Wednesday, 28 January 2009

Another nightmare!

Profit since last update £533.89

One of the most interesting things for me this year has been the debate about trading v gambling. I’ve discussed it before many times and there are various posts about it on the blog at different times.

To reiterate what I’ve said previously, in my opinion, everyone needs to find a style of gambling that suits their risk aversion. I’m very risk averse and I don’t like losing, so I tend to leave IR lays on 90% of my bets to ensure I make a profit or at the very least, get my stake back. I know not everyone is like me though and lots of punters would see this as money lost when a horse wins the race after they have laid part of their profit off.

Another interesting topic is the win only v each-way betting methods. As I’ve said before, I only really bet win only apart from odd occasions when I feel the each-way part of the bet gives me great value. For example, if I happen to fancy a 5/1 in an 8 runner race, I will bet each-way since I think Evs is a decent price for the horse to be placed in most cases. I will still lay off low IR on the win part of the bet as I see a place bet and win bet as two separate bets.

One topic I’ve only covered a little this year is staking. I have never bet to a staking plan in my punting life and I never will do. A lot of my staking is around how I perceive value and it’s a very subjective approach from me. I could bet on two 16/1 chances and yet, I’d be happy to gamble 10 times more IR on one than the other one. It’s the way I play and it’s something I don’t intend to change.

Lastly, as you all know, I add a different dimension to my punting by using Betfair to trade pre-race and IR. If possible, I will bet more on a horse than I want to take IR with the sole intention of laying off pre-race to get a riskfree bet or take a small sum in running if I think I’ll be able to make money IR or I may leave it as a simple bet. Again, this is all very subjective and varies according to each individual horse or race.

Why does any of the above matter?

This month, I’ve had an absolute nightmare with the tips. I can’t get across how bad the month has been and it has been a shocker. Obviously, I tend to go on losing runs now and again and I bounce back and no doubt, I’ll bounce back from this run but it has been a poor month for me and all the subscribers.

When I tell you that I’ve only had 3 winners and 18 placed horses this month, it’s easy to see how thin a line there is between success and failure!

For example, 11/1,10/1,11/1,25/1,14/1,14/1,14/1,16/1 and 10/1 selections have been placed. Obviously, I don’t back each-way for all my selections and even backing each-way, it still looks like a horrendously bad month for the tips with only 3 winners.

One reason for not posting up an update on the month has been the fact that I was waiting on it turning around and it hasn’t turned around! I know people like to read how I’m doing and I still put a lot of example analyses on the site for people to browse if they want to learn anything. The main reason for not posting though is that it feels unfair to be posting a profit when subscribers are suffering a loss and a healthy loss at that.

I’ll post up my BF P&L at the month end but since the last post, I’ve made just over £530 profit on Betfair. I’ve only really traded a couple of Saturdays on my own selections and backed a few on Betfair Mobile whilst being at work but it’s been a good run for me.

The point of my introduction is that there are a lot of different ways to skin a cat on Betfair. I’ve discussed it at length in the past and it is true. I’ll talk through an example of how a few people played a horse I tipped on Saturday. The horse was Too Forward.

To my knowledge, 4 people played this horse 4 different ways. I’m sure a few did something a bit different but I know 4 ways people played it.

I gave out the selection in the forum on the Friday night as I let everyone know how keen on it but not everyone uses the forum, so it effectively became an official selection on Saturday morning.

I suggested 1.5 points each-way at 16/1. It was available at 17.5 and 17 on Betfair on Friday night for just under £1,000 in liquidity. In the morning, it was 16.5 and you could have got around £2,000 on it if you were patient, so there were no liquidity issues even for big players.

Here’s 4 different ways people played it including myself:

Example 1 – My method (trade and aim for a risk free bet)

As you know, I like to back a horse like this with a larger stake and then look to lay off pre-race for a riskfree bet and then make some money IR.

My first bet was £50 at 17.5 on Friday night. I then topped up to have £200 at 17.5 when I went to my bed. In the morning, I had another £200 on it at 17 and I effectively had £400 win at 17.25.

Clearly, I don’t use any staking plan and considering how sweet I was on this, I was happy to risk £50 IR on it which is about my maximum bet.

Throughout the day, the horse shortened and it’s SP was 10/1 at the off. I laid off my £400 at 13.5 on average and I had £1,500 riskfree on the horse to win.

I decided I’d take £100 out at 4, £400 out at 1.9, £200 out at 1.1 and let the rest run.

Roughly, I got £100 return guaranteed if it hit 4, £500 return if it hit 1.9, £700 return if it hit 1.1 and £820 if the horse had won the race.

As it turned out, the horse hit 2.1 IR and finished 3rd. I won £100 but was very close to winning £500!

So, I won £100 for zero risk.

Example 2 – Following my Staking Plan (Bet 1.5 points each-way)

If we assume £50 a point, then someone had £75 EW at 16/1 which was a total stake of £150.

If the horse got placed, they made a profit of £225. If the horse won, they make £1,500 profit.

Hence, for a risk of £150, they won £225.

Example 3 – Win Only (Bet on it to win according to a predetermined staking plan)

One of the subscribers uses a win only staking plan according to the odds of the selections. Hence, they had £40 win at 16/1.

If the horse had won, they’d make a profit of £640.

Hence, they lost £40.

Example 4 – Follow my Staking Plan and lay off low to recoup stake

Someone had £75 EW at 16/1 and left a lay at 3 IR to recoup £150 if it hit 3.

If the horse run well and traded at 3, they would break even. If the horse won, they’d win £1,200.

Hence, they broke even for a risk of £150.

I think the above show that there are many different ways to win and lose money at this game.

I won £100 for zero risk at the off.
Someone won £225 for £150 risk at the off.
Someone lost £40 after risking £40 at the off.
Someone broke even after risking £150 at the off.

From what I can make out, the only difference between my method of gambling and other methods is that I effectively bet on two different things.

Firstly, I bet a lot on my belief that the horse is the wrong price. If we assume I use £10 a point, I was willing to bet 40 points on the fact that 16/1 was the wrong price of the horse. However, I bet zero on the fact the horse would win the race. If I wanted to, I could have took some money IR but at 10/1 at the off, I thought the horse was rightly priced. The value was nearly gone.

However, unlike most traders, I didn’t green up as I thought that IR, the horse would trade lower than 10/1. Clearly, you can’t risk 40 points IR and in this case, I didn’t risk anything. In many races though, I do risk a little IR to make additional profit if it runs well but I’ll lose if it runs poorly.

So, the second part of my bet is whether I think it will run well and trade lower. In most races, I’ll take a point or two IR but if I have a decent riskfree bet, I won’t take any money IR and will happily settle for my riskfree bet.

OK, here’s the crux of the matter………

In the long-run (and I mean long-run!), examples 2,3 and 4 will show nearly identical profits in my opinion. Whether you bet win only, follow a staking plan or follow a staking plan and lay low, it makes no difference. All you are doing is smoothing your P&L or creating extra variance in it by backing win only.

My method will show a higher profit (in proportional terms) though due to one reason. I am gambling twice! I effectively bet on the horse shortening in odds and then on the horse running well.

The above is a great example of when it goes right for me. However, people need to realise that it doesn’t always go to plan and sometimes, I’m forced to take money IR on a horse when it has drifted. Hence, I may have £20 win on a horse trading at 25 and the odds I have got are only 5/1! Hence, unless my horse runs really well or wins, I’m not going to avoid a loss but that happens now and again (not often this month but frequently in the past!).

The whole tipping service is built on my belief that I can find horses over-priced that will run better than the market odds suggest. As I’ve stated a million times, I don’t go looking for winners as backing lots of winners doesn’t mean you’ll make a profit. It only means it will take you longer to lose but ultimately, you will lose if you don’t back horses that represent value.

As I said in the intro, people need to find a style of gambling that suits their risk aversion and ultimately, their skill. My skill is identifying horses overpriced that run well. That’s why I make money at the game I play. It’s also why I’ll bounce back from this current run with the tips and make the guys money across at the site!

9 comments:

superbadglenn said...

Excellent blog mate, and a great article.

Anonymous said...

An interesting post - but what would you have done if Too Forward had drifted ? Odds of 34 on a 13 year old to win a big Cheltenham handicap would not seem crazy to me. If that had happened, would you have accepted a £200 loss with no chance of winning - or taken £400 IR with the chance of losing it all ? Either way, your method wouldn't be looking quite so good as the other ones you describe...

Graeme Dand said...

Anonymous,

That's where managing the bet comes into it!

Firstly, I don't use £400 stakes and that was basically my whole bank I'm using at the moment on that one bet. I don't do this too often as you can imagine!

Secondly, I would have looked to reduce my exposure considerably if it had drifted from my opening play. I left it overnight which can be a risky thing to do on a Friday night but I was sure it was overpriced.

On Saturday morning, I doubled the bet simply because it looked fairly strong on oddschecker and I would have been surprised for it to drift after that.

It was an obvious horse to shorten and I don't recognise too many of these in a month.

There are lots of examples on the blog of times it goes wrong. That maybe explains why I'm £6k in profit and not £16k in profit this year but I live with the fact I get some wrong now and again. Limiting losses is just as important for me than maximising wins!

I guess the secret is to find the right horse I was willing to stake £400 on the fact it was overpriced. That was based purely on the form book and the fact I thought other people would realise this.

The fact it traded 2.1 isn't important to me as I would never take £400 IR on a horse. I try to take as little as possible IR as horses run below form all the time for no apparent reason...

Especially when I tip the fuc*er!

Thanks for the comment. I wasn't trying to say my method is better, more like I was trying to explain why I'm posting a profit when lots who follow my selections are posting a massive loss this month!

Graeme

superbadglenn said...

Graeme,

How did you get into reading form and how do you do it?

I am really interested but can find no one to teach me??

horseman said...

my dear graeme
greetings from india
hats off to your blog
and wonderful is the feeling
i have sent you a mail
i am sure you will respond to my mail
thanks
cheers
easwara
bbliss47@gmail.com
india

Anonymous said...

It sounds like you use a version of the Kelly Criterion staking plan - although you may not realise it!

James

Graeme Dand said...

Superbadglen,

I was lucky in the sense my grandfather was a very knowledgable punter and importantly, a very successful punter. He started teaching me about horseracing from a ridiculously young age (I was able to count up bets in pre-school!) and my knowledge just grew as I grew. My Granda died when I was about 15 and I just carried on doing what I was taught and everything sort of just fell into place over the last few years.

One comment everyone makes about me is the fact my knowledge far outweighs my age which is obviously true. I doubt there are too many 27 year olds in Britain who have been looking at horseracing since the age of 5, so 22 years experience is a lot for anyone my age. Obviously, it’s debatable what I learnt from the age of 5-15 apart from the very basics but I learnt so much about the principles of gambling and about value from my Granda which has gave me a great platform to make money at this game.

I’m not sure how you can learn how to read form. I find I ‘learn by doing’ and I still feel like I learn more everyday about horse-racing and I guess it helps being my age as you can remember a lot. I put an amazing amount of time into form analysis and there’s no substitute for hard work.

I’ve said this to all my subscribers at the site but my daily emails are the best way to learn from me. Without sounding like a sales plug, anyone joins the tipping service gets access to every email I’ve written on horseracing over the past 4 months and in my opinion, it would be worth joining just for that very reason. In addition, there is a thread in the forum called Ask Graeme which describes my methods and has an amazing amount of help about reading form. For a one off small fee, you could get access to me and every analysis for 4 months! ( I really should stop the sales plug!)

If you did want to give it a go, drop me a note and I’ll do you a special price to subscribe if you are seriously interested about trying to learn from me.

Good luck with your punting.

Graeme

Graeme Dand said...

Horseman,

Thanks for the comment and email.

I'm not exactly sure what it is you are looking for if I'm honest.

Drop me another email and I'll try to help you out.

Graeme

Graeme Dand said...

Hi James.

I’ve looked into the Kelly Criterion Staking Plan in the past and I admit the values of my betting aren’t far different but I guess the key difference is I use no pre-determined staking plan at all.

Sometimes, I’ll back a 16/1 chance with £5 win and other times, I’ll throw on £100 to try to trade it. In both cases, I think the selection is overpriced as I wouldn’t back a selection I didn’t perceive as value but for no apparent reason, I treat them differently. Usually, I’d trade it if I thought the market was likely to agree with my findings that the horse is overpriced but that’s based on instinct and nothing more than that.

Over the past 12 months, people have said on many blogs and forums that you can’t trade on Betfair using knowledge of horseracing and I’ve hopefully proved conclusively that this is not the case. I’ll need to update my blog for the month of Jan-09 but I ended the month well and it’s been another good month of trading for me.

I guess the key for me now would be to try to scale it up but unless someone can do my trading for me as I work full-time, I can’t scale it up too much. I don’t trust Betfair Mobile enough to have £200 win on horses to trade! I nearly got caught out on Friday by the crash on BF Mobile.

Any traders fancy helping me out? lol

Graeme