Thursday, 28 August 2008

That’s a bit more like it !

If only I’d realised that all I had to do was ask for some critical feedback and the comments would roll in – LOL !
Seriously, thanks again to everyone who took the time to comment – as Graeme has said many times in the past, it’s the ‘banter’ that really makes the blog. I also happen to think it is extremely useful – a monologue might be good for the ego, but the learning opportunities are severely limited…!!

Talking of which, I have mentioned a few times lately, how I have picked up valuable snippets of information from the blog over the past months, which I’ve used to improve or consolidate my performance…

An example of this was a comment made by Matt last week, in response to a short priced winner that Graeme had put up for the tipping competition.
I’m not quoting exactly, but it was along the lines that there was virtually no difference between tipping a horse at 5-4 when it should be evens; and 20-1 when it should be 10-1.

My instinctive reaction to this was that it was nonsense and that I should just disregard – but as with one or two other posters on this blog, Matt has built up some credibility in my mind, so I felt I should give it a little thought… and low and behold I eventually got what he was saying…!

If the percentage chances are accurate, then a 5-4 shot has a 44.4% chance of winning a race whilst an even money chance has a 50% chance (ie. just over 5% difference); similarly, a 20-1 shot has just under 5% chance, whilst a 10-1 shot has just under 10% chance (again, around a 5% difference !).

To be honest, once this particular penny had dropped with me, I felt that my ability to pick 25-1 winners that should be 10-1, wasn’t really the achievement it sounded like ! Surely it would just as easy – if not easier – to pick 5-4 winners that should be even money shots, and the returns over time would be the same…
So I thought for a little longer…

Personally, I wouldn’t have a clue whether a short priced favourite should be 5-4 or even money. I can just about tell if a horse is 6-4 and it should be 1-2 (like Levera !) – but that’s about it… Therefore, I would have absolutely no confidence in my ability to pick out overpriced runners at this kind of price…

20-1 shots that should be 10-1 is a completely different matter however… These stand out to me like beacons. I would have total confidence that I could spot a true 10-1 chance trading at 20-1…

And I guess that’s why there are so many methods around and why individuals should only use methods that they personally feel comfortable with, tweaking as they go along...
However, challenging my method with Matt’s logic (an angle I would never have considered myself), was an extremely worthwhile exercise for me to undertake and one that wouldn’t have happened without the blog - and it’s comments…!

7 comments:

markomar said...

I don`t think that strictly speaking a 5/4 horse that should be evens has the same value as a 20/1 horse that should be 10/1.

In the case of the first one his true chances of winning are underestemated by 11% of his true odds.

In the case of the second horse his real chances of winning are underestemated to the tune of 50% of the true odds.

However the first bet has the advantage in that it is more likely to win so you will be comfortable betting more money on it.

Though the second one is stil the better bet of the two according to Kelly. With optimal bets sizes and after commision you can expect an increase in fortune of 0.37% on the first horse and 1.38% on the second.

Of course for some bettors it will be much easier to find four 5/4 horses that should be evens than 1 at 20/1 that should be 10/1 so it makes much more sense for them to concentrate on the first approach.

markomar said...

Having played some more with the Kelly calculator, it turns out a horse that should be evens has to be priced at 59/40 to be as good an induvidual bet as a 20/1 horse that should be 10/1.

So it seems Matt wasn`t really that far off. :)

Sry for double posting.

Anonymous said...

Hi,

I'd sort of agree with markomar, I'd make the edge 25% for the 5/4 shot and 100% for the 20/1 shot or putting it another way for 100 1pt bets you'd get back 25pts for the 5/4 shot and 100pts for the 20 shot (or around those figures), so surely the 20 example is superior. My kelly calculator coughs up a stake of 3.7% for the 5/4 and 4.3% for 20 shot so you'd make even more on it. I suppose you could argue with the staking between the two prices but it wouldn't make much difference.

I haven't read the post from Matt but I'd guess he's talking from a perspective of trading, as opposed to backing prices (which seems to often get mixed up on this blog) else if you extend it to it's logical conclusion then the 5% edge is the same to a 1000 shot being 20 (5%+0.01%) - which even you or Graeme will never do!

still criticising, Nick ;)

Graeme Dand said...

Guys,
Just back from the pub (Thursday night quiz). This all made sense to me when I left ! And who the hell is Kelly !!!
A.

Anonymous said...

Great blog,very thought provoking!

Anonymous said...

These guy have got it wrong when they say the difference between 5/4 & evens is 25% that is the difference in returns not the actual percentage chance two different things altogether

Anonymous said...

Hi,

To the above post we're not saying that the percentage difference is not 5% just that the 20/1 and 5/4 shots are not equal strength in a gambling sense, the percentage difference in a trading sense at lower odds is relevant but Andrew doesn't trade.

On Kelly, you might find it of interest as you mentioned losing runs, theres a Wikipedia page on Kelly Theory which explains it better than I could. It should be taken with a pinch of salt, your bank shouldn't really be the most money your prepared to lose, but especially when your betting at varying prices it gives a "theoretically" perfect level of staking,

Nick