A Study of a System Part 1

The following study of a long shot system presented in 2 parts could well apply to any system; however long shots really exacerbate the issues that most punters face when dealing with punting.

Firstly let’s look at the market, the strike rate of all winners over $10 SP is somewhere around 3.3% taken from a sample from 150,000 recent horses. Combined they win about 18.6% of races. The loss is about 45%. These figures will vary slightly based on price source and length of time.

As the data shows, in roughly 20% of races we see the market getting the winner considerably wrong, with a 3.3% strike rate per selection. These market errors don’t occur too frequently and often they don’t pay off for those that are hunting them. However that is a nature of the beast, if you are looking to profit from long-shots you have to find a weakness but you need to accept that since the market is the best overall judge of horses chances in the race, the market is going to be seldom so wrong. Punters need to be looking for a predictable pattern amongst the long shot results which are mixed in with the unpredictable anomalies that no one can capture.

The key phrase is a Predictable Pattern. This should represent a group of horses whose form/analysis suggest that they have a better chance then they appear and capitalise on these. It can be done, however there are many pitfalls waiting for those that attempt to profit from long shots. All of which can be avoided by simply being realistic, having correct bank management strategy and knowing where to bet. The most important factor is not so much finding the winner; it is to manage your emotional state in order to give yourself a chance to find a winner.

One thing that Axis is particularly great at doing is identifying certain market errors. There are occasions when past performance would indicate the horse has little or no chance in the race and yet Axis finds ‘something’ that indicates it does.

Here is a real life example from a system we have:

1600 days (about 4 years)
9062 bets (about 5.5 bets /per day)
6.2% Win strike rate, ONE selection per race.
Betting environment – Betfair
Betting: $10,000 Bank, 1% per bet, constant bet size.
OUTCOME: $84,700 profit!

This ‘Predictable Pattern’ (our long shot system here) runs nearly 80% better than the market average strike rate, (6.2 vs. 3.3) with a good number of selections. Most people would not hesitate to go and take the leap; who could blame them, there is $20,000 begging to be had every year. This is no smoke and mirrors, this is a real system we have had in our arsenal for over a year and half now, making about 9% POT on average.

The issue is that most people would walk away loosing from such a system due to many factors, despite this being a profitable system and the many articles on our website and elsewhere that are trying to prepare them for the REALITY OF BETTING. We are not talking about the nodding of heads, whenever a runs of outs, bank risk and emotional self management is mentioned, but actually UNDERSTANDING AND DEALING with them, when (not if) these realities come along.

In Part 2 we will look at the key reasons why most people would fail using the above system and what to do in order to avoid them.

__________________
Michal - Ratings2Win Pty Ltd
R2W Axis - Axis is Australia's leading horse racing software and database;
with sophisticated form analysis tools and accurate horse performance ratings for TAB meetings.
http://www.ratings2win.com.au/

Look forward to more and thanks.

I thought you were going to show how to analyse a system. You have written nothing but shown that you can find a backfitted system with the data you have.

The title showed great promise but I am underwhelmed with what is written. There is very little value in the post except saying
"my product is better than yours".

Very disappointed.

That's your opinion, perhaps you could have waited for the second part, prior to leveling your criticism. I'll post it now.

__________________
Michal - Ratings2Win Pty Ltd
R2W Axis - Axis is Australia's leading horse racing software and database;
with sophisticated form analysis tools and accurate horse performance ratings for TAB meetings.
http://www.ratings2win.com.au/

In part 1 we last finished with a profitable system, and a statement that despite it being a real system (not for sale), now having made profit going forward for well over a year and half most people would loose long-term using it or any other profitable system for that matter.

Let’s explain and explore the reasons why this would be. Firstly some terms everyone punting should be familiar with:

Max Run of outs is the greatest number of loosing selections in a row that has occurred in the sample.
Max Bank Draw this is a number that represents the longest run of bets between 2 bank highs. This can occur at any stage of the betting sequence.
Bank Risk; usually represented by a percentage, it is the portion of your bank that you will temporarily hand over to the bookie before getting it back along with your profits. The Max Bank risk is the absolute worst case scenario recorded and Average Bank Risk is the run of the mill temporary loss you make before recovering. While the aforementioned Max Bank Draw represents a number of bets the Bank Risk represents the actual dollars.

Most people can logically accept and comprehend the risk factors outlined above; it is another thing entirely to go through them. So let’s look at some of the realities of what you have to go through to get your $80,000 profit while you are turning over near enough to $900,000.

Max run of outs – 95. Looking at the bets per day, 95 bets is around 3 weeks’ worth of daily betting where all you have every day is another ‘disaster’. Yet this figure does not take into account what happens once a winner is struck; how many more loosing bets before the next winner? It could be 94, just one less than the max, making this 1 winner from 189 bets. We regularly see people twitching after a week and abandoning and or drastically changing methods after a few weeks of no winners. So what is the likelihood of enduring the above mentioned run?
Max Bank Draw down– 2288 this represents a period of about a year and quarter where your betting has not seen a new bank high. You may well be in profit based on your initial bank size, but this frustrating period means an eternity where you just can’t seem to catch a break. How many times in that period are you going to contemplate changing the system or giving up in frustration or fear that this really is the beginning of the end, so it’s best to get out while you are still marginally in front. The real eye opener is that this draw down equals to $29,000. So obviously somewhere in the middle of your sequence, when you had a nice profit of nearly 2x your original bank, you lost most of that profit.
Bank Risk – 94% this means that somewhere you will nearly wipe out your entire bank before achieving recovery. Simply said, I don’t know anyone that would have broken through that and continued.

While the above seems like a lot of bad news, and the system will have been discarded as being broken, a scame and whatever else or simply changed several times, the truth remains; providing that you have what it takes, this is a real and possible outcome. The issue is that realistically most people do not have what it takes to do this at least to the level required to capitalise on the above (risky) opportunity.

The failure to control your emotions and bank roll management is why 99% of people fail on punting. It is a harsh truth to accept!

However there is some good news! We don’t all have nerves and determination of steel, yet we all still want to have a profitable punting experience. We can control our losses and there by eliminate our failures by managing our outlay and thereby our bank.

Betting: $10,000 Bank, 0.25% per bet, constant bet size. OUTCOME: $21,200 profit !

While the above is not a great outcome compared to the first scenario, (remember the $80,000 profit) the risk is far more realistic due to the 0.25% per bet. While the Max Draw down, run of outs and so on are still the same, the risk to your bank is now only 34%. That is much more manageable for most people and above all suitable for a method such as this..

If you want to make more money, then get a bigger bank instead of increasing your risk. Using a $50,000 bank betting the same 0.25% with the same risks would result in a profit of around $102,000.

Long-shot systems and for that matter, punting in general is a grind that most people are never really prepared for even if their bank management is sound. The pressure of undesirable strike rate, runs of outs and draw on the bank will unhinge even the most optimistic and determined punters. Throw into the mix the occasional missed winner, a couple of bad photo finishes and other mishaps and you have the reason why 99% of punters fail; they fall apart from over extending their betting beyond their risk threshold this applies to both financial and mental/emotional arenas.

The best advice that we can provide, is to work with a method that you can sustain emotionally and financially. Be realistic about the time spent in respect to managing the work required to generate and bet your methods selections and above all else, being realistic with your expectations. If you are lucky enough to get your hands on reading material from those that succeed long term and are a known and a respected entity, you will find that the message is nearly always the same; here are some of the key points that most pros live by:

Long term approach to betting!
Good tools and automation in today’s competitive market!
Logical and tested (long-term and large sample) method!
Bank roll management in line with your true risk threshold and methods performance!
Consistent application of the method and betting execution!
Realistic expectations!

There is no escaping mathematics and reality in betting, there are no dispensations for anyone and despite of the information out there many choose to ignore it, generally until they are confronted by the said reality; sadly and often this is not recognised for what it is; a failure of the punter to adhere to the realities of betting!

We hope you'l find all of the above useful in your future endeavors.

All the best!

__________________
Michal - Ratings2Win Pty Ltd
R2W Axis - Axis is Australia's leading horse racing software and database;
with sophisticated form analysis tools and accurate horse performance ratings for TAB meetings.
http://www.ratings2win.com.au/

Lose, and losing, it's lose and losing !!!!

Very basic analysis of a system. I do hope you are going to extend this with more parts of the study ? I can think of at least another 5 parts which are a minimum for studying/analysing a system before you would even start paper testing.

Hi Guys,

Thanks for your input, and putting that spelling nit picking aside, this is meant to be a look at what I consider very important factor of punting that most get wrong. People concentrate most of their focus on selection of their bets, and very little on the facet of punting that will be their eventual undoing. Bank and (by extension) emotion management. I have seen the aforementioned undoing many times, happen to people that have long-term profitable methods no less. The simpler the better as far as Im concerned to get the point across. I can expand the study much, much further, I can think of many things especially using the tools at our disposal in Axis to analyse betting, bank management and the selections themselves into almost excruciating detail. However time is a factor, perhaps you could contribute something ?

__________________
Michal - Ratings2Win Pty Ltd
R2W Axis - Axis is Australia's leading horse racing software and database;
with sophisticated form analysis tools and accurate horse performance ratings for TAB meetings.
http://www.ratings2win.com.au/

Without the system data there isn't anything I could add except that I would include at a minimum for studying a system :

Chi Test Analysis
Winner Distribution Analysis
Time Series Distribution Analysis

These 3 items basically all give you a good understanding of the system as a whole and whether it could be followed.

Thanks for your input UB, Im sure that there will be many that would benefit from a significantly more in-depth explanation of the points you raised as they are seldom covered and their understanding and application are varied. Please go ahead and use your own example for the demonstration purposes.

__________________
Michal - Ratings2Win Pty Ltd
R2W Axis - Axis is Australia's leading horse racing software and database;
with sophisticated form analysis tools and accurate horse performance ratings for TAB meetings.
http://www.ratings2win.com.au/