I was reading on Peter's blog that prices on horses before off are true representation of chances to win the race. I would like to know what range of odds are we talking about?
Let's say odds on a horse are around 3.75. What range are you accepting to consider these are true odds, is it say 3.65 to 3.85? What would be range when odds on horse are 1.5?
Thanks
True price
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rubysglory
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Hi Equity. The much quoted fact that prices on horses before the off are a true representation of a horses chances to win the race is an important observation. IMO, emphasis must however be placed on the words 'the off'.Trading involves the journey to get to zero minutes whilst taking advantage of any market imperfections - whether that be by way of reading charts, following WOM, pricing your own market etc. Expanding your question further, years ago (1955) professional Australian handicapper Don Scott set out to discover the relationship between the bookmaker starting price of a horse and its actual winning chance. From a bookmaking perspective it was found that the price group 2.00 - 4.50 represented the least disadvantage to the backer on a win percentage to strike rate basis. Based on Don Scott's figures, for SP odds of 1.50, to achieve a 5% profit over the longer term, the required long term average price required was 1.72 and for 3.75 it was 5.50. It is my observation that his findings still hold true.
rg
rg
Interesting point about price group with least disadvantage, although I would argue that in 1955 bookmakers juice was much thicker than these days on exchanges...
Anybody who would like to answer my question?
Peters article about true odds here: http://www.probabilitytheory.info/conte ... ge-markets
Anybody who would like to answer my question?
Peters article about true odds here: http://www.probabilitytheory.info/conte ... ge-markets
Last edited by Equity on Wed Dec 21, 2011 6:01 pm, edited 1 time in total.
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psycho040253
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Hi Equity
Most people who are aware of Jack Houghton (Author of the book: Betfair for Dummies), are aware of his article about Steamers & Drifters. What they are not generally aware of was his work on Betfair prices at the off. He had unrestricted access to Betfair's data and analysed many thousands of races. What he found was that, in general, the Betfair market on a race is approximately perfect i.e. a horse's Betfair odds, at the off, are a fair reflection of their chances of winning. For example, a horse, whose Betfair odds at the off are 4.0, will win, on average, one in four of its races.
What this implies is that if one were to back 4 horses whose Betfair odds are 4.0, at the off, to win, one would expect 1 of them to win and the other 3 to lose. Therefore, on average, if the Betfair commission were zero (if only!), one would expect to break even. When commission is included, on average, we will lose.
What this also implies is that, if one is a pure backer or a pure layer, then, in order to make a consistent profit, one must consistently find 'value'. i.e. one must back horses, before the off, at odds above those at the off and lay horses, before the off, at odds below those at the off. This all sounds very simple, in theory, and I would urge anyone who can do this consistently to contact me for I would reward them richly.
Although Jack did his analysis some years ago, although I cannot prove it, I see no reason why it still doesn't hold true.
Psycho
Most people who are aware of Jack Houghton (Author of the book: Betfair for Dummies), are aware of his article about Steamers & Drifters. What they are not generally aware of was his work on Betfair prices at the off. He had unrestricted access to Betfair's data and analysed many thousands of races. What he found was that, in general, the Betfair market on a race is approximately perfect i.e. a horse's Betfair odds, at the off, are a fair reflection of their chances of winning. For example, a horse, whose Betfair odds at the off are 4.0, will win, on average, one in four of its races.
What this implies is that if one were to back 4 horses whose Betfair odds are 4.0, at the off, to win, one would expect 1 of them to win and the other 3 to lose. Therefore, on average, if the Betfair commission were zero (if only!), one would expect to break even. When commission is included, on average, we will lose.
What this also implies is that, if one is a pure backer or a pure layer, then, in order to make a consistent profit, one must consistently find 'value'. i.e. one must back horses, before the off, at odds above those at the off and lay horses, before the off, at odds below those at the off. This all sounds very simple, in theory, and I would urge anyone who can do this consistently to contact me for I would reward them richly.
Although Jack did his analysis some years ago, although I cannot prove it, I see no reason why it still doesn't hold true.
Psycho
We keep an eye on price vs value all the time and it's remarkable how accurate the market is, but there are discrepancies.
When you dig below the surface you realise that people discount the chance of something happening too quickly and dismiss the chance of something happening too quickly as well.
You also notice that people often use arbitrary points to enter the market, for example, at the off.
So value gaps do appear all over the market. The only problem you face is finding enough value to overcome commission charges. But it is possible.
When you dig below the surface you realise that people discount the chance of something happening too quickly and dismiss the chance of something happening too quickly as well.
You also notice that people often use arbitrary points to enter the market, for example, at the off.
So value gaps do appear all over the market. The only problem you face is finding enough value to overcome commission charges. But it is possible.
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superfrank
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personally i don't find it a surprise at all that the market is accurate on average - it would be a massive surprise to me if anything else was the case.
on a race to race basis there is obviously huge scope for the market to be very inefficient. yesterday a fav went on a huge drift at Kempton after Eddie Fremantle said it was no good (would that drift have occurred had he been stuck in traffic and couldn't make it to the studio?, we'll never know).
bombing and manipulation on Betfair can only increase the chance of 'false' prices being created because it can change sentiment, but it doesn't mean that, on average, the market will ever show up as anything but very efficient.
it would be very interesting if someone could collate the same info based on the prices at the official off time, 1min, 2min and 3min before the off as well as at SP.
on a race to race basis there is obviously huge scope for the market to be very inefficient. yesterday a fav went on a huge drift at Kempton after Eddie Fremantle said it was no good (would that drift have occurred had he been stuck in traffic and couldn't make it to the studio?, we'll never know).
bombing and manipulation on Betfair can only increase the chance of 'false' prices being created because it can change sentiment, but it doesn't mean that, on average, the market will ever show up as anything but very efficient.
it would be very interesting if someone could collate the same info based on the prices at the official off time, 1min, 2min and 3min before the off as well as at SP.
We've done this and the market is most accurate seconds before the true off, more so than at post time. It is less accurate the further out you go.superfrank wrote:it would be very interesting if someone could collate the same info based on the prices at the official off time, 1min, 2min and 3min before the off as well as at SP.
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psycho040253
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- Joined: Thu Mar 10, 2011 9:29 pm
Euler wrote:
So value gaps do appear all over the market. The only problem you face is finding enough value to overcome commission charges. But it is possible.
Yes, Mr Euler, good sir, it is possible. I've been getting about 17% 'value' (after 5% commission) for quite a time now.
Also, if a market, overall, is efficient and a horse, or a number of horses, has X% backing value, then, by definition, there must be a horse, or a number of horses, in the same field, which has X% laying value.
Psycho
So value gaps do appear all over the market. The only problem you face is finding enough value to overcome commission charges. But it is possible.
Yes, Mr Euler, good sir, it is possible. I've been getting about 17% 'value' (after 5% commission) for quite a time now.
Also, if a market, overall, is efficient and a horse, or a number of horses, has X% backing value, then, by definition, there must be a horse, or a number of horses, in the same field, which has X% laying value.
Psycho
So it is perfectly possible to see horse say with SP of 1.4 when in reality it should be 1.5. And maybe even bigger discrepancies on lower liquidity markets.Euler wrote: So value gaps do appear all over the market. The only problem you face is finding enough value to overcome commission charges. But it is possible.
That's good to know.
Great thing about racing is you can find out quickly what real value was unlike with financial markets. Although in general those are efficient too.
Reading this thread it would almost lead a novice to conclude that the starting odds of every horse exactly matches the chances of that horse winning!
This is one of the great myths of racing and is perpetuated by people who can prove, via the Massey or Betfair sites that when you examine all the 2/1 shots that set off round the racecourse they do in fact win once in every 3 times.
Now I see a dichotomy in this argument, don't you?
It's patently obviously impossible to categorically state that any horse has an X% chance of winning and therefore the odds at the post time is only a best guess as to the horses chances. And in the tradition of best guesses, they are often miles away from the truth. The fact that horses can go off at totally the wrong odds does raise the question "where does this leave the precise nature of odds making"?
The real truth of the matter is that no single horse ever reaches post time at the exact odds matching its actual chances of winning the race. That being so, then you have to conclude that there is some other factor at work in these statistics.
Enter the world of collective correction and you will come to the conclusion that the stats are correct overall because there is a force at work that weighs the the balance of odds over many samples and makes corrections that serve to reinforce the statistics.
On any single day at Ascot you may find that every favourite went off at odds lower than their true chances but you can also guarantee that in a day or two at Thirsk the favourites on that day will go off at odds that will compensate for the poor value punters got at the Ascot meeting.
Statistics are just statistics; the variation in them and the auto corrective nature of racing odds will ensure that they remain statistics.
This is one of the great myths of racing and is perpetuated by people who can prove, via the Massey or Betfair sites that when you examine all the 2/1 shots that set off round the racecourse they do in fact win once in every 3 times.
Now I see a dichotomy in this argument, don't you?
It's patently obviously impossible to categorically state that any horse has an X% chance of winning and therefore the odds at the post time is only a best guess as to the horses chances. And in the tradition of best guesses, they are often miles away from the truth. The fact that horses can go off at totally the wrong odds does raise the question "where does this leave the precise nature of odds making"?
The real truth of the matter is that no single horse ever reaches post time at the exact odds matching its actual chances of winning the race. That being so, then you have to conclude that there is some other factor at work in these statistics.
Enter the world of collective correction and you will come to the conclusion that the stats are correct overall because there is a force at work that weighs the the balance of odds over many samples and makes corrections that serve to reinforce the statistics.
On any single day at Ascot you may find that every favourite went off at odds lower than their true chances but you can also guarantee that in a day or two at Thirsk the favourites on that day will go off at odds that will compensate for the poor value punters got at the Ascot meeting.
Statistics are just statistics; the variation in them and the auto corrective nature of racing odds will ensure that they remain statistics.
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psycho040253
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JamesJames1st wrote:Reading this thread it would almost lead a novice to conclude that the starting odds of every horse exactly matches the chances of a horse winning.
Statistics are just statistics; the variation in them and the auto corrective nature of racing odds will ensure that they remain statistics.
Regarding the first point, I have to say that I completely agree.
Regarding the second point, I strongly disagree. The fact that on average and over the long term, a horse's strike rate is determined by its Betfair odds at the off is an important point and isn't JUST statistics. It has crucial implications. It means that, over the long term, and on average, a backer MUST obtain better than Betfair odds at the off and a layer MUST obtain less than Betfair odds at the off in order to be successful. If they don't, they WILL lose long term. Of course, there's the issue of determining where the odds of a horse will be at the off to resolve, but that's another issue.
The other important point is that this thread introduces the concept of 'value' to a novice and identifies what the implication is of not understanding or not obtaining it.
Just for the novices .......
Suppose you back 20 horses using the minimum £2 stakes at average Betfair odds of 1.9 and their average Betfair odds, at the off, was 2.0. According to theory, 10 of the horses will win and 10 will lose. Our profit on the 10 winners will be 10 x 2 x 0.9 = £18. On the £18 profit, we will pay 18 x 0.05 = £0.90 in commission. Our total profit will therefore be 18 - 0.90 = £17.10. However, on the 10 losers, we will lose 10 x 2 = £20. Therefore, our overall profit on the 20 horses = £17.10 - £20 = a loss of £2.90. Why did we make a loss even though 50% of our selections won, as they should have? Because the odds that we obtained when we placed our bets were below the Betfair odds at the off. In other words, we didn't get any value.
Psycho
If you want a good demonstration of an efficient market try losing money on the exchanges. Despite my best efforts, over the long term I've only ever managed to more or less break even before commission with a net loss appearing after deductions.
If any does have a consistently losing system then I'm really interested in seeing it.
If any does have a consistently losing system then I'm really interested in seeing it.
This is not really correct.Regarding the second point, I strongly disagree. The fact that on average and over the long term, a horse's strike rate is determined by its Betfair odds at the off is an important point and isn't JUST statistics. It has crucial implications. It means that, over the long term, and on average, a backer MUST obtain better than Betfair odds at the off and a layer MUST obtain less than Betfair odds at the off in order to be successful. If they don't, they WILL lose long term. Of course, there's the issue of determining where the odds of a horse will be at the off to resolve, but that's another issue.
The statistical fact is that the set of all horses which start at a price x have a winning chance of x.
That is not to say that all the horses within the set have a chance of x. There is a distribution of chances within the set.
The aim is to find the horses within the set that have a lower chance of winning than x and back them, while laying the ones with a chance greater than x.
The distribution may well change shape as more informed punters bet, and there is a theoretical possibility of all the horses being correctly priced.
that's good point, loosing system smells moneyEuler wrote:If you want a good demonstration of an efficient market try losing money on the exchanges. Despite my best efforts, over the long term I've only ever managed to more or less break even before commission with a net loss appearing after deductions.
If any does have a consistently losing system then I'm really interested in seeing it.
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psycho040253
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Mr Payuppal, good Sirpayuppal wrote:This is not really correct.Regarding the second point, I strongly disagree. The fact that on average and over the long term, a horse's strike rate is determined by its Betfair odds at the off is an important point and isn't JUST statistics. It has crucial implications. It means that, over the long term, and on average, a backer MUST obtain better than Betfair odds at the off and a layer MUST obtain less than Betfair odds at the off in order to be successful. If they don't, they WILL lose long term. Of course, there's the issue of determining where the odds of a horse will be at the off to resolve, but that's another issue.
The statistical fact is that the set of all horses which start at a price x have a winning chance of x.
That is not to say that all the horses within the set have a chance of x. There is a distribution of chances within the set.
The aim is to find the horses within the set that have a lower chance of winning than x and back them, while laying the ones with a chance greater than x.
The distribution may well change shape as more informed punters bet, and there is a theoretical possibility of all the horses being correctly priced.
When I used the term 'Average', I assumed that anyone interested enough to read this thread would assume that the chances of the selections within the set whose odds at the off = x would have a chance of winning which was distributed about the mean x.
Also, when you wrote 'The aim is to find the horses within the set that have a lower chance of winning than x and back them, while laying the ones with a chance greater than x', you really meant 'The aim is to find the horses within the set that have a HIGHER chance of winning than x and back them, while laying the ones with a chance LESS than x. I assume that this was either a typo or a case of a little too much Christmas cheer - or have I missed something?
Psycho