Horse race trading vs. Stock trading

[raceplays]

I have been reading with great interest the posts in this forum and there does seem to be a lot of educated traders (or punters as I like to call them) who frequent the place.

It brings me to post this little insight of mine.

I have been trading thoroughbred horse racing with the same ferocity for the last 10 years that a lot of the people in here seem to trade stocks. I have never really been one for trading stocks as I do not know enough about it but on the other hand I also make a very comfortable living from trading horse racing.

At the end of the day I think it is important that no matter what you are trading be it tomatoes, stocks, cars or horse racing that you need to have a very strict regime inplace for trading and also a very good grounding of knowledge base with your chosen field of interest.

I personally started out backing horses to win on Australian racing but with the advent of betting exchanges (a medium that allows two punters to bet against each other by offering set odds, taking the bookmakers and tabs out of the equation) I started to concentrate on Uk Racing trying to find loserswhere liquidity is over $1 million AUD per event. I also do not bet to win anymore but now only let other bet on a horse to win by offering odds on that runner in the hope it will lose. This practice is called laying.

Look at the logistics. In a field of 10 runners only 1 horse can win whilst 9 of the others have to lose. What I do is find the one horse who is under the odds of 10/1 which I feel has the least chance of winning and let people bet on it. This means each time I am successful I make atleast 1% on my capital as I risk 10% of my capital on every horse I decide cant win.

Mathematically if a horse is traded at 5/2 or 3.50 then I would make 4% (10% divided by 2.5)

Mathematically if a horse is traded at 8/1 or 9.00 then I would make 1.25% (10% divided by 8)

I used to make a good return of 35% on average per month betting to win but now that I lay horses I have been consistently averaging in excess of 80% profit per month.

Betting exchanges are obviously proving to be very popular with the public who know of them and this can be gauged by the consistent increase in liquidity on events since their inception to the wagering market place some 4 years ago now.

It is also interesting that the most successful and largest betting exchange in terms of liquidity (Betfair) was started by 2 stock traders who came up with a model of allowing two punters to bet against each other without the need for TABS or Bookmakers.

I feel the big importance in their rise in popularity has been the simple fact that punters are getting a fairer go for their dollar now.

Instead of trying to beat the TAB who takes a minimum of 15% out of a pool before paying out on the winner you have a lot of people competing against each other to secure and offer the best odds meaning that you can now bet into markets set at 101-103% instead of the TABS whos markets are set to a minimum of 115%.

Another great advantage of betting exchanges is something that stock traders would be familiar with. Arbitration.

If you have good knowledge you can find plenty of situations where a horse may be at 3/1 or 4.00 early in betting and then be heavily supported into 2/1 or 3.00. Under this instance you can say back the horse to win by outlaying $500 early to win $1500 at 3/1. Then when the odds come in to 2/1 allow others to back the horse with you to win by letting them have $650 on it at 2/1 to win $1300. If the horse wins you collect $1500 but pay out $1300 for a gauranteed $200 profit while if the horse loses you have outlaid $500 whilst collecting $650 from others backing it also to win. A gauranteed profit of $150. No matter which way you look at this scenario you are going to make either $200 or $150 dependent upon the result before the race has even run. I hope that makes sense.

All in all I do think that the old adage of betting on horse racing being a losing end is nuissance. What it comes down to simply is knowing you chosen format of "investing" inside out and sticking to systems you have set down.

Interested to hear others thoughts on this idea.

I have got to s stage now where my laying of horses is so consistent and successful that others are now using the information I produce to do the same thing. I don't charge them an upfront fee to get the information either, merely a percentage of the profit they generate each week. This way it allows people to tap into something and odd to their investment portfolio without having to outlay large fees for a racing program or stock program when those funds should be dedicated to their investing bank.

 

[baglimit]

Re: Horse race trading vs Stock trading

hello betfair fan.
i will open by admitting you have provided a clear concise count of how using betting exchanges can be used to make money.
however I am totally against betting exchanges for several reasons.
1. the recent controversies in england have proved once and for all how easy it is for those 'in the know' to use this knowledge to the detriment of others. in the past only licensed bookies could get away with what these crooks have been getting away with - and the bookies certainly have a lot more to lose if caught - hence they steered clear of involvement in trouble (gai's hubby the exception here)
2. from their recent 'book opening' by betfair it is clear the commissions they claim to be able to raise for payment to the racing industry are a real pin drop compared to those funds offered by the traditional forms of wagering. it would be very unlikely, even with a licence, they would be able to raise similar levels of payments from their 'modest' commissions.
3. the service they provide is all internet based, with a few computer ops, programmers and a couple of admin staff running the show. the racing industry, primarily financed by the traditional wagering providers, employs tens of thousands of people thru the country, keeping that old economy turning over. putting a severe dent into these trad providers does a lot of damage to these people in so many fields - the tab employees, the outlet staff, the oncourse staff, the racing club staff, the stable staff, the owners, the list goes on. the industry set up as it is currently allows those commissions to be spread around so many areas, allowing the industry to at worst maintain a steady future and at best continue to grow and create opportunities for so many. i dont see betfair providing that opportunity.
i will close by admitting i hold TAH shares, and it is in my favour to see betfair & co disappear. but i am also a punter, and dont want to see the current surge (be it spasmodic) be stopped to the benefit of a fortunate few. i fear the industry would return to the declining interest levels of the 80's if exchanges took hold here. THATS MY SAY.

 

[raceplays]

Re: Horse race trading vs Stock trading

Baglimit,

Glad to see your reply mate.

A few things I will raise regarding your post.


You have mentioned that Betfair employs few staff. To the contrary they actually employ more than 450 staff in the UK and this is growing in line with their liquidity on a monthly basis.

The simple reason that corruption in the industry has come to a head over the last year is because of the Memorandum of Agreement signed between the BHB and Betfair giving those at Portman house access to auditing of Betfair trading on any given account.

With this mentioned also remember it is possible for those "in the know" as you say being able to still profit before betting exchanges came into existence.

For example, if I as a trainer or jockey decided to pull a horse up instead of laying it on the exchanges all I would have to do is back every other runner in the field through TABS for a gauranteed return. Look at it like a see saw. Backing every other runner in a race is the same as laying one runner in essence minus the 15% take by the TAB's

I have an old adage taught to me by my grandfather who was an SP bookie back in the 50's and 60's and a very successful one at that which comes to mind. 1% of races are corrupted worldwide and if that 1% is the difference between you making a profit or losing then you shouldnt ber playing the game!!!

Take Cricket Australia for instance, they have signed the same memorandum of agreement for cricket with Betfair.

I can gaurantee you right now that Tabcorpand the likes are running basically a scare campaign against Betfair because they didnt think of the idea first. If and when betting exchanges are given a licence to promote in Australia Tabcorp and the likes will be the first to launch betting exchanges of their own.

With so much competition for the gambling dollar from so many sectors now bookmakers and TAB's alike will need to grow with change to keep up.

Dont be concerned about the value of shares associated to Tabcorp and the likes as only a minimal amount of their yearly profit is derived from horseracing. Pokies and the likes bring the most profits for these companies.

Look at it also from another angle, because of the arcane betting models we have in Australia professional punters such as myself are forced to look elsewhere in the world where we know returns can be better. This is large turnover that used to come to the TAB's and bookies in Australia which now goes offshore to places like The UK who have embraced the idea of exchanges. I read a study some years ago which said 30%-45% wagered on racing was professional money. If all of this 30%- 45% goes off shore Australian racing is still going to suffer greatly.

You mention your fear of a decline in interest back to those levels of the 80's if betting exchanges too hold here. To the contrary turnover on racing has never been higher in the UK since the inception of betting exchanges.

 

[baglimit]

Re: Horse race trading vs Stock trading

i will provide further replies to your latest post soon, but in the meantime, check this out :
http://heraldsun.news.com.au/common/story_page/0,5478,11489961%5E661,00.html

 

[raceplays]

Re: Horse race trading vs Stock trading

Baglimit,

Interesting you have mentioned this.

I personally laid Callea at evens some 5 weeks ago and also laid Ricki Lee before her exit aswell.

this is a very similar situation to the Brownlow vote a few years ago and as Gerard Duffy said from Centrebet, on anything where there is human involvement of vote counting there is always the chance of this happening.

To me it shows that not only racing ias corrupt to an extent which we discussed before but also anything else that involves the chance for one to financially gain from their actions.

I think in the stock world the equivalent is "insider trading"

Would I be correct in saying this????

 

[baglimit]

Re: Horse race trading vs Stock trading

now raceplays - i have time to respond.
1. pretty hard to back all the other runners in a field to make a profit - yes i know that staggering the stake will improve the chances, but you have to remember you are currently backing 1 or more horses to lose (anywhere between 2nd & last) whereas the traditional punter is backing 1 or more horses to win (1st only). pretty easy really to find a loser compared to finding a winner.
2. tabcorp shares have always suffered from perceptions. anti gambling campaigns have hurt their price (maybe not actual profits), smoking bans ('the pokies will never recover' - they are slowly now), challenges from new forms of wagering (exchanges). its one reason i want betfair to go away - the perception is they will grab a large share of the market - i dont think they'll get a licence, let alone get that share of the market, but the preception exists.
3. pro gamblers will always chase the best value - whether betfair, bookies or tabs offer them - surely if you were a pro punter backing winners, not losers, you would have accounts with as many services as possible to cover every % available. the internet allows that. im personally not worried about pro punters deserting tabs in droves because of this 'chase for value', but again the preception is otherwise.
4. as my original post said, i just dont like the fact they will never be able to contribute the funds that traditional avenues do - to try and match them betfair would surely lose that 'edge' they believe they have, and slowly go and find a rock to hide under.

p.s. got any tips for 'winners' saturday

 

[markor]

Re: Horse race trading vs Stock trading

One of the advantages of the betting using your method on horses is that the ATO doesn't need to know a thing about your ' capital gains '

 

[raceplays]

Re: Horse race trading vs Stock trading

Baglimit,

In reply to your last posting.

You seem to forget that Betfair only seek a licence in Australia so they can really advertise. I am sure they arent too concerned if they do not get one as people will still continue to bet with them on Australian racing as they do with offshore bookmakers based out of Vanuatu and the likes. More and more governmental juristictions are coming into line with Betfair and granting licences. All it does by not giving a licence is lower the reputation of the Australian racing product to offshore investors. It is not only the onshore investors Australia needs but also this offshore revenue to keep the industry growing from strength to strength. You only have to look at the tremendous efforts orf breeding sales companies such as Inglis and Magic Millions to see this is a majoir factor with over 30% of yearling sales in Australia coming from offshore investors with a keen interest to either rfaces horses here in Australia or simply tap into strong breeding lines for shipping to race elsewhere in the world. Arcane management and policies associated to Australian race clubs will only damamge the industry here in what is now truely a global marketi n all aspects of the sport.

You talk of professional punters always chasing value be it if it is through bookies TABs or betting exchanges. No professional punter I know outside of exotic players use TABs to wager and this can be further emphasized by the fact that bookmakers such as "Sporting Bet" and "IAS" offer a product called maxi div which is paid out at 1-2% higher than the best TAB price on offer from the 3 major TABS on all race meetings Australia wide. Look at the logistics of this. Instead of having to diversify your funds into 3 TABS and try and pick the best price in a fluctuating market you can keep your money in one account and be gauranteed 100% of the time you are going to receive the best dividend in Australia and furthermore not effect the price by betting through the TAB's.

If you read the financial section of most national newspapers today 30 November you will see the baord of Tabcorp are currently exploring offshore opportunities such as Casino's in The UK and gambling houses in Macau urged on by the wealth of the chinese gambling dollar. They can already see that the Australian market is basically saturated and need to look offshore for further opportunities.

Betfair last annual report from this year shows that to the contrary their contribution to UK Racing is greater that the tote and only larger is the big 4 books in The UK such as Ladbrokes and it is a closing gap each year.

Anyway we are really getting off the track from the original line of my posting. I still believe that race trading if done correctly is far more profitable than stock trading.

Here is another analogy for you. All horses can be viewed in fine detail when it comes to form analysis to work out their chances but if you traded a stock on the exchange with inside knowledge you would be likely a subject of insider trading laws. It is merely black and white with deciphering the good from the bad the major objective.

Call it gambling, investing or any other term you like but basically laying horses to lose is simply one of the easiest ways to make a comfortable return week in and week out. I can tell you striahgt out that with a $5K starting bank one can easily generate returns of in excess of $1000 per week or 20% on their money consistently as a minimum and i mean minimum with very little risk associated.

When Bin Laden decided to crash 2 planes into the world trade centre did you see the dividends of horses drop at all or the performances associated effected in any way. The answer to this question is an unequivical NO. On the flip side what was the effect on the stock market be it if only short term.

 

[baglimit]

Re: Horse race trading vs Stock trading

raceplays - i think we have got to the point we will simply agree to disagree - the point i do agree on is that, yes, we have strayed from your original point. i know for many years mark read promoted the idea of race betting, especially backing several horses to win in a single race, and playing the percentages, could prove to be a perennial income earner. and i am aware of the online bookies offering 'best tote' odds for clients (i am one of them). my point was simply the way betfair allows 'unregistered' and therefore allows 'potential' rorters to take bets. it simply allows and makes it far too easy for ANYONE to play the devil. HAPPY PUNTING.
P.S. want to get on a nice 4/1 or 5/1 pop - have a look at NMS.

 

[raceplays]

Re: Horse race trading vs Stock trading

Baglimit,

I appreciate your reply. I think it mainly stems from our different angles towards the industry in itself at the end of the day.

I will bring up one further point though since you have mentioned Mark Read. I feel Read has been one of the front runners in innovation in the Australian Racing industry but even he himself advoacates the advantages of betting exchanges for the general punter looking for a competitive edge in an age where every percent advantage you have will add up in the long term.

Since meeting Mark and his lovely wife Shari both personally and having numerous business dealing with them over the years it is my feeling that Mark's wife Shari is a very smart businesswoman and without her International All Sports the company they control would be nowhere near as strong as they are presently. Not taking anything away from Mark as he has a brilliant racing mind but along with Shari's business tencaity they have formed a very very strong team of leadership for IAS.

 

[baglimit]

Re: Horse race trading vs Stock trading

i did have a bet with mark read sometime in the 80's - $5 e/w on some nag - thats as close as ive got.....puts it in perspective me thinks

 

[Alvin]

Re: Horse race trading vs Stock trading

hi guys,
i am working on applying my maths in the stock market onto the race track.
still in the preliminary stages of my research, but there is definate correlation on the ubiquitous theories of trend trading, quantum theory and chaos theory i am finding.
I expect to have a full model in 12months in which i can start testing it in the market.

Alvin.

 

[The Barbarian Investor]

Re: Horse race trading vs Stock trading

The Cup by Technical Analysis

The best strategyis to diversify across races by placing small bets on each race during the whole day, totalling no more than you would be prepared to lose.

It suggests placing Each way bets on meduim priced horses. Odds within a4/1 to 25/1 range and idealy no more thana 10/1 on the form guide, look for horses that tend to finish fast and hard and stand a good chance of coming second in the race, potentialy first if things go badly for the more highly priced favourites.

And reduce your betting or avoid betting altogether if there are less than 8 horses, as the reduced returns on placed bets aren't worth the risk. With the right odds, bets will generally 'break even' if the horse earns a place using this strategy, it's not difficult to get 4 or 5 places from 10 races.

On an average day, losses should be manageable with a profit upside from the odd occasion that the horse wins.

On average, favourites have had odds of 4/1 or lower and favourites for the Melbourne Cup either win or do badly. On average winners have had odds of at least 16/1 or lower..

A strategy that i keep with me for the only day that i bet- Melbourne Cup day ( i had a win)

The Barbarian Investor

 

[baglimit]

Re: Horse race trading vs Stock trading

barbarian - i'm sorry, but i have to say spoken like a true once a year punter.
if the theory works for you, great. but dont ever apply that sort of thinking to anything beyond 1 day a year. cup day betting is totally different to every other day of the year. the 2nd biggest day is mediocre in comparison, and the others - not worth mentioning. but have fun once a year.
and makybe was a monty this year.

 

[Mofra]

Re: Horse race trading vs Stock trading

Alvin,

I'd be very interested to see any results as they come to fruition. On the topic of mathematical & mechanical modelling of supposedly random events, have you read "The Predictors" by Thomas A Bass? Certainly worth a look if you're into mathematical modelling.

Cheers & good luck,

Mofra

 

[Alvin]

Re: Horse race trading vs Stock trading

Hey Mofra,
thanks for the book tip. i will amazon it in a minute.
Chaos, quantum and number theory have always been a fun topic for me. not saying i understand it, but it is amazing that there is so much order within apparent disorder.

Just to let u know, i have done some prelim studies, of a population size of about 4 meets (ie 4 weeks) betting on 3 races per week and i have an expectancy of 0.4.

so i am losing 6/10 times, but on the 4 i have made a profit of an average 337%!!!

still early days yet...could be beginners luck..but i doubt it. will keep u posted

Alvin

 

[baglimit]

Re: Horse race trading vs Stock trading

best news ive had all day

The Australian Racing Board has received advice from the Deputy Chief Minister of the Northern Territory, the Hon Sid Stirling, that the Northern Territory Government will not be considering any applications for betting exchange licensing.
In a letter to the Chairman of the Australian Racing Board, Andrew Ramsden, the Deputy Chief Minister advised that “given the Australian Racing Board and other Racing Ministers’ stance on betting exchanges operating on Australia racing, the Northern Territory will not be considering any betting exchange submissions”.
This clear statement of the Northern Territory Government’s position shows to be completely groundless recently media conjecture concerning the Northern Territory’s alleged intention of licensing Betfair.
At its meeting yesterday the Australian Racing Board also noted the legislative measures that are available at a State and Territory level to prevent betting exchanges.
The Australian Racing Board Has reaffirmed its intention to further lobby Federal Government for action on its part to prevent betting exchanges from operating on Australian racing.

 

[Mega Rich]

Re: Horse race trading vs Stock trading

MESSAGE FOR "RACEPLAYS"...

Hi "Raceplays" David (Alias: Mega Rich) here in Melbourne!

I have been trying to get in touch with you with regard to your post on "Horse race trading vs Stock trading".

I have sent you TWO emails, but as yet have had no reply!?

PLEASE will you contact me at: davidwmahoney@the-edge.net.au
as soon as is possible for you? I would really appreciate that!!

I want to ask you if you know anything about a man called Vic Young,
who claims to have an extremely successful "Horse Betting System"
that wins MOST of the time! He advertises his system in an Australian
Home Business Opportunity magazine and I would like to correspond
with you about HIS system and get your feedback on it...I can scan
the information I have and email it to you to study...you may find it
interesting!?

Also, I would like to learn how I may use the system that YOU use,
if that is, you are willing to tell me about it!?

I hope to hear from you VERY SOON "Raceplays"!

Until I do...Have a very "MERRY CHRISTMAS" and a "HAPPY NEW YEAR"!!

Cheers: David (Mega) M.

 

[baglimit]

Re: Horse race trading vs Stock trading

HOPEFULLY THE BEGINNING OF THE END FOR BETFAIR -

In the United Kingdom a National Audit Office report has found that betting exchanges paid just £7.3m in tax last year, despite taking bets worth more than £2.67bn. (This compares to £376m paid by bookmakers on bets worth £30bn. In percentage terms, exchanges paid a mere 0.27% of turnover in tax compared with the 1.25% paid by bookmakers).
Against this background, betting exchanges in the UK now face a more taxing future, with the National Audit Office expected to change taxation legislation for exchanges. A review of the basis for taxing exchanges was called for by the Chancellor of the Exchequer, Gordon Brown, last year.
Quoting a "well-placed industry source", The Observer writes that:
"The duty and the commission that exchanges make just doesn't add up. It's all pointing to the Treasury acting to stop this."
The Observer also reports on the implications of taxation changes for the future of the UK’s largest operator, Betfair.
“If the Treasury moves, it will be a serious blow to Betfair, which controls 95 per cent of money wagered on exchanges. The firm is desperate to float or engineer a buyout, but uncertainty over the tax regime it will face has delayed any decision”.
Betfair has previously talked down suggestions that the company was preparing to float, but the exchange’s co-founder, Andrew Black, confirmed earlier this month that this was his goal.
The importance of Australia to these stock exchange plans is the $300–400 million value an Australian licence would contribute to an I.P.O.. Securing this value for the exchange’s existing private investors is dependent on one or more States issuing it with licences, but months of intense lobbying by Betfair has to date failed to secure these.
The commercial benefits to its private investors from an Australian licence forming part of a company prospectus may be compared with the impact on Australian racing. Analysts have previously estimated that Governments and the racing industry will lose up to $240 million per annum if betting exchanges are permitted to freely operate in Australia.

By: Racenet - Thursday, 20 January 2005

 

[raceplays]

Re: Horse race trading vs Stock trading

Since I initially posted my thought on stock trading vs horse trading I have had some people asking me to explain the process further and how they can do it and how the last month has been going.

A few people on this forum being stock traders have ventured in and started trading themselves with success of over 30% rise in bank since starting in the last month.

If you want more information feel free to email me at info@raceplays.com or go to www.raceplays.com