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Spotting Potential Drifters


For this article I am going to look at an idea to lay horses early on the exchanges. The theory is thus: look for a horse that looks forecast too short a price in the betting forecast of the Racing Post. Lay it as early as possible on the exchanges, although only if you can obtain the desired price. From here there are two options: you can either let the lay “stand” or if the horse drifts markedly you may wish to consider backing back at a bigger price to give yourself a “free lay”.

 

Basically the hope is that if you can correctly spot such drifters, then you will be laying such horses at a value price. For some readers this might seem ‘double dutch’ at this juncture so I think it may be worthwhile showing you how it could work in practice. For this exercise I have simply paper traded, as this stage I am unsure whether I am good at spotting such horses!!!

 

Monday 17th March - 2.30 Wolverhamptonthe Racing Post favourite was Blue Sky Thinking at 7/4. However, this immediately stood out to me as a potential lay at anything near this price. The reasons were fairly clear:

 

1. The horse had been off the track for nearly 300 days;

2. It was an amateur race which are generally more unpredictable due to the jockeys involved. Indeed the jockey was having only her 5th ride and had yet to finish in the first three;

3. The trainer Karl Burke had a poor record in amateur races even with horses near the head of the market. Combining favourites with second favourites in such races (2000-2007) Burke had saddled just 4 winners from 27 for losses in excess of 60%;

4. There looked to be 5 potential dangers in the race all ridden by more experienced jockeys.

 

Thus there were plenty of reasons to lay the horse and ideally on would want to get this ‘lay’ matched as early as possible. Indeed, in this case, if you had acted early enough then you would have been able to lay at some quite short prices, albeit to fairly small stakes. The table shows the prices with amount matched at 3.0 or shorter at 10.45am that day:

 

Price

Amount matched

As we can see Blue Sky Thinking was laid as low as 2.26 (roughly 5/4). Admittedly this is one lay of just £2 that has been matched. However, there was a fair amount matched between 2.88 and 3.0 - £352 was traded and so £176 in total had been matched. The 7/4 forecast price equates to 2.75 and hence I would have been very happy to lay at prices up to 3.0.

 

By 10.45 in the morning, the horse was as big as 4.6 to back and 4.8 to lay. So imagine the scenario – you had managed to lay £50 at 2.98. Not the best scenario but still a value lay when you consider the situation you now have with the horse trading as big as 4.6. The liability on a theoretical £50 lay at 2.98 is £99 should the horse win. At this point therefore you could take the “safer” option and back the horse back to cover the lay. I am not taking commission into account here due to

2.26 

£4

2.38 

£4

2.40 

£4

2.6

£4

2.66

£4

2.76 

£43

2.78 

£12

2.80 

£4

2.88 

£86

2.90 

£76

2.92 

£50

2.94

£13

2.98 

£110

3

£17

 

ease of calculation, but if you now had placed £27.50 to win at 4.6 you would have covered the bet and have a free lay. To explain this more fully we now have the following two wagers:

 

LAY £50 at 2.98 – liability £99 

BACK £27.50 at 4.6 – potential profit if horse wins £99; liability if horse loses £27.50

 

If Blue Sky Thinking wins then you lose £99 on the lay part of the bet, but win £99 on the win part of the bet. Hence you have broken even. If Blue Sky Thinking loses then you win £50 on the lay bet, lose £27.50 on the win bet and hence make a tidy profit of £22.50.

 

This is not the only option, there are two other options:

 

1. If you now thought 4.6 was a value price you may wish to reverse the idea and place £50 to win at 4.6. This would give you a free bet now on the win side. If the horse won you would pocket £180 from the win bet, lose £99 on the lay bet and make a profit of £81. If the horse lost you break even (£50 won on lay, £50 lost on the win).

 

2. You could create an “arb” – a situation where whatever result you would make a profit. Ideally using this idea you want to create a situation where the payout is the same on both outcomes. This can be done manually, but I use an arbing calculator to do the calculations for me. Hence in this case you would need to place £32.39 on the win bet and whatever the outcome of the race you will pocket either £17.60 or £17.61.

 

What is the best solution in this case? Well for me personally I would choose the arbing option - £17.60 is a decent profit when you have initially had a liability of £99 having placed the initial lay. If I could make around 18% profit on each bet I would be happy! Well I think we all would be!

 

Of course, you may be happy to leave the lay to stand using the argument that you laid the horse at 2.98 and its truer price looks to be nearer 4.6. It depends totally on your betting mentality. The great thing is that you have four choices – leave the lay to stand, trade for free lay bet, trade for free win bet or arb for guaranteed win.

 

It should be stressed that this scenario will only occur if you are correct in your initial judgment that the horse in question will drift in price. If though the price comes in rather than go out, you are left the situation in reverse – you still have four options but the situation is less bright. Having said that, assuming you are a fairly good judge of horses, you should not see this type of horse backed in too often, and even if it is, then price change should not be as severe as that for potential drifters.

 

Let us go back to the ideal scenario with an early lay bet matched and a drifting horse on your hands. The other question to be addressed is if we are now going back the horse – when do we back it? In the case of Blue Sky Thinking we know that at 10.45am the price stood at 4.6. Indeed the horse had gone as big as 4.8, but had started to ease back in price. This price movement continued and by 11.30 the horse had been backed down a bit further to 4.2. The scenario is still a good one as an arb at this price would still guarantee a profit of over £14. However, the timing of the bet can be important in terms of potential returns, but without a crystal ball there is no right answer. The horse could continue to drift all day – some paper favourites end up double figure prices on Betfair; alternatively the horse could reach a peak and then start to shorten again. This looks to be the case with Blue Sky Thinking, but again the decision depends on your betting mentality. The more speculative punter may wait and hope the horse starts to drift again, the more careful punter would decide that now is a good time to place the ‘back bet’. What is clear is that whatever you decide, there will be trading opportunities like this every day. Over a period of time you should get a better “feel” for any market movement and hopefully you will make informed and more accurate choices in terms of bet timing.

 

For the record this is what happened to Blue Sky Thinking in terms of price from 11.30am:

 

Time

Price to back

11.30

4.2

12.00

4.3

12.30

4.3

1.00

4.0

1.30

4.0

2.00

4.2

2.30 (off time)

5.5

 

Hence if you had waited until very near to the start of the race you would have been in a better situation with the price on Blue Sky Thinking going to 5.5. As it turned out, despite the massive drift, Blue Sky Thinking went on to win the race. That shows that the market does not always get it right. However, assuming you did not leave the original lay to stand, then you would have either broke even or made a profit.

 

I am going to continue to monitor this idea and see how accurate I am at spotting potential drifters. If some horses drift as badly as Blue Sky Thinking did, then there could well be scope to make some money! Well we can always dream can’t we??!!

 








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