update my daily P&L when I trade next month.

Lastly, I haven’t given up completely on the idea of tipping but as I mentioned in my last post, I don’t get enough gamblers who read the blog who would be interested in tips. Until that changes, it makes sense to concentrate on trying to make a profit from trading and gambling on my selections myself!

My new adventure begins on Saturday now when I’ll be trading again, so I’m really looking forward to it. As I’ve said to Andrew recently, if I don’t make it as a trader in this game, it won’t be for not trying my best....

Thanks for all the recent comments and support and here's hoping for a profitable month!


Mark Iverson said...

Good luck Graeme,

In my opinion this approach will suit your style perfectly.

There's one big IF need to get your money management right.

Your stake sizes will crucial - don't overexpose yourself and ensure you can stay in the game when the inevitable losing runs hit.

All the best,


leonthefixer said...

Good luck mate - still not got round to catching up fully on your blog since I went on holiday but will be doing so as of next week when I have a bit more time in the mornings. All the best with this new stratergy, I really hope it works out great for you!

All the best mate.


Graeme Dand said...

Hi Mark.

Thanks for the comment.

I think the general consensus on here is that I’ll do much better gambling a little more instead of trading all the time but time will tell.

As you say, money management will become crucial and I’ve a feeling coping with losses will also be fundamental to any success from here on in. I’ll be going from having lots of scratched races and small wins to having lots of small losses and then a bigger win.

My head is fairly straight at the moment and I’m 100% confident I’ll be fine. I quite like the fact that when I’m right and pick a winner, I’ll be rewarded for it. Obviously, I’ll take the hit when I’m wrong but as long as I can minimise losses when they occur, I’ll be OK in the long-run.

Whatever happens, I’m sure it will make good reading on here!

Good luck for August also.


Graeme Dand said...

Hi Leon.

Well done on another great month. Amazing really considering how much you missed of the month. You really have stepped up your trading over the last few months and it’s paying dividends.

I’m still scratching around trying to find the best strategy to suit my trading skills, risk appetite and horse-racing knowledge. I found July a very testing month and my losses got out of control when I hit a bad drifter, so I have to look at tweaking my strategy further.

I would be interested to know how much you actually had in winning trades in July? I had over £1,600 which I am assuming would be in line with your amount but you obviously control your losses much, much better than me!

As I’ve said before on here, £1,600 in winning trades with the stakes I use is good going but I obviously gamble much more than you with my trades. Hence, it’s natural to assume I’d have far more heavier losses over the month but for some reason, it all went a bit wild last month and my losses were more than my wins!

I’m looking forward to the new month though.

Good luck for August also.