Directory of Past issues - April 2009

7th April - How to cash-in on the bookmaker's natural disadvantage

16th April - Learn how to listen when money talks

21st April - The shady truth behind 'steamers' and market movers

28th April - The importance of 14-day form stats

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7th April 2009

Good afternoon, friends,

In today's Horse Racing Focus...

• The bookmaker's natural disadvantage...
  
• Specialisation is the solution...
  
• Where to specialise this flat season...

The bookmaker's natural disadvantage...

Spend a little time working for a bookmaker and it quickly becomes
apparent that the ordinary racing punter enjoys a natural advantage
over the professional layer. The ordinary punter gets to pick and
choose the races in which he gets involved and risks his money. The
bookmaker faces a different imperative. He must provide a market on
every race. A failure to do so would concede commercial advantages
to his competition.

Believe me, there are plenty of events a bookmaker's racing traders
would rather not get involved in - races where they don't really
have a line on the horses and are at risk of getting picked off by
punters who do. It might be that difficult maiden sprint at Ripon,
the Class 6 donkey seller at Wolverhampton, the bumper full of
unknown animals in Ireland, the race full of untried 2 year olds,
the Hunter Chases or the hard-to-call novice hurdle handicaps.

Where races like these are concerned the traders are outside of
their comfort zone. In an ideal world they would choose not to get
involved. But in the real world they must. Unsure of what they know
or what they don't know, their book will be very much at the mercy
of the money. If they get it wrong, the money will come and so will
unwanted liabilities. It's a stressful situation for the traders -
one where they can end up looking pretty stupid.

They will not want to be picked off by the smart money. Eyes will
be glued to Betfair and Oddschecker all morning watching for clues
and warnings in the market's movement. Bets placed will be
scrutinised closely. Traders will be looking for clues as to which
animals they might be the wrong price on. They'll want to identify
that as early as possible - before too much liability is worked up.
They will not want to be a stand-out price on anything attracting
support.

Specialisation gives you the edge...

The lesson here is that there's so much racing to cover that even
the bookmaker and his trading team - with all the financial clout,
human resources and technical expertise you could wish for at their
disposal - cannot master every single area of racing. So what
chance the punter managing the feat? Not much.

It's something to bear in mind as the flat season gets underway.
Between now and the end of the flat there are going to be so many
meetings and so many races for so many different type of animal
that no punter can hope to keep on top of it all and develop a
coherent approach. No punter can expect to be the Jack of all
trades.

The solution is specialisation. If you focus your attention on one
small area you can become an expert - and that's a real edge. You
can know more about a small group of horses, a trainer, a course, a
jockey or a specific race type than the vast majority of people you
are betting against - with a minimum of effort. And it will also
give you an edge over the hard-pressed bookmaker who has no choice
but to get involved in everything that is going on.

Areas where you could specialize this flat season...

In-depth knowledge of a one or two specific area of racing will put
you streets ahead of the average punter when it comes to avoiding
bad bets and latching onto the good ones. Here are just a few ideas
for areas where you might consider focusing your attention and
becoming a specialist during this coming flat season:

• Specific segments of the racing population...

You could focus on a specific group of horses - whichever specific
group most reflects your personal interests. Where the flat is
concerned I tend to focus my attention on horses running over 5f-8f
in the better quality handicaps. It's a manageable group for me. I
study their preferences - what kind of ground they produce their
best on, what kind of tracks suit their style of running, what size
fields they run best in, what distance is their optimum trip.

This work enables me to avoid certain horses when they represent
bad bets and get on their side at good prices when my research
suggests the wider market (represented by the prices available)
have got their preferences wrong. I could never hope to study every
horse in training in such detail. But, because I've specialized,
the workload is manageable and possible.

I also scrutinize the results of these races with a fine toothcomb
- racetimes, comments in running, trainer and jockey comments,
formbook analysis. Because I'm playing close attention to a
relatively small group of runners, it means I can pretty quickly
build up an in-depth knowledge of my specialized area that puts me
at an advantage over the market.

• Get to know individual trainers inside out...

One punter of my acquaintance prefers to study trainers rather than
horses. Not all trainers - just a few. He studies how they campaign
their horses, keeps a close eye on how the their strings are
performing, at which courses their runners excel, under what
circumstances the trainer's sole runner at track should be backed,
the trainer's preferred methods of running horses so that they drop
down the handicap, their preferences for early pace or holding
horses up, the jockeys a trainer prefers to use when he has a live
runner.

My acquaintance is particularly interested in identifying gambling
stables and will closely watch the markets prior to racing - with
the intention of identifying the telltale signs of a stable gamble
on an a fancied runner. When he sees the signals he's watching for
he's able to snap up the best prices available with some degree of
confidence.

When we go racing he's forever looking about - trying to spot
trainers on the course who might be expected to be at another
course. With some specific trainers this can be a clear signal that
they've turned up to watch a 'live' one. He even claims to know
when specific trainers are talking down a horse's chances or,
conversely, hyping its chances up. He reads everything written
about 'his' trainers and analyses every reported word they utter.
He's specialized to such a degree he believes he can read some
trainers' minds.

This information is out there to be identified. But you won't find
this kind of detailed information in your Racing Post or on the
racing page of the The Sun. It takes work - work you must undertake
yourself. It's an investment of time and effort - but the reward is
a real edge over the market which remains largely ignorant of these
telltale facts.

• Specialise in horses at specific courses...

I wouldn't dissuade anybody from working hard to become an expert
on a specific course or courses. It can be an extremely effective
method of improving your betting performance.

For a long time my local course was Goodwood and I studied it
heavily - figuring out the prevailing draw biases, the types of
horses that could best take advantage of a good draw, whether pace
horses or hold-up horses were getting their noses in front and on
what ground, how top weights were performing in handicaps, how
favourites were faring, which trainers were excelling with their
runners, which jockey's were riding the course's significant
undulations to best effect and over what specific distances and
which horses saved their finest performances for the race fans on
the Sussex Downs (the legendary Zuhair and Flak Jacket are classic
examples).

It's no coincidence that Goodwood has always been a profitable
course for me. The profits are directly attributable to the
investment of work involved in specializing.

These are just some ideas. There are dozens of alternative
opportunities for specialization. The trick is to know more about
your specialized area than the rest of the market - giving you a
serious edge. This requires work (yours or someone else's). But the
rewards make the effort/expense (time and/or money) more than
worthwhile.

Until next time, be lucky.

16th April 2009

Good afternoon, friends,

In today's Horse Racing Focus...

• The money speaks... But what is it telling us?
  
• The wisdom of crowds...
  
• Using the wisdom of crowds when laying horses...

Apologies, dull times and my mailbag...

First of all please accept my apologies for the delay in getting
this week's issue to you. I've been between addresses for a few days
and unable to connect to the Internet. However, I'm settled again
now and it will be business as usual from this point forward - with
HRF letters arriving in your email box on Tuesdays.

This is probably the dullest point of my racing year. The Cheltenham
and Aintree festivals are behind us and the jumps season is winding
down. The flat season is yet to really pick up the bit. It's a time
of reflection and preparation - rather than a time of heavy betting
activity.

It seems as good a time as any to highlight an issue arising from my
HRF mailbag. I get quite a lot of mail and I do try to answer it all
(although the replies are sometimes subject to delay). Where readers
highlight subjects or make points that would be of interest to the
wider HRF audience, I like to share my response in this column... so
without further ado...

The money speaks... But what is it saying...?

A lot of readers know that I'm a confirmed layer of horses on the
betting exchanges - and that laying losers accounts for a large
portion of my income. As a result, I've been asked a number of times
why I don't offer a lay tipping service. And the answer is because
50% of the time my lay selections are made in the moments leading up
to the 'off' in a race. As such, there is literally no time to share
the information.

How about making the selections a bit earlier in the day, Nick?
Well, that would be possible with lay selections I make based on my
usual statistical analysis of form. But my daily bread and butter
lays are based largely on what the market is telling me - rather
than just the stats.

Betting is a profits game. And if I can turn a decent profit quickly
and without a great investment of effort then I will do so. As time
goes by I'm finding that the exchange markets themselves are a rich
source of information and guidance when it comes to quickly finding
losing horses to lay.

The wisdom of crowds...

A while ago I read a book called The Wisdom of Crowds by a guy
called James Surowiecki. He discusses in detail the idea that, under
certain conditions, collective opinion is likely to provide more
accurate predictions than individual opinion.

Ask a large enough group of independent people to predict an event
or estimate a probability and you'll get a range of responses. Take
an average of their estimates and individual errors of judgement at
both ends of the spectrum of opinion will cancel themselves out. In
other words, collective opinion will get us closer to the right
answer than individual opinion is likely to.

Betfair markets are a collection of opinions represented by money so
they really ought to be a rich source of valuable information for
those in the business of prediction - as we racing punters most
certainly are.

What's more Betfair markets meet the criteria Surowiecki lays down
for a 'wise' crowd: Betfair markets have

• Diversity of opinion - everybody has their own ideas and
  information.
  
• Independence - people's opinions are not determined by those
  around them.
  
• Decentralisation - people are able to specialise.
  
• Aggregation - a mechanism exists for turning private opinions
  into a collective decision (in this case the Betfair market itself).

When I started to think in more detail about money on Betfair
markets representing collective opinion - I had one of those
deceptively simple breakthrough moments that helped me see the
market in a different way and enable me to identify horses ripe for
laying without having to work too hard or engage in hours of
analysis.

How to use the Wisdom of Crowds when laying horses...

The important thing is to be on the exchanges and looking at the
market in the last few minutes leading up to a race. That's when the
majority of money is laid down - when the collective opinion really
starts to take shape.

That's the one time when you can clearly see - via price movements -
what the collective opinion of the race is. And remember, the
collective opinion is likely to get us closer to the 'right' answer
than individual opinion.

In the moments leading up to a race we can see exactly which horses
are coming in for sustained support from the collective - the price
will contract. Similarly we can clearly see those horses that
collective opinion is steering us away from - the prices will drift.
You must check this out for yourself. Just take a look at a few race
markets in action.

After a period of watching the markets in this way, it soon became
apparent to me that the market is indeed a rich source of
information - that is right often enough to justify following its
sentiments. When horses drift in price just before the off the
collective opinion is telling us that they are unlikely to win. The
collective opinion is drawing our attention to a horse that is
likely to lose. We have found ourselves a potential lay.

Laying in the Place market can keep the liabilities down...

In any single race numerous runners will contract or drift in price.
It's down to us as individual punters to figure out which is the
best horse to focus our bets on - form study and specialist
knowledge, statistics and price considerations can all play a part
here.

I don't like big liabilities when I'm laying. I don't want to be
laying 8/1, 9/1 or 10/1 shots. In instances where a horse has
drifted from 6/1 to say 8/1 just before the off, I won't lay it in
the Win market. Instead, I take the view that the collective opinion
has the horse right, that it isn't going to win and that it probably
isn't at the races full stop and so won't be competing at the
business end of the race. I will lay the horse in the Place market -
where my liabilities are smaller.

Of course, this approach isn't completely foolproof. Drifters do win
the odd race. And they do manage to place. But over the last few
months, I've done pretty well using this method to come up with my
daily bread-and-butter lays. I'd like to pass them on - but there
simply isn't time. But now you know how I'm working, maybe you can
find a few of these lays yourself - using the wisdom of crowds. 

Until next time, be lucky.

21st April 2009

Good afternoon, friends,

In today's Horse Racing Focus...

• How one man can move the market...
  
• Traders and shrewdies...
  
• The snowball effect...

The pitfalls of following the early morning money...

Last week I talked about how betting exchange markets can provide
an excellent guide to the outcome of races. In the moments leading
up to the off the money talks. Friendless horses, attracting little
interest from the market, can be considered ripe for laying - at
the very least they bear close examination. Friendless horses do
occasionally win or place (no method works 100% of the time). But
frequently they do not - and that makes them a potential source of
profit.

However, as a more general strategy 'following the money' is not
without its pitfalls. The market can be deceptive. Nowhere is this
truer than in the early morning markets. On any race day, about
11am, log on to Oddschecker, go to their Racing section and take a
good look at the day's 'steamers'.

By mid-morning there's usually a long list of horses which have
contracted in price in the couple of hours since early bird prices
were released. A number of these horses will have contracted
significantly. Horse A might have opened at 20/1. During the course
of the morning literally every firm on the block has cut the animal
down through the prices to 12/1. In some places it might even be
10/1. And exchange prices will mirror this activity.

To the untrained eye this market activity might suggest that
there's some real, wide and deep market optimism about this horse
and its chances. The contraction of price might suggest that plenty
of the punters you're up against know something you don't - and
that they're actively wading into the early morning prices with
fists flying. The market appears to be suggesting that this horse
is significantly fancied.

Sometimes that might actually be the case. But more times than not
this market activity is the work, or more accurately, the
consequence of a single punter. One man can shift a market - if
he's the right man. To show you what I mean, let me take you to the
trading room of a major bookmaker on the morning of any given race
day...

Traders and shrewdies...

It won't surprise you to learn that the people who work the trading
desks for the bookmakers are enthusiastic punters. They occupy a
privileged position in the information chain - and naturally they
take advantage wherever and whenever the opportunity arises.

One element of information they get access to, which the ordinary
punter doesn't, are the betting records of the bookie's own
clients. We all know someone who will tell you, should you ask,
that where betting is concerned there's only one winner - the
bookie. That statement is partially true. The bookie does win. But
he's not the only one. There are plenty of decent punters out there
who get their nose in front of the rest and come out on the right
side.

Every bookmaker can point to a list of punters who are or have been
generally unprofitable to do business with. These are the
shrewdies, the people in the know, connections with valuable inside
information, the good judges, the astute and the downright clever.
These are the punters who the bookmaker doesn't really want to bet
with. These are the punters he wants to 'mark up' and limit.

That's the bookie's prerogative. We punters don't like it. But a
bookmaker exists to profit. Them's the facts of punting life. As
far as the punting trader is concerned these 'markers' are a
fabulous steer. When the 'marker' gets on the phone or places a bet
over the Internet, traders are instantly alerted to his opinion.
Given the fact that this marker is profitable, it will come as no
surprise to learn that plenty of traders are happy to follow his
money.

It might be a punter who shows long-term profit on Irish racing.
He's well worth paying attention to when he places a bet on an
Irish race. He might have a particularly good record with the
runners of a specific trainer, or a specific group of horses, or
runners in specific types of races - maidens or Hunter chases, for
example.

The bottom line is that when he gets active in areas where he has
proven profitable over the long term, plenty of traders working for
bookmakers are going to be on the phone - snapping up the best
prices about that selection wherever they can get them.

The snowball effect...

Once the marker's money is down you'd find it amusing to see what
happens next. Traders will disappear out into the car park or into
the bathroom to 'make an urgent call'. Text messages will be sent
to pals in and out of the building. Within ten minutes bookmakers
all over the country are taking bets on the 'marker's' selection.

Some of the people placing these bets will be 'markers' themselves
with other bookmakers - not surprising when you consider the kind
of privileged information their bets are based on. As such, traders
working for other bookmakers will take an interest. Now they'll be
on their phones. Now they'll be alerting their pals to this good
thing. More bets are being placed. And so the snowball builds.

The upshot is that the price of the horse has to be cut - all
across the board. One after another bookmakers will cut their
prices as more and more punters - some of them 'marked up' - get
involved and try to get on at the biggest price. And, if the
snowball effect gathers enough momentum, the price will have to be
cut again and again.

Now we have a 'steamer' on our hands. And this sucks in the legions
of ordinary punters. They can see the price shortening. And,
following the money, they too start to get involved.

One man can move the market...

Not all gambles develop this way. But plenty do. In these instances
the 'market' isn't really speaking at all. One man is. One man's
opinion or expertise is at the root of the market activity. But,
unless you know how the momentum behind the gamble originated,
you're faced with a scenario where it looks like the 'collective'
opinion of the market is giving you a steer.

As we discussed last week, the collective opinion is generally more
accurate than individual opinion. Based on the gamble outlined
above you could make the mistake of getting involved because you
think you're seeing the effects of collective opinion. But you'd be
wrong. The gamble originates with an individual opinion.

Sure, our original punter is profitable. But that's over the long
term. He won't get it right every time. You'll only profit like he
does if you place ALL the bets he does.

Traders - in their privileged position in the information chain -
stand an excellent chance of profit. But getting involved on a one-
off ad hoc basis, the fate of the ordinary punter, will lead to as
many losers as winners, probably more. One man can move the market.
But following his money - knowingly or not - will not always lead
to winners and profit.

Picking the true collective gambles from those based on individual
opinion is not easy. Nothing is simple in this game. And following
early morning money is fraught with danger. The market can easily
mislead. That's all from me today.

Until next time, be lucky.

28th April 2009

Good afternoon, friends,

In today's Horse Racing Focus...

• Hitting the ground running this flat season...
  
• Factor in the 14-day form stats...
  
• Due diligence and discrimination...

Which strings have hit the ground running...?

In my book, as far as the flat season is concerned, a strike rate of
20% or one winner for every five runners is an indication that a
trainer's string is in decent heart. Working on the basis that
confidence builds confidence and winning breeds winners, it's always
useful to know whose runners are firing and whose charges are
running like damp squibs. It pays to latch onto the former and
swerve the latter.

We're a month or so into the new flat season now and looking at the
Flat Trainer's Championship table on Monday afternoon, it's clear
that quite a few strings have hit the ground running this season.
The current crop of 20% men looks like this. 

It isn't only winners that indicate the strength of a stable's hand
at any given time. It can also be revealing to take a look at the
near misses. Measuring the percentage of a trainer's runners getting
into the first three can highlight strings which are particularly
competitive right now and focus attention on the yards perhaps most
likely to produce winners in the days ahead.

As the stats table above shows, the runners from the yards of
Johnston, Chapple Hyam, Jarvis, Cox and Hills are the most
competitive overall right now.

Johnston is going particularly well - maintaining a big percentage
of horses making the frame from by far the largest number of overall
runners. But there isn't any value in following him blindly. His
overall record to a £1 stake of just £1.65 indicates that the market
is up-to-speed on Johnston's current potency.

Hills and Cox with profits of £34.38 and £37.45 to a £1 stake
respectively appear to be the two handlers whose runners might be
the most overlooked of our current 20% men.

A fortnight can make a big difference...

Strings can go in and out of form in just a few days. So it's in
your interests to look at recent form stats - in addition to the
overall seasonal figures. To establish an up-to-the-moment picture
of who is in form right now, who is coming into form and whose
string is perhaps dropping away from a recent peak, I scrutinize the
14-day form stats for the trainers.

Over the last 14 days, as you might expect, several of the handlers
hitting 20% for the season have decent records - with a good
percentage of winners and placed horses from their runners:

But what's most useful about looking at the 14-day stats is that the
practice can alert you to strings coming into a run of form -
strings which might have had a slower start to the season than those
hitting a 20% strike rate overall but, nevertheless, strings with
recent performance and results that bear close comparison.

Take Richard Fahey's string, for example. Over the season to date
his yard has sent out 164 runners, producing 28 winners at a 17%
strike rate. In addition, the yard has sent out 22 2nd placed horses
and 29 3rd placed horses - meaning 48% of the yard's runners have
made the first 3 in their races.

Those are not bad figures. But, looking at the 14-day stats, it's
clear that Fahey's yard is kicking on right now. His 14 day figures
look like this:

Based on these figures, he's a handler of definite interest to
punters right now - particularly as the wider market seem to be
underestimating his runners for the season to date. His runners have
produced a £79.39 profit to a £1 level stake for punters since the
season began in March.

Sorting the wheat from the chaff...

I'm not a big believer in backing any trainer's runners blindly -
regardless of how good the yard's seasonal or recent form statistics
happen to be. Even the simplest due diligence and discrimination can
help us reduce the pool of horses of interest to us and get the
percentages on our side - to the point where we swerve most losers
and back most winners.

Having studied the current stats there are three trainers of
specific interest to me - Barry Hills, Clive Cox and Richard Fahey.
I don't want to back all their runners. I want to hit as many
winners as possible but avoid as many of the losers as we can. Is
there anything that might help me in this quest? For me the first
port of call is always trainer/jockey combinations.

Where Barry Hills is concerned the winners are kept in the family.
Of this season's 22 winners to date, 17 have been ridden by son
Michael (from 48 rides) and 3 by other son Richard (from 10 rides).
Between them they have a 34.4% strike rate on Dad's horses. The 25
rides taken by other jockeys have produced only 2 winners at a
strike rate of just 8%. The message is clear - only back Barry's
horses when Michael or Richard is onboard.

Paul Hanagan is the main man in Richard Fahey's yard. He's had 88
rides to date and won 18 times at a strike rate of 20%. His rides
alone are responsible for £71.72 of the £79.39 profit Fahey's
runners have produced during the early part of the season to a £1
level stake. Hanagan's rides are the percentage play when looking at
Fahey runners.

Adam Kirby appears to be the jockey in favour with Clive Cox (Philip
Robinson is also a preferred booking when not engaged on a runner
for Michael Jarvis). Kirby has taken 20 rides for Cox this season to
date and won on 7 of them at a very impressive strike rate of 35%.

So there you have it - the fruits of my Monday afternoon number
crunching and some conclusions which might be of use to you in the
days ahead.

Until next time, be lucky.