Analysing a Horse Racing Market Part 2

[JollyGreen]

Here we go folks, another update for you.


So we have decided to ignore the hype and work only using our method. You can choose whatever method suits you best, I cannot really advise you how to do it, I can and will explain how I look at a market and you can choose the bits that suit your style of gambling or trading. Let us not forget that trading is gambling (or the Tax Man may be after us!) but you are betting on a movement and not on the complete event. This allows you to keep risk to the minimum as you can exit at any point. Some people prefer to bet, some prefer to lay so I am not going to insist you follow one method or the other. In my posts on horses to oppose or back, I try and show both ways of profiting so all can benefit.

So how do we choose which horse will win or lose a race, what is the basic requirement we are looking for. Ultimately we are seeking the horse that crosses the winning line ahead of the others. I know we have steward's enquiries but let's leave that to one side. So which horse crosses the line first, is the fastest horse or is it the best horse on the day? Well if we are honest we have to say it is neither. A race can be won by any of the runners and they may not be the best or fastest as events like falls, injury can all affect the result. We cannot really factor that into our analysis but we have to accept it as part of our long term profitability. Here is a tale of woe that highlights the problem.

I had a share in a horse and we were hoping one day to have him fit and well in order for him to win a race. He'd had a few niggling injuries so it was a long road to recovery. We finally had him somewhere near his best and sent him out for his first race for about 18 months. The handicapper had been kind and dropped him a few pounds so we were happy with that. We couldn't really back him because we needed to be sure he would cope with the stresses of a race again after his rehabilitation. Unfortunately the rain came and the ground went too soft meaning he would run okay but we would not see him at his best. He took his chances and after the race the jockey reported he took a big blow 3 from home and then picked up well to the finish. That told us he did need the run but all seemed well health wise. We prayed he would eat up and not be cast in his box. The next day he was fine and so we knew he had come out of the race well. We scoured the entries to find a race and finally we found one. He was probably 20lb better than his official mark and we felt he was a very likely winner. The day came and the money was down, serious money was down at nice prices. I sat to watch the race like an expectant Father at the birth of his first child. The race started and they approached the first obstacle, the leader tipped up on landing and fell sidewise. Two horses were pushed sideways and one unseated the jockey who then brought down our horse! Almost 2 years of preparation went pear shaped in 20 seconds of racing! It goes to show you never can tell!

You will notice in my tale of woe I mentioned an official handicap mark. This is the rating assigned to a horse based on performance. Basically they say weight stops trains and they use it to slow down horses. To gain an official mark the horse needs to run 3 times to be assessed. The handicapper will rate him by his proximity to another horse in the race; you will hear this referred to as a yardstick. A horse can also be assigned a mark if he wins a race or finishes close to a decent horse. They changed the rules not so long ago and I must confess I am not fully up to date. It's a vagary that won't really impact on most of my analysis so I tend not to waste time on it.

We are now into the new flat turf season so we will have a lot of debutants running. This is a punter's graveyard because there isn't much to go on. Yes, you can look at breeding and physical size but even then the horse could be a complete head case and run as green as grass. The latter means the horse is unprofessional, he/she doesn't know how to race yet, something you have to expect in young horses, especially 2 year olds. They can pull hard and not settle they can plant themselves at the start, they can hang in behind other horses, throw their heads up etc. All of these problems will probably mean a horse is wasting its energy doing things it shouldn't and therefore is not a betting proposition.

That is why handicaps are supposedly more competitive in terms of racing and prices. I have to say supposedly because we all hear about the handicap good thing and how money comes for certain horses. So how does the handicapping system work?

Imagine yourself turning up to the Dad's or Mum's race at your child's school. You're pretty fit and used to run in your youth. You strike a wager with some friends that you are going to win. The race starts and you look up to see another parent disappearing into the distance. It turns out Linford Christie has children at the school and you've been hammered! The same thing could happen if you didn't know who Linford Christie was but either way you are extremely unlikely to beat him unless as mentioned earlier an accident occurs! Now if we used handicapping based on horse racing we could ask Linford to carry his child and that might give us a sporting chance!! So in a nutshell that is how handicapping works in horse racing. The best horse carries more weight than his supposed inferior rivals. So now let's look at it from an "inside information" point of view, ah….that Holy Grail of riches! We turn up to the school race only this time we know that Linford Christie is participating so we are either betting for him and taking bets on other parents in the knowledge that barring accidents we are in the money….unless Usain Bolt also has a child at the school and he's a late entry!! Anyway, that highlights how elusive inside information really is and 99% of the time you are never going to get it!

Now we know how horses are assessed and how we judge them, why then would anyone want to bet in a maiden or 2 year old race where there is little or no form to view? That is why these types of races are volatile in terms of market moves. The stable lad is having £100 on his stable's 2yo, the bloke down the pub said this one is catching pigeons on the gallops, the van driver who delivers parcels to the local stable says their horse is a dead cert! All these whispers gather momentum at some point in time and the prices follow suit. In the local bookmakers the mugs and lemmings will be lining up to bet the money horse. When it loses they'll say racing is bent and ask how a 20/1 outside can beat a 4/6 favourite? Horses have no toes remember…..they can't count. So in this type of race my advice is simple; leave it alone and expect the unexpected.

Now we know weight stops horses, what else should we look for? Time! The winning time can tell us a lot about a race but it will be ignored by all but a small percentage of the gambling fraternity. The other important aspect, perhaps even more important is pace. To win any race in the best possible time you need to set the correct pace throughout and maintain it all the way to the line. This applies in any form of racing. If you look at Formula 1, the car that maintains the best lap time over the course of the race will win. In swimming the person who slows down the least wins the race in the best time. In an Olympic 200m freestyle race there is no point recording 65 seconds for the first 100m and then sprinting the final 100 in 50 seconds because you'll be about 15 metres behind the winner. Your finishing burst will look good but it won't bring home the bacon! The world record for 200free is 1:42 by Paul Biedermann so I have created some arbitrary times.

How does this affect us when looking for the best horse? Well if you watch a race and a horse wins hard held it actually means very little unless you know the overall time of the race and the pace at which it was run. The former Champion Hurdler Binocular won the Kingwell Hurdle in December 2011 and he looked impressive. That signalled money for him as the lemming factor kicked in. In truth it was only an okay performance and clearly not a Champion Hurdle winning performance. Sure enough he flopped at Cheltenham. I wrote in an earlier post that he had beaten trees in the Kingwell and that was proven to be correct. When you get a chance, visit a bookie's for an hour and listen to the banter. You will always hear punters say "this horse hacked up last time out and he's 9/1 today". What they fail to understand is last time the horse had beaten trees in a slow time and when he subsequently finishes last they start the "racing is bent" conversation. It is very easy to fall into this trap so always ask yourself "what did it beat and what was the time?" You can get this from the Racing Post and compare it to other results on the day at the same course.

The real "lemming" horse is when it beat trees last time out in a poor time but this time it is up against better rivals. The price is short and so the punters naturally assume it is a good thing. After all it won with its head in its chest last time and the price confirms it will win. Sorry to keep repeating myself but then the "racing's bent" conversation starts up again. I am sure you are starting to see the pattern here. Sadly, every now and then one of these "tree beaters" wins the next race and this keeps the lemmings coming back for more and more. I know it is a cynical of me but trust me it is true - I was once that mug punter!

I have yet another hospital appointment so I'll stop here.

Please let me know what you would like me to include in the next section. I will have some recuperation time on my hands so can write it on my laptop.

Hope it's not too boring

JG

[gazuty]

Love reading your thoughts big fellow.

I can't wait for Black Caviar to get over to the old dart. Check our her sectional times. When you get a chance can't wait for you to post an analysis of her vs Frankel. Are sectional times measured in the uk? Maybe a compare can then be done in the lead up.

Both great horses and in true Aussie spirit, bc will meet Frankel on his turf at his distance. Speaking of value, BC's first uk race may be the only chance to ever get on bc at over 2.0.

[Iron]

How reliable an indicator of a horse's chances is the RP rating?

And if a horse has one of the top RP ratings in a race, but is a 20/1 shot, is it probably a value bet, with potential that's been overlooked by the market?

Thanks

Jeff

[JollyGreen]

Jeff

I cannot really comment on something like that because I would need to see the race itself. For example, there could be plenty of improving types in the field who may surpass the top rated horse. Perhaps it's returning after a long lay-off, the reasons are plentiful. That's just two things to consider but I would say it's unlikely you'd get 20/1 about the top rated unless something else was wrong.

[Iron]

Thanks JG.

Here's a case in point of a top rated outsider. In the 14:00 in Catterick, a 12/1 shot is joint top rated (Economic Crisis): http://www.racingpost.com/horses2/cards ... aceTabs=sc_

I wonder if the odds are something to do with the fact that the trainer is Alan Berry, who isn't known for having an over-abundance of winners!

Jeff

[JollyGreen]

Hi Gazuty

I'm pleased you like my posts, thank you for taking the time to reply.

We have sectionals here but due to the weird courses we use they can be open to interpretation! In your part of the world I think the courses are more uniform so decent sectionals can be used. I started using them many years ago and they gave me a real edge. Sadly, they are commonplace now so the edge has been eroded.

I would love to see Black Caviar in the UK especially against Frankel. I think I would even go to the course to see them in the flesh. It will be a good battle and only time will tell which one prevails.

JG

[JollyGreen]

Jeff

A truly awful race with 3yo of low calibre. Have they trained on, grown, will they handle the going? There could be potential improvers (at this level) so that older top rating is almost worthless. A few pounds either way would cover the whole field.

[JollyGreen]

The likely favourite Onenightinheaven and likely 2nd favourite Majestic Breeze are by Choisir and Majestic Missile respectively both of which tend to produce horses that prefer fast ground. We won't know the true state of the ground until the first race is completed but if it is on the soft side it may not suit either of them. The conundrum is what will beat them or are they the best of a bad bunch?

[SamWilson82]

Great posts JG, really interesting to get an insight into how you approach a race.

I think I would find it very difficult to mix trading and punting because even if i could pick winners or losers (Which I cant), I feel it would affect my trading decisions. If I Expected a price to shorten/drift and come into line with "my prices", I might be reluctant to get out of a negative position or might go in too heavy from the start.

Lets say that like yourself I could identify value and know that in the long run I will make a profit. I mark something up as a 3.5 chance and its trading at 5.0. I would naturally be wanting hug the backside of the market in expectation of a move.. but hang on.. My trading eyes and indicators are getting signals of a potential drift to 6.0. This would throw me off completely.

Does this warn me against backing it?
Do I back it for more as the price becomes more out of line?
...But I want to Lay it to stay true to my trading plan and instincts.

I just cant get my head around mixing the two up and just couldn't deal with the extra variables

I was also wondering how much you thought that instinct played a part in your decision making over what a price "should" be or how much of a statistical model went into your "tissues"? In the same way that i believe many successful traders have a good instinct for predicting price movements I wonder if a similar sense plays a big part when going through the form and analyzing a race.

Sam

[gazuty]

Big fellow. Imagine if you could have been let loose in a closed market like Hong Kong back in the day, where once upon a time there were a fixed number of horses which could all be analyzed and Alan ruled the bookies and smashed them apart when they mispriced - for those who dont know him - http://www.theaustralian.com.au/news/ga ... 1115456105

The main thing Alan discovered, in the Hong Kong scene and after building his bank card counting, back horses when they return from a spell and are priced at value and then after a couple of races forget about them.

[JollyGreen]

Hi Sam

Thanks for your input and for the kind words. You are 100% correct, never go against what the market is doing. In earlier posts I have said many times I do not try and go against the trend. If I feel a price is too low and am looking for a drift I will not be actively holding a position. If the market starts to shorten a price I am very happy to trade that downward move. If I am uncertain then I will simply abstain.

I think I should state that these market analysis threads are more aimed at helping people to understand where the money goes and why....on the majority of occasions. It is an insight into how I look at a market especially when I feel a favourite is far too short and am looking for a straight lay.

I would also like to add that I keep trading and straight laying/punting completely separate.

I use instinct a lot when looking at a favourite's price, you get a feel for what is correct. Having said that the market still baffles me with some of the weird prices it throws up. I use similar instinct with trading, I get a feel for how the price is moving, how much it is moving and which way. I use a method for creating a tissue based on form/stats/conditions etc but this is more for finding winners and losers. I also use it to leave certain runners out to form a Dutching or Bookmaking opportunity.

So in a nutshell, you are correct, do not mix the two as it can influence your view of the market from a trading aspect.

JG

[JollyGreen]

Hi Gazuty

I think he also took advantage of the over rounds in the market if my memory serves me correctly? I know one of the syndicates did that when they had large sums of available money. They simply skimmed the error off and made fortunes.

JG

[gazuty]

Hi JG (aka big fellow)

[not for you big fellow - but for others - The over round in bookmaking generally comes from mis pricing in the book makers favor those beyond the first three favorites. Old fashion rails bookies have bad days when all the favourites comes home.]

"It was a system that required hundreds of bets on a single race  and saw Woods wager a staggering $500 million on Hong Kong racing in 2007, for a profit of  about $40 million."

Woods system focused on when the favourites should really have been shorter. He had to hit lots of bookies at the track all at once to prevent/ minimize odds movement.

Would have been very exciting and all in the days when one could only back and not lay. He would have loved the exchange.

Keep up your analysis big fellow. Love reading what you do.

Gazuty