This article has been inspired by a forum post in the Race Advisor members area which caused me to go back through all the emails we’ve been sent over the last few months to actually discover how many people had asked the same question. The answer was…
…364 people had asked the same question!
Alright, I admit that it wasn’t always exactly the same question that was being asked. But that’s only because not everyone realised that it was the question they should have been asking.
For once and all I’m going to answer this question today. I’m going to put everything out in the open so that you’ll always have all the details to hand.
I guess that means I should start by sharing the question with you.
In fact, I’m not going to start with the question. I’m going to start with the scenario.
Why?
Because I believe that most people don’t realise that this is the question that they need to ask.
So here we go…
Let’s take Joe as an example.
Joe has been trying to solve a little problem that he’s been having. He’s spent a lot of time working on a strategy but he just can’t get it to work. After finishing developing his strategy he performed some what-if scenarios which looked at what would have happened if he’d changed just one or two rule parameters. The results were much better and so paper trading began.
And then… disaster.
During paper trading, the original method massively out-performed the adjusted method. So Joe adjusts his strategy to focus on the original method instead, but then… that starts performing poorly. So, a couple of days later, he adjusts the strategy again.
He knows that he should wait until he has at least 100 winners before making changes, but that could take two or three months.
The bottom line is he thinks he has a good strategy and then hits six consecutive losers which gives him doubts, so he looks to find out why he’s hit these losers and modifies his strategy again.
Does this sound familiar to you?
Have you ever experienced something like this?
Me too!
Joe doesn’t know the reason why he can’t make a profit, but until he learns to ask the question:
What do I need to change in the way I bet?
Instead of…
How do I make a profitable betting strategy?
Then he’s never going to be able to make a profit.
The reason that Joe can’t make a profit is nothing to do with his betting strategies. It’s to do with the way he’s betting. He’s making four key mistakes which, until changed, will mean he’s unable to make a profit even if he’s handed a profitable strategy.
Hang on.
I can see you thinking that doesn’t make sense. Surely if he’s handed a profitable strategy then he’ll make a profit?
Unfortunately that’s not the case because betting is as much, if not more, about the psychology of betting as well as the method of selection finding.
One of my favourite examples is where an acquaintance in the US gave one of his betting methods to 500 people as an experiment. He was using this method to make a regular $10000 every month from racing.
There was no doubt that this method worked. And the results of the experiment were that:
- Out of 500 people, 475 decided the method couldn’t work based on just reading it
- Of the 25 who tried it, 20 hit a losing day within a week and stopped using it
- Of the 5 who tried it for longer than one week, all stopped using it within four weeks for a variety of reasons such as, it took too long and they wanted to bet bigger stakes but couldn’t do that with the recommended bankroll
So, even when handed a method that is already being used to make a profit, not one person in five hundred made any profit using it. And the reason for that is…
…they all had fundamental problems in their method and outlook of betting. It wasn’t the strategy that was hindering their profits, but their expectations.
Okay, let’s get back to Joe.
He made four critical mistakes and I’m going to show you what these are so that you can recognise them in your own betting if you’re doing any of them.
Mistake 1
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After finishing developing his strategy he performed some what-if scenarios which looked at what would have happened if he’d changed just one or two rule parameters. The results were much better and so paper trading began.
Joe had already developed a betting strategy and then, by tweaking the rules, he began to back-fit it. You cannot adjust rules based on a single subset of data unless it contains tens of thousands of selections (and even then it’s not advisable). By doing this Joe was back-fitting rules that had been properly created to data to try and make more profit out of them with the result that it made less.
Mistake 2
[divider]
During paper trading the original method massively out-performed the adjusted method. So Joe adjusts his strategy to focus on the original method instead but then… that starts performing poorly so a couple of days later he adjusts the strategy again.
When the back-fitted method doesn’t work, which is to be expected, Joe panics and starts trying to change it again to find a profit. But, he never gives any of his changes enough time to actually see if they’re going to work.
Mistake 3
[divider]
He knows that he should wait until he has at least 100 winners before making changes but that could take two or three months.
Two or three months is not very long to find a strategy that could be making you a profit for the next five years or longer. But it’s also possible to go through past race cards and find selections historically by making sure that you leave at least the last six months out of the data you use to build the strategy. Yes, either way it’s going to take time to go back through past races.
The desire for instant profit is over-riding what Joe knows he needs to do to actually make that long-term profit. He needs to overcome this emotion and be disciplined whether waiting for the selections, or going back through past race cards and testing them.
Mistake 4
[divider]
The bottom line is he thinks he has a good strategy and then hits six consecutive losers which gives him doubts and so he looks to find out why and modifies it again.
Joe is being unrealistic about what he can achieve. The chances of finding a profitable method that won’t hit six consecutive losers is so small it isn’t worth considering. An average strike rate for a profitable strategy can be considered to be 20%. If you have a 20% strike rate then at some point you can expect to hit a losing streak of 31.
And that’s consecutive losses, not a downswing!
Joe needs to be prepared for that, and the only way that’s possible is to have the right bankroll which can cope with it and to know that even after 25 consecutive losses you could still expect to get another 6 and… it’s possible you may only get one or two winners before it happens again.
That paints a pretty bleak picture, but…
…you could have this kind of downswing and come back to make insane profits!
The key is to be aware of what you should expect in a losing sequence and have a plan to deal with it emotionally when it happens.
Now don’t worry if you recognise some of these traits in your own betting. At one point I’ve had them all as well!
Being aware that you have them is the hardest step. Once you’re aware that you’re encountering some these problems with your betting, resolving them is surprisingly easy.
If you’re facing any of these difficulties in your betting or if you’ve overcome them in the past, then leave me a comment to let me know how.
Michael, as always a good article, and reading it I thought you was talking about me. I find even though I know Im aware of this behavour it can be a problem to fight it , because of wanting instant profit and wanting it now! A bit like fighting the urge to eat desert before the main course!
It is very difficult to fight this natural instinct but, when you break through, you will find it makes a big difference in your betting. It is probably one of the biggest barriers to entry of making long-term regular profits for a lot of people.
One thing to consider is that the rules of racing change also. Several changes have been made by the ‘Racing For Change’ devils which has affected a method I use. I have all the results from 1998 and a break even strike rate was around 26%. Now it’s around 29%.
For the first few years the strike rate was sometimes over 30%. Now it’s 27% or less. Something has happened and I believe it’s the meddling with the rules by the Racing For Change mob. As this method is only the basis of what I do I can get round it by using deep analysis.
It amuses me when people selling systems say that ‘it works on all kinds of racing’. Experience tells me that any system needs first of all splitting into Stake races and Handicaps. Then into all the different types of racing – Flat (turf), Chases, Hurdles and All-weather. I analyses all the All-Weather courses individually as the results vary widely.
Then a host of other variables covered in more than 10 loose-leaf binders. I believe that ‘Racing For Change’ is a negative force in racing and that bookmakers are covering their BOG prices by clipping the odds generally throughout racing. Between the two of them punters have a hard time making a profit despite the wealth of information available nowadays.
Over 16 years results using exactly the same selection process confirms this.
Thank you for your comment Roy, as you say Racing For Change have made changes some which seem to have had no purpose whatsoever. I’ve had a couple of conversations with them about it in the past. This:
“Experience tells me that any system needs first of all splitting into Stake races and Handicaps. Then into all the different types of racing – Flat (turf), Chases, Hurdles and All-weather. I analyses all the All-Weather courses individually as the results vary widely.”
Is excellent advice!
Excellent post, Roy, but there is no point blaming the bookmakers for trying to make a profit. they provide the market and if BOG is no longer viable (I don’t believe this to be the case yet) then you have to move on. Betfair SP is reasonable alternative.
The point I was trying to make here was that although bookies seem to be giving you something by offering BOG prices the overall prices have been clipped to allow this.
I do actually only use Betfair now.
Racing For Change wanted to tighten the handicap bands to make racing more competitive although many trainers opposed this and I think some sort of a compromise was arrived at. They reversed the draw on right-hand courses which made all the work I had done on that useless.
Plus various other things meant they just threw a spanner in the works of a lot of analysis. It was meddling just for the sake of it.
Fair enough, Roy. I must say that I still find BOG to be preferable to BFSP by a couple of percentage points over the long term. I am not sure how much leeway there is for bookmakers to clip odds generally in order to cover their BOG concession – they have to compete with each other after all. I do notice that some firms, Ladbrokes and Coral in particular, rarely offer the best early prices. Ladbrokes, indeed, are often without one single best price in a market compared to other bookmakers so their overround must be extremely advantageous. I guess their clout enables them to get away with this. BOG was always a promotional response to the threat from the exchanges and all bookmakers offer it under the proviso that it can be removed from any individual customer – Paddy Power have done this to me, others like Stan James have simply closed my account or like Bet365 restricted me to risible amounts like 35pence.
The reversal of the draw that you mention, hasn’t really affected me as the software I use accomodates this. I don’t think racing for change is all bad as the authorities have to do something to give the sport the boost it desparately needs. The point is, things change and as punters we have to learn to accomodate those changes. Anyway, happy punting.
I know from my results going back to 1998 (these were ‘live’ and not back-dated) that the prices and percentages are inferior now to what they were then. This is for exactly the same selection process.
I had heard BOG prices are only available for small amounts so not surprised you quickly got restricted. As I mentioned in a previous post I tend to put half my stake at best I can get on the Betfair exchange and the other half at BSP>
It tends to even out the movements. There might be better ways but I don’t want to spend hours staring at Betfair just for a few more quid.
I don’t like the way racing has gone with it’s pop concerts and general loutish behaviour. I favour the conference centre approach and wedding venues. Plus some good quality housing where appropriate.
Thanks for your reply, Roy, in particular your strategy for using Betfair. I have been considering moving back to the exchange myself as bookmaker restrictions tighten but I have been put off by the amount of market watching it involves. Your suggestion is a happy compromise that I shall adopt.
I accept your evidence about prices based on returns from your system. However, and unfortunately for your point, the only way of determining whether bookmakers are clipping prices is to compare overrounds from all markets over time and I doubt, though I have not done this research, that these are any different than they have ever been. The results from any one system could simply be reflecting normal market adjustments. Bookmaking is a very sound business based as it is on exploiting eternal human weakness but the big firms operate on surprisingly low percentage profit margins overall.
Thanks again for your Betfair suggestion.
I agree Brian that the bookies overrounds may be similar over the years but they have to cover BOG prices somehow. Maybe they clip outsider prices to cover them. My handicap system which I started in 1998 and still continue with is the basis of my methods. The first five years gave a strike rate of 31%, 27%, 30%, 33%, and 29%. The last five years have been 28%, 26%, 25%, 27%, and 27%.
If you backed them over the first five years you would have made a healthy profit because the prices were better too. Over the last five years you would have lost money. As these horses are only the basis of my selection process I just have to work harder now and eliminate more to make a profit.
I am almost certainly going to give up Flat (turf) racing. Even if I don’t have a bet there is often a lot of logging back into my files to do. There are often three afternoon and three evening meetings and I find as the season goes on I get more and more depressed (well fed-up) with it all. I find the All-Weather and Jumps far more profitable as well.
This is just my view from my angles but it will be nice to be able to take it easier during the Flat season.
When you are doing a lot of repetitive hard slog day after day you stop being creative and inventive. Since coming to the decision over the Flat I have already developed some winning micro-systems on the A/W and Jumps.
Good luck with your new methods, Roy. I am not a big fan of micro systems as a rule – I prefer sounder statistical angles, but I know one pro pal who uses them very successfully. Oddly enough I have the opposite problem to you in that I have abandoned jump and winter all weather racing in favour of Turf flat racing during the summer. I have tried and failed repeatedly to make jump racing pay but it is such an uncompetitive medium and the markets are hence so tight that I can’t get a grip on it. Well, I have one profitable jumps angle which operates all year round at a low strike rate of aound 17% which I will persist with as it has not yet been picked up by the market. No idea why I cannot find a consistent AW season angle – it is not for lack of trying – but I do back on the AW during the summer by adapting my turf angles.
You may well be right about the bookmakers, but I suspect that they use BOG as a loss leader to pull punters in on the web and smart phones which is where they want to conduct business as customers are then so much easier to monitor and restrict if necessary. Here’s to your continued success!
364 optimists….4 basic mistakes..You’ve hit the coffin nails on the head. In 2005 I read Chapter 10 of David Duncan’s p/back ” Winning Horse Race Betting Systems” which encapsulates similar analysis and advice ..Also well worth reading if you ever see a copy. Patience, self-discipline, dedication and a healthy bank will indeed reap results…which is why professional punters succeed. …together with access to fast technology and data banks. But it is HARD WORK. However it is much easier than in the old days so…. join the winners. As for me? Do I learn from accepting all this? … Naahh…. I love my racing too much not to be tempted by “investing” on that overlooked outsider, that up and coming young trainer..or apprentice, for a tasty occasional big return…..So occasional that the slow grind of my systems merely fund my flights of fancy…and keep me away from bankruptcy…..After 50 years of “learning” I have come to accept I am in it for the sport not the money!
A great comment Josephine, thank you. It’s great to be in the sport for the love of it instead of the profit. What makes you special is that you realise that you are in it for the love of the sport and know that you can fund that from your slow-grind systems. 🙂
I’m much more disciplined now than I used to be but I still have my moments which cost me. I’m just wondering though, why would you leave the last 6 months results out of your data?
I leave the last six months out of my data when building a system because I want to be able to test that system on data that was not used during the build and so could not in anyway be backfitted to discover how it is likely to perform in the real world outside of a system building environment.
What you say, Michael, is absolutely true and you make laudible efforts to try and improve punter’s strategies. But, it is also true that these efforts are almost certainly bound to fail partly because they will fall on deaf ears, but also because the more people adopt a successful approach the more the market will adjust to it and render it unprofitable. It is a sad fact that successful punters are successful at the expense of unsuccessful ones. Money pours into the market from all sources, bookmakers and exchanges take their cut and distribute what is left to the winners. The vast majority of punters do not grasp this basic fact and the vast majority of them never will which is what makes it possible for the successful to continue to profit from the gullible and naive. I don’t like to think of this too often because it makes me feel a bit guilty – Catholic upbringing you see. I make money betting, and I make it not from bookmakers or betting exchanges but through them from the gullible. I have come to believe that it is impossible to change this basic fact: 95% (maybe more) of punters lose. They need to in order for the rest (including agents like bookmakers and exchanges) to profit. Nobody wins off bookmakers, they win off other punters. It is easy to avoid this knowledge when you bet online, but go into a betting shop and you quickly realise how ignorant of even the most basic facts of handicapping, concepts of value and money management most punters are. AgainstThe Crowd was the title of pro punter Alan Potts book and that concept was and remains true.
Exactly Brian, there will always be losing punters and unfortunately as successful bettors we need them to make our profits. However the Race Advisor readers are unique in that they want to learn how to win which puts them into the 5% of bettors who are interested in learning how to succeed.
Hi Michael,
So true, so very true…..I think we can all see ourselves in this mirror! I was interested to read about the winning system given to 500 people, I have always said the same, although I hadn’t quite said that no one could make a profit, stunning!!
Question?
I know that “back fitting” is bad, but I don’t really know why? Basing rules going forward on results in the past seems to be logical, doesn’t it?
Surely, the current trend for “stats” based race analysis is simply “back fitting”??
Cheers
Gordon
Thanks for your message Gordon. There is always an element of back-fitting by definition when building a system. However what is generally termed as “back-fitting” in betting systems is when you make rules specific to the data with no logic in them. When you put these rules into samples of data that you’re not building the system on they fail because they were made purely due to the results of the data you were using when building the system.
It’s surprisingly easy to fall into this trap as even some rules that could be consider to have good logic behind them are open to back-fitting in certain scenarios. The best way to prevent this is to leave 6 months of data out when you build the system for testing on completely unseen once it has been built.
From whats remaining you take 60% randomly each time and make a rule. You then take another 60% randomly to analyse for the next rule etc… this means every time you look at a rule you have a different group of horses and so it helps to prevent you back-fitting to a single set of data because the data is always changing.
Hi Michael, I have a little solution which I use every day. When I go to my comp. in the morning, the first thing I will see
Hi Michael, I have a little solution which I use every day. When I go to my comp. in the morning, the first thing I will see is a large notice sitting in front of me saying—“always think long term profits”. This immediately brings me back to earth and reality. Regards, John.
A great suggestion John, I used to have something very similar and would recommend doing that to everyone 🙂
At the front of one of my files is the message ‘Luck is what happens when preparation meets opportunity’.
I don’t know who said this first but it’s the motto I apply to all I do in racing.
Hi Michael
A very good article I’m sure 90% of us can see ourselves in it,the part that worries me is the amount of time needed to see if it works,I’m sure there are people out there who seem to start their systems or methods at the wrong time,and the fact of the bankroll needed for some of these systems methods what ever you call them, most of us need to save a long time now through other commitments one way or another and if we had those kind of bankrolls some of these systems need we probably wouldn’t need to have a flutter,Don’t get me wrong I agree with everything you say but most of us can’t afford to do it that way myself included,so I am one of the ones that only bets when he can afford it.I hope this doesn’t sound nasty it is not written in that way just a conversation going on in my head. Be lucky
Thanks for the comment Michael. There is the need to keep the bankroll long-term in order to approach your betting like this. If you are not able to do that then I would always recommend using my Festival betting approach on the days when you decide to have a flutter.
Hi Michael,
Thanks for your reply, point taken!LOL I have seen some so called systems with rules that bear absolutely no resemblance to anything logical!LOL
So, for example, I read somewhere a while ago, that stall 1 at Southwell, in 1mile races, had won just once in about 100 runnings, would you consider that back fitted, or simply a stat? I may have the facts slightly wrong there, but you get the point.
Something that seems to happen to me quite often is that a new idea goes off like a rocket, then flat lines. One of my systems I have been following for about 18 months. In the first 12 months it made 100pts profit, then it stalled, it didn’t lose much, but it made nothing either, so remained profitable overall, but was making nothing anymore. I then took a break for a month or so whilst moving house, and then started again last November. In the first month it made nearly 50pts, and then stalled again. Currently, since November it stands at 30pts, but seems to be going nowhere…..
Personally I never back test, I just set my rules and filters, and off I go. The main reason for my not back testing is that since the demise of Adrian Massey, I have no idea where to go to do any back testing?? Any advice Michael, regards site’s to go to, to back test, preferably free, or low cost, would be much appreciated.
Regards not blaming the bookies for trying to make a profit. I could agree with that if it were not for the fact that the minute you do start to make a profit they close your account, or restrict you to the point that you cannot make a profit any more. Betting is a risky game, but it is we punters who are taking all the risks, the major bookmakers simply cannot lose because of their unfair practises. If only we punters could get together and act as one, we could bring about major changes by simply refusing to bet with particular bookmakers. It wouldn’t take long, just a few days should be enough, to force even the biggest bookies to their knees, but of course it is never going to happen….
Thanks again Michael.
Cheers
Gordon
I wouldn’t consider 100 runnings anywhere near enough for an accurate statistical measurement on data. Generally I say you have a useful stat after 100 inners, which in this case we would expect to mean about 10,000 runs. Although of course this isn’t always possible as the data isn’t there.
There are a few places online where you can still build systems, HorseRaceBase is one, but in a few months I will also be releasing a system builder that’s going to work in a completely new way 😉
Excellent piece again. I have my own strategy and lived through the above. The emotional aspect is the hardest element to conquer and even after five years I need to be reminded…
Great show
Paul Moon
Hi Michael whenever I go off on a tangent with my system of betting and start getting negative results I always remember something Eddie Lloyd has said in the past “keep it simple” and that usually pulls me back into line. Sometimes I think we try and be too clever for our own good. The saying “if it ain’t broken then don’t fix it” springs to mind. I have just looked at the stats of my system and after 73 bets I am just making a small profit. This is the danger point when tweeking could affect future profit. The one positive thing I will do is see where my profits are coming from and concentrate my betting on that area. During the winter months it’s so tempting to speculate in other areas of betting when the racing is affected by the weather and that usually has a negative outcome for me. Great article Michael, keep up the good work.
Thanks Richard, “keep it simple” is a very good phrase to keep in mind!