Analysing a Horse Racing Market. Part 1

[JollyGreen]

First I want to start by saying you can never be 100% correct when judging the markets. Are the markets correct? Definitely yes! Could you use the market direction to back or lay horses and make a profit? Possibly! I have to say possibly because I know it can be done but I also know you have to put in other factors to make it work in your favour. If it was a simple as backing steamers and laying drifters there would be nobody on this forum we would all be too busy counting our money!

EDIT. The markets are correct on Betfair because they purely reflect the money in the market. It does not mean the odds are correct for a chosen runner if you use your own methods. One horse could be too short and the slack is taken up by another to balance the overall market. This is where an opportunity lies

So how do you analyse the market and then use the prices on offer to your advantage? I warn you now this could be a long post, I did make some preparatory notes but I'm sure I will wander off piste, so to speak!

I stumbled onto trading by complete accident. About two years before Betfair was introduced I was writing on various websites and for some smaller publications. I hasten to add they have now all disappeared but that was not because I stopped working with them, these things spring up all over the place following a trend and disappear almost as quickly as they appeared. On one particular site I was providing analysis based purely on form and I was advising people to back a horse but I always put a price point at which I personally would bet on the horse. This worked for some people but caused controversy for others, the others being what I would describe as mug punters or trolls! Basically I would advise a horse but I felt had a good chance of winning but I would suggest that it was not bet unless the price was 3/1 or bigger. If the horse opened in the market at 5/2, smashed into 15/8 I would not be betting it but plenty of people on the forum would see the money for the horse and assume I must be correct and they would increase their stake. The horse would then be beaten and I'm sure you can appreciate my name was taken in vain and my parentage was questioned! I made the mistake of being honest and saying I had not had a bet on the horse because it did not meet my minimum price. As is normal on forums (this one aside) the vitriolic comments started to flow. People simply could not understand why you would not bet a horse when the price was shortening. To me it was quite simple; in my market based on my form I felt the correct price was 3/1. Now I cannot pretend that I am totally accurate but I know based on my betting activity on that type of horse I needed 3/1 or bigger to show a long-term profit.

It does not have to be made any more complicated than it already is. Imagine a game of heads or tails there really is no point in playing because it is even money for heads and even money for tails. So long-term you would expect to just break even. I know you could have a winning run but without going into some complex theory we can assume that breaking even is very likely. If you visit a casino and play a roulette wheel you know that long-term you cannot win. If it was that easy the house would not have marble staircases plush carpets and owners so rich they light cigarettes with £50 notes. Yes I know I'm exaggerating there but I am sure you get my drift. The same applies to a fruit machine in a pub you cannot win but you will always see people willing to put their money in time and time again. They are nothing more than a glorified money box for the pub landlord and you won't find me parting with my money!

So let's look back at the markets and decide how best we can profit from them. The first thing anyone needs to do is to completely remove the emotion. By this I mean do not listen to so-called experts on the TV in the newspaper or on the radio. As was mentioned in another thread about snipers, definitely do not listen to stable lads. If they were that good why are they a stable lad? You should also ignore comments from jockeys, owners, or trainers. What else would you expect them to say when questioned about the chances of their horse? Do you honestly think you would hear a trainer come on TV and say "no he's a complete dog I wish I wasn't training him to be honest!" I wouldn't mind betting that's what they feel like saying with some of their horses but naturally they're going to come onto the TV or radio and say "he's been a tricky individual but definitely has talent and I think he'll enjoy the ground today, he is as fit as I can get him!" They simply cannot be negative because they have owners listening and they'd soon remove their horses from the yard if a derogatory comment was passed about one of their runners. Yes, sometimes a prominent trainer will come on TV and say "we expect a good run from him today, he had a problem last time but we've cleared that up and now, we're expecting him to go very close!" This will probably see the price contract and you could catch a profit from that move. Does it mean the horse will win? Hell no!

Okay let me have a quick rant about things that annoy me when it comes to media coverage of Horse Racing. There are many experts on the TV, some of them are totally useless and couldn't tip a wheelbarrow. Some of them are good but they are not given the time to explain a selection and they are certainly not going to give away information on a horse when they have probably spent hours researching the race. So basically they are there to give the odd opinion on a race. I know some of these guys and they're shrewd enough to know which side their bread is buttered! You will notice that pre-race the "experts" talk about a horse's chance. They talk about the last race it participated in they might mention the ground but they will do that for just about every runner in the race. When the winner crosses the line, low and behold the commentator says "we gave a mention to that one so hopefully you were on?" They fail to mention every horse was covered at some point and therefore nobody would be on, at least nobody making a profit that is. You will also hear crazy comments like "oh that horse is trained by Tom George, his was the first horse box I saw this morning!" Cue the rush to the bookies to part with their hard earned cash!

Then you have the person in the booth who when seeing a drifter win the race comes out with the old gem "the market got that one wrong!" Well the market didn't get it wrong the market did exactly what it was supposed to do. Listen closely in future and you will note when a horse is smashed off the boards and the price goes down only to lose, the man in the booth will not say "the market got that one wrong!"

Another person that drives me mad is John McCririck when he says "they knew!" He usually spouts this one following a horse's victory where one of the major bookmakers published a shorter early-morning price. Yeah right, they just balance their book based on their odds complier's assessment of the race. If you check it out over the course of the year you'd have to give a mention to every bookmaker because in the immortal words of John McCririck "they knew!"

So to summarise if you want to be successful betting horses, laying horses, trading horses or a combination of all three you have to paddle your own canoe! Let me explain a bit further. If you are betting on horses it should be based on your assessment of the form, your knowledge of the race conditions etc. It doesn't matter if you are wrong so long as you follow your methods. You have to start somewhere and as time moves on you analyse both your methods and your results and look to eradicate the errors. It could be you are overrating certain horses? If you perform this long enough you will start to knock the edges of your creation. If you've chosen a horse called "Dead Cert" to win the 2:30 race at Cheltenham and the price starts to drift you should not be deterred. You have to remove yourself from the media frenzy that could be driving the price out. Unless the horse is misbehaving, sweating looks edgy you must stick with your selection. I am not saying that as a get out clause but events like that are not media driven. If your horse gets kicked when circling near the start you may have to cancel your selection and wait for another day. If the horse is behaving as normal but for some reason the price is drifting you should not stray from your belief that you have found the winner; well the potential winner anyway! If your horse has been chosen based on your methods and has not been injured or distressed in the build-up to the race then nothing has changed and you must stick with your choice.

If you've laid a horse because you believe it cannot win based on your methods but the price starts to shorten do not abandon ship. You made your selection based on known criteria so the fact you are now looking at a horse being supported in the market changes absolutely nothing. When all is said and done you are right or you are wrong and the price movement has no effect, or should have no effect on your judgement. I always say horses have no toes and can't count anyway! To be perfectly honest if a horse shortens and I have decided based on proven method the horse cannot win I will lay for more money as my risk is lessened and my reward is increased. There will always be a point where the price is too big for someone to lay it and that is why I mentioned the odds on offer from a coin toss or a roulette wheel. The same applies when selecting horses and only you can determine what value is for you. If a horse is 1.8 on Betfair and you feel it should be priced at 2.3 then you have a possible lay. Remember, you must stick to your method and adjust accordingly as your dataset increases. There is another way of looking at a market though when it comes to laying horses. You must have other horses that can beat the horse you have chosen to lay. For example, a horse could be priced at 1.8 on Betfair but at 2.3 on your book but it might not be a lay. You may have other prices in your book that suggest the horse may actually win the race. The price is not big enough to back but with nothing else likely to beat it, you cannot sensibly lay it. This scenario can and will arise so quite simply put a line through the race and move on. For example, a race is being run over 2m but all of the runners have no form over 2m and the breeding suggests they all may struggle. Because of this fact, you cannot sensibly oppose a horse simply on price. The favourite may win because he is the best of a bad bunch so you have to pass. If however, there are 4 other horses in the race with form/breeding over 2m but a favourite bred for 1m4f you have a chance to oppose it. Yes, I know it is complex but this is what you must look for. If you have any doubt - leave it out!

I'll move onto another part later.

[JollyGreen]

Well I have done okay trading the first three races but I must admit my internet is a bit sticky so I am going to let it settle down a bit. A couple of times it froze and thankfully the market had moved my way. It could just as easily freeze a bit longer and move against me so I thought I would highlight some things that occurred in the early races today.

In the first at Southwell I was keen to oppose Crytal Cove BUT before someone asks why it wasn't put on here let me explain. I was slightly concerned because none of the others looked to be world beaters so I needed to look for an in running opportunity. This horse is by Dubawi and his progeny seem to excel on flat easy tracks and a surface like the M5! The fibresand at Southwell is a deep slow surface and the only fast ground is in the car park! So I knew I could probably take on this horse BUT I needed to see the early pace. When he went like a bat out of hell I knew he would probably not get home so I laid him at low numbers. Sure enough he faded out of the places and I should have laid him in the place market.

Then we moved to Yarmouth for the 2:10 where the lemmings were drawn into backing Out of the Blocks. This horse was smashed up and I was laughing my head off as it flew past 2.0 and kept going! Now I did not lay this one because to be honest there was not enough ammunition to take it on with...BUT...this demonstrated that while the move in was correct on Betfair, simply because that is what the money dictated, it was not the correct price based on data available. So it was a case of, you shouldn't bet it but by the same token you couldn't lay it with supreme confidence.

Why was I against it? Well this horse's sire was Firebreak and Grand Sire was Charnwood Forest. Both of these sires produce progeny that love fast ground. If this race had been held in the car park then I would have been lumping on!! The reported going is Good to Soft and it is kicking up enough to suggest it is slightly slower. You can simply look at yesterday's times and it shows slower ground. So if you know that, how can you back a horse that would be at home on the M5?

So the lemming factor comes into play as mentioned before. As Jeff said the mugs are all scrambling to part with their money because they see a shortening price and they assume "someone knows something!" All the bookies are rubbing their hands with glee because they're dropping the price and the mugs are still piling in. The bookies are phoning their family and telling them to feed another goldfish to the cat and to hell with the expense...joke before the animal rights people jump on me!

So in two races there were two horses that were backed when they shouldn't have been and the first one was backed in running when many shrewd people knew it would not get home.

So now we move to Pontefract where the favourite drifted like the Kon Tiki! It was as if the horse had lost a leg. I laid it at 4.3 and it drifted out to 7.0!! That was a great trade for me. Despite it drifting badly it won easily! Was the market wrong? No, the market was spot on but it highlights the market is not a clear guide to the result!

I didn't hear any of the commentators mention "the market got this one wrong" when Toymaker sluiced in or when Out of the Blocks bombed.

Ignore what they say and paddle your own canoe!

[JollyGreen]

Here we go again....

Simon Mapletoft put many people away on the 3:00 Southwell with yet another gem the "experts" roll out. "You always have to take note when money comes for a David Barron horse!" So where did this horse finish despite being heavily backed? I think it is still running!

[Iron]

So now we move to Pontefract where the favourite drifted like the Kon Tiki! It was as if the horse had lost a leg. I laid it at 4.3 and it drifted out to 7.0!! That was a great trade for me. Despite it drifting badly it won easily! Was the market wrong? No, the market was spot on but it highlights the market is not a clear guide to the result!

Not sure I follow. When you say the market was spot on, do you mean that the true odds were 7.0?

Nice posts, btw.

Jeff

[JollyGreen]

So now we move to Pontefract where the favourite drifted like the Kon Tiki! It was as if the horse had lost a leg. I laid it at 4.3 and it drifted out to 7.0!! That was a great trade for me. Despite it drifting badly it won easily! Was the market wrong? No, the market was spot on but it highlights the market is not a clear guide to the result!

Not sure I follow. When you say the market was spot on, do you mean that the true odds were 7.0?

Nice posts, btw.

Jeff

No Jeff, I mean the market did as it was supposed to i.e. the drift was caused by money opposing the horse. So the market was correct to do that but the price was incorrect. When a trend starts it is easy for others to follow and keep it moving. 7.0 was far too large for that horse. The market movement can be correct but it doesn't have an effect on the result.

[Will Sharpe]

Excellent post JG, as always well written too.

[CaerMyrddin]

Congratz JG, great stuff as usual.

I wonder how many study form to trade, against how many just 'trade the numbers'.

It would be interesting to know that. Maybe Peter can run a poll on the blog?

[trader44]

just reading these post , great post jolly green much appreciated

[greety]

Great post JG. Thanks for the effort involved.