I have been reading with great interest the posts in this forum and there does seem to be a lot of educated investors 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 propertys ir invest in them. I have never really been one for trading properties 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, properties 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
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 property investors 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 a 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.
Raceplays – interesting you are training up others and taking a % of their winings. I know one trainer, Dr Van Tharp (who is interviewed in the book ‘Market Wizards), who ran a year long course call the ‘super trader’ course. Price was a upfront US$100,000, and you had to already be in the market. After completing the course he would arrange for you to start trading an initial account of US$1Million.
Dr Van Tharp dosen’t trade, he simple trains people up and gives them his money (in fact he does trades his retirement account, which has a long term growth profile of around 30% ROI, but he only works on it once every 60 days though. so it’s hardly an active portfolio).
This means that he has created a passive income stream without having to work (even at trading… except the 6 days a year to rejig his retirment acct.). Interesting stuff!
Rgds.
jackw_auJust quickly I think it might be worth your time having a look at this forum: http://www.mastermindforum.com/phorum/list.php?f=9
I think you might find some good info esp. on positing sizing / money management. In fact you can create a system with a negative expectancy (so you lose on most of your trades) and still make alot of money…
Rgds.
Lucifer_auLucifer,
Makes for very interesting reading.
If you like i can point you in the direction of my site so you can take a quick look in more detail at what is involved in what I’m doing on a day to day basis.
Just drop a reply here and Ill point you there
Doug
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Raceplays,
In theory it sounds very attractive, but as with all investing ‘theories’, how do you turn this theory into practical real life situations. For example, the numbers you have stated obviously all add up, but how do you get people to bet with you firstly, then do you look for a one off $650 bet at 2/1 or do you take alot of small bets until the amount adds up to $650? Also, how to punters get to access placing bets with you: Are you at the track or can they place bets via internet or a ‘Betfair’ website?
The theory does sound interesting and I would like to learn more on the practicalities of this form of ‘investing’?
It is only your thoughts that create your future – Be careful what you think!
Just be aware anyone contemplating signing up with raceplays, that he would have access to your betfair acct. login details. It would only take a couple of minutes for him to empty your acct. into either his own betfair acct. or into a bookie acct.
Also note that allowing a third party to wager on your behalf with your acct. is against Betfair’s T&C’s.What he says about trading, laying, etc. is all possible but I certainly wouldn’t trust a complete stranger with $5000 of my money. He might be legit. But you have to ask, if he’s getting those sort of returns, it wouldn’t take long to turn any amount into a considerable sum, so why not just keep it all to yourself?
Fair point Bibra [cap]
It is only your thoughts that create your future – Be careful what you think!
By the way, for those that don’t know. Betfair is a betting exchange where punters can bet against each other and betfair acts like a broker. They charge 5% of your profits on a market, but your commision rate will go down as your volume increases.
It’s a bit like the options market, where one person/s thinks a stock or commodity is going to go up and the other/s thinks it will go down. If the buyer likes the price the option has been written for, a trade is executed.
If you’re any good at trading the financial markets, you could probably make a killing trading the betfair markets and your profits are tax free [biggrin]. Raceplay’s trading example is a good one where the horse has dropped from 4.00 to 3.00.
Raceplay,
You talked about arbitage betting in your first post. I came across this recently through an investment associate who was looking into a US based programme that feeds you lists of scenarios worldwide in many types of sporting fields. The payment for this programme was a fixed monthly figure.
Me being the sceptic that I am and not really into betting, thought it sounded all too good to be true and havn’t persued it very hard, however would be interested in other opinions / experiences.
Hi jhopper
I hope you don’t mind me jumping in and answering your question. There’s a couple of resources you should check out if you’re interested in arbitrage.
http://www.arbbest.com Read the forums here (you’ll need to register first, it’s free to register). You’ll learn alot about the mechanics and the pitfalls of this type of betting.
If you’re still interested after that, I recommend the guidebook at http://www.zero-risk-arbitrage.com The book’s about 49 pounds from memory, but well worth the money if this game interests you.
For anyone else here who’s never heard of sports arbitrage, or even financial market arbitrage ( generally not available to the general public because of the the infrastucture and millions needed to be worthwhile), I’ll try to give a brief explanation.
An arbitrage situation occurs in sports betting when we can back all possibilities on an event and make a profit regardless of the outcome.
Eg. Let’s say we have a two outcome match, say tennis. Let’s say Leighton Hewitt is playing some guy not as good as him so Leighton is the favourite. So we shop for prices at online bookies for a while and find the best price we can get on Leighton is $1.50.We’ll call this bookie Bookie A. This means if Leighton wins, our return will be $1.50 for every $1.00 bet. So if we bet $500 and Leighton wins we’d make $250 profit. Now let’s say we find another bookie that happens to have a really good price on the outsider, Bookie B is offering $3.30 on the outsider. Now we plug in the odds into our spreadsheet (Really easy to construct, if anyone wants I can post up the formulas). Let’s say we’re going to wager a total of $2000.
Bet $1375 on Leighton at $1.50 with Bookie A. Potential return = $2062.50
Bet $625 on the outsider at $3.30 with bookie B. Potential Return = $2062.50
Notice our return is 2062.5 no matter what the outcome of this match is. We wagered a total of $2000 so no matter what happens, we’ll make a profit of $62.50
This sort of situation occurs everyday. However, there are pitfalls. One, it’s damn hard work to find the situations. With hundreds of online bookies with hundreds of different sporting events every day, it can be quite tedious searching for arb opportunities.
There are also good reputable online bookies where your money is safe, and not so good bookies around. The arbbest forum is a good place to start your research to sort the good from the bad. http://www.sportsbookreview.com/ is also pretty good.
There’s a few more points which I’ll continue on with if anyone’s interested, but right now I need to sleep.
That’s really interesting Bibra.
I just had a bit of a play around on Excel to see how things work etc.
For anyone who is interested, I came up with the following (applies to only two possible outcomes like in Bibra’s example);
– Subtract 1 from each of the odds (eg 1.5 becomes 0.5 and 3.3 becomes 2.3).
– Multiply the two new numbers together.
– If the total is greater than 1, then you are onto a winner. If it equals 1 then you break even, if it is less than 1, you lose (unless of course you bet all your money on the winner – but then that is not arbitrage).Off to look through the form guide
Regards,
Clint
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