Punters that give no consideration to price in their betting decisions stand little chance of securing consistent value, which is essential to long term punting success. Some people dismiss value as being over-rated, but if you ran a business and paid 50% more for goods than you needed to, you would soon go broke. It's the same principle.

The most common and useful way to assess value is to construct your own betting market and use that as an indicator to the fair price for each horse. Many punters have a misguided belief that framing your own prices is a difficult process and one that requires a special skill or mathematical formula. The truth is that anyone can learn to frame his or her own prices and it takes no time at all once you get the hang of it.

The first point you should remember is that market prices are nothing more than an opinion about the winning chances of each horse. Framing your own prices then is about converting the opinion you have about each horse into a number, which when combined with all runners gives you an idea of that horses winning chance and therefore, value price.

The method outlined below is quick and simple yet just as effective as any other you will come across.

The Easy-Price Method

After analysing a race, allocate a point score to each horse ranging from 1 to 10, to indicate your opinion of the horses winning chance. A horse allocated 10 points is one you consider a standout selection, while a horse allocated 1 point is considered to have little chance of winning.

The following table can be used as a guide to deciding the number of points to allocate to each horse:

In many instances your opinion will lie somewhere in between these categories, so all you need to do is allocate the number of points that best reflects your opinion. For example, if you feel a horse lies somewhere between having a 'good chance' and 'some chance' you could allocate it five points. After assessing a few races you will quickly develop a feel of how many points your differing opinions are worth.

You may choose to carry this out for all runners in a race, but I only price the top four or five chances and use that as the basis for my win betting.

To demonstrate this process in action, I have taken an old Australian race as an example. The same principles apply anywhere.

Step 1: Allocate your points to each horse

Moonah Brooke - was the top ranked runner on both the 'recent' and 'best' speed ratings. He was two points clear of the next horse and looked certain of securing the run of the race. He was however rated up to his best form and did have a query over his first up effort. With that one query I classified Moonah Brooke as having a good chance and allocated him seven points.

King Shalford - was rated a clear second on his 'recent' and 'best' speed ratings. His last start was a very strong effort behind Martino over 1600m. He looked suited by the pace but from barrier eight there was a slight question about where he would be positioned in the run. That was the only concern so I decided to also allocate him seven points.

Kid Millions - was rated third, comfortably behind Moonah Brooke and King Shalford. He was also drawn in nine and with other on-pace runners drawn inside the position map showed he might face a tough run. Overall he had some chance but his ratings and likely tough run were of some concern so I allocated him three points.

Speedie Gonzales - was rated fourth on recent speed ratings and equal third on his best ratings. The race comment noted that he liked to go at a good early pace in the lead and after getting run down in a weaker race last start, he needed to improve to turn it around here. With that in mind and his recent ratings not quite up to the others, I felt he had a little less chance than Kid Million and allocated him two points.

Step 2: Convert your points to winning chances

To calculate the winning chance of each horse you simply take its point score as percentage of the total points and multiply that by the percentage you wish to set your market to.

Your market percentage reflects the combined winning chance of each horse, so when pricing all runners it's logical that their combined chance equals 100%. However when only pricing four or five runners in a race it's important that you set your market to less than 100% to make allowance for the combined winning chance (albeit small) of the runners you have not priced individually.

As a rule of thumb, in an average twelve horse race you should set your market to 80-85% for the top five runners. Smaller fields can be as high a 95% while large capacity fields of 16 and greater should be anywhere down to 65-70%.

For the four runners in this 11 horse race I decided to set my market to 80%. The winning chance of each horse then became:

Step 3: Calculate your prices

To calculate the price for each horse, divide its winning chance into 100.

In the space of a few minutes we have turned our opinion of each horse into a price that can be used as a guide to what we should accept as fair before betting. So what were the actual market prices for this race?

From our prices we can immediately see that Moonah Brooke and King Shalford are at what we consider to be a fair price, while Kid Millions and Speedie Gonzales are not. As the favourite, Kid Millions looked especially poor value and what is commonly referred to as a 'false favourite'.

King Shalford ultimately won the race at an excellent value price, with Speedie Gonzales second and Moonah Brooke third. Kid Millions was unplaced.

The way you use your prices depends entirely on your betting strategy. Some punters prefer to only back their top selection providing they can get a fair price. Others prefer to bet more broadly and back all of those runners that represent value. One strategy is not better or more profitable than another; the most important thing is that you select a betting approach you are comfortable with.

Successful punters know that selecting winners is only half the battle. Securing value and making sensible betting decisions is just as important and a vital skill that many (losing) punters ignore. By using this simple approach to framing your own prices you can adopt a much more professional approach to your betting and reap the bottom line benefits!

Good punting!

Original article courtesy of the Form Pro.

The beauty of Betfair is that there is such a wide variety of markets. Horse races can have more than 20 runners, whereas sports like basketball or tennis come down to just two options in the match odds or handicap markets. Some markets will trade millions, others just a few thousand. Profits can be made on all of them, but you have to treat different markets accordingly.

With two-way or head-to-head markets, bookmakers' margins are relatively tight (average of 108%), but that doesn't mean you can't find value on an exchange - it comes down to judgment and timing.

Let's look at judgment. How exactly are you making your selections? Do you do plenty of research before working out a set of prices (or percentages) in your head, or do you use someone else's prices as a guide? There is no single way to profiting on an exchange - there are many different ways to trade. Some people like the constant action, others like to pick and choose where they play. Either way, you need to have confidence in the prices you are using as a basis for your trading.

Look on both sides for value

First thing you need to understand is how the markets operate - what makes them different from markets with many more options? Head-to-head markets can also be called binary markets, meaning they could just as easily be listed as 'Will Player X win? Yes/No'. So in theory, the back price of one selection should equate to the same price laying the opponent. (As Betfair introduce cross-matching to more markets, this is becoming less relevant, however the skill is very useful and some markets, particularly weaker ones, do not yet use cross-matching).

Take a look at this racing match bet example:

Let's say you fancy Precocious Leader to win this matchup. Should you take the 1.8 to back or lay the other horse at 2.2?

At least 80% of punters will go for backing at 1.8. And they'd be WRONG.

How does that work? In a two-horse race, backing one runner effectively offers your layer (or bookie) the reverse price on the other runner. Think of it in fractions. If you have a standard bet with a mate on a football match, you usually will bet at even money or 1/1 - £5 of yours against £5 of his. But we all know not all contests are even. If you want to bet your selection at 4/5 (1.80), then the person laying the bet is receiving odds of 5/4 (2.25) on your selection NOT winning. This could either be 5/4 on the other player in a tennis match, the whole field in a horse race, or the other team and the draw in a soccer match.

Back to our example:

Put £20 on at the 1.8 - risk £20 for a profit of £16.

Now compare to laying:
To risk £20 laying at 2.2, click on the Liability link (click on the word for a box to pop-up, not just the dot), type in 20 and your potential profit (the stake offered) would be £16.66.
More profit comes in this case from laying (INSERT LINK) because it means you are indirectly getting a better price to back.

The easiest way to look at it is to think in fractions.
Backing at 1.8 = backing at 4/5.
Laying at 2.2 = laying at 6/5 = backing at 5/6, or 1.83.... a better price than available in the back column.

Think in fractions, and flip it over to turn the lay price into a back price. This is a concept we call Reciprocal Pricing. If you are backing Heads at evens, then by default, you are laying Tails at evens. If you are backing Kauto Star at 2.5 (6/4), by default, you are laying every other horse in the race (The Field) at 4/6 or 1.67. It's just 'flip the fraction' (LINK TO ODDS FOR LAYING).

Confused? Use the 'What If' (LINK TO SETTINGS) function to test it out for yourself. No need to place any bets, just enter a price and stake and the site will do all the calculations for you.

The difference is only small (0.033) for Precocious Leader, but take a look at Ardent Stayer using the same theory. How much better price can you get by laying the other runner?

Backing is laying and vice-versa. Teach yourself to look at the other side for options (the vast majority of punters don't!) and you'll stand to profit more.

Those who look for more, get more

So in both cases in the illustrated example in the previous article, laying provides a better price. It doesn't always work that way, it's just that most Betfair customers stick to what they know - only betting on something to happen (backing) and only taking what they can see on the screen.

If a market is highly liquid and close to the start, any anomalies such as this will probably have been levelled out. A good guide is looking at the market % figures above the Back and Lay columns. The closer they are to 100%, the less likely you can make use of this.

However not all matches are shown on television, and not all sports and markets are as popular as others. These opportunities occur every day across a wide range of markets - they're not as obvious as over-broke markets (markets to back <100%) which also means less people pick them up. Can't work out how to profit from these markets? Imagine laying Precocious Leader at 1.9 (equates to backing Ardent Stayer at 2.11) and then asking to lay Ardent Stayer at 2.04. If you get matched, you've got a green book.

Patience is a virtue

When trading a market, if the largest bet size on the screen is only £50, putting up an offer of £500 will most likely scare punters away, or draw in small punters with £2 offers just in front of you - capitalising on your knowledge, because obviously the big money means you've done your homework.

Be prepared to take small bites to achieve your overall goal. Timing and patience are crucial. You will have to factor commission rates into your projected profits, plus the potential need to vary your prices to get all of your bets matched.

There's no need to panic when someone keeps putting up tiny offers in front of yours. If someone comes along and wants to bet more than £2, then they'll have to take (some of) your offer as well anyway.

Trading on an exchange gives you more options. You can trade in and out of positions, put up offers on both sides according to your ratings, or just follow the money trail and go with the flow. You control the price you take and the stakes you risk - getting your bets matched at the right price is the part that requires practice.

Another perspective of gambling wisdom from the excellent Slipperytoad blog.

Mistakes are the portals of discovery. James Joyce - Irish author (1882 - 1941)

When everybody thinks alike, everyone is likely to be wrong.

Losers think of selecting the winner and beating a race. Professionals think of betting for value and beating the races.

Never succumb to anyone who just wants to let you know what you are doing will never work.

Don't fall foul of the favourite/longshot bias i.e. horses with short odds (i.e., favourites) tend to win even more frequently than indicated by the final market odds, while horses with long odds (i.e., longshots) win less. So, during tissue compilation, don't underestimate the chances of preferred contenders and overestimate the changes of marginal contenders.

The best handicapping literature in the world are your own records.

The crowd is smart ... so let them do the handicapping and analyse them.

The difference between success and failure is small. Therefore you need to continually work to maintain your edge and continually work to improve your performance.

Successful punters think in terms of chances, not fancies and certainties. They try to assess the true chance of a horse in a race and bet on the basis of their evaluations.

Value is all-important - not winners. The secret is not getting more heads than tails; it's winning more when a coin comes up heads than you lose when it's tails.

Common sense dictates that you cannot outsmart the public if you are handicapping with the same information and methods as the public.

The successful punter never allows items of news, "whispers" or thoughts of others override his train of thought when assessing a race's runners for betting purposes.

Following the herd is fine until they all run off the side of a cliff together.

If you want to make money ... big money ... do what nobody else is doing.

To be a winner, one must know or perceive things which the public must not grasp. If there is no special insight then there will be no special odds, no bargains, no overlays; the more that information is used by the public, the less it pays off at the bookies.

To be successful you've got to have had some failures in your career - and learnt from them - otherwise you have probably been too conservative.

Picking winners is easy. Beating the odds is not.

In order to make money betting on sports, you must either have information that is not being used by the betting public, or you must have a superior ability to process the information that is public

"The aim of any entrepreneur is to make more money than you lose" - Theo Paphitis

Knowing the moment to sell is what separates the successful entrepreneur from the also-ran. According to George Soros's son, the hedge fund billionaire sells out when his back starts playing up.

The market is incredibly efficient; don't buck the analysis done by others who determine the market.

Punting Maxims of the Form-Pro

The Form-Pro's personal philosophies and ideas about successful punting published so far. The result of years of study, research and punting experience, these tips should immediately improve your bottom line!

1. Proven class is always worth more than potential class. All other things being equal prefer the horse that has already proven itself in the class of today's race.

2. Don't underestimate the importance of form consistency. Regardless of their last start performance; be wary of horses that have a habit of mixing their form from run to run.

3. Race pace has a major influence on the ability of a horse to carry weight over a given distance. A horse will be at a significant disadvantage if asked to carry more weight over more distance in a race with faster early pace.

4. Never discount the clear victories one horse has had over another in their previous runs. Unless there were "significant" excuses for the defeat and / or you expect the horse to notably improve under the new race conditions, it is most likely to be defeated again.

5. Don't be deceived by the "one-off" rating in a horse's previous form that indicates it should easily beat today's opposition. Unless the horse is young, on the way up and has already demonstrated some special talent, the rating is likely to be an aberration. Your bankroll will be in much better shape if you base your assessment on ratings more consistent with the horse's overall record.

6. Knowledge of a horse's ability or potential to compete at different class levels is the basis of effective form analysis. Always start your analysis of each horse with an assessment of its class relative to the race under consideration.

7. If you aspire to make consistent profits from racing a detailed knowledge of individual horses is essential. Spend time noting the characteristics and ability of individual horses in different conditions and you will be well rewarded.

8. Pay particular attention to how a horse finished off the final 50m of its race. A simple note of whether the horse was making, losing or holding ground during this period can prove vital when assessing its form in a future race.

9. The judgement and skill of a jockey is frequently the difference between winning and losing a race, especially on hold-up runners, biased tracks and horses drawn wide. Steer clear of poor and inexperienced jockeys on horses facing these difficult conditions and you will avoid many losing bets.

10. Pay particular attention to young, lightly raced horses that win with something in reserve. Quiet often they can continue to step up in class and string together a few more wins before they reach their class and weight peak.

11. Proven ability in wet going is vital. Horses that have yet to start on slow or heavy tracks represent high risk, regardless of how good other aspects of their form might be. Your bankroll will be much better off if you avoid them as betting propositions.

12. Making an income from racing is about playing the odds and taking advantage of profitable opportunities when they arise. Have the discipline to ignore favoured runners that represent poor value and courage to support others that represent higher value and you will drastically improve your bottom line.

13. When examining the potential disadvantages a horse must overcome to win a race, always consider its class relative to the class of opposition. Horses that have a class edge will often overcome difficulties to still go on and win. However horses that are racing at their class peak will most often only win when everything is in their favour.

Originally published on the Form-Pro website.

The Wisdom of Pittsburgh Phil

Pittsburgh Phil was a legendary US racing punter and his wise words apply to all forms of betting, not just racing in America.

A good jockey, a good horse, a good bet. A poor jockey, a good horse, a moderate bet. A good horse, a moderate jockey, a moderate bet.

A man who plays the races successfully must have opinions of his own and the strength to stick to them no matter what he hears.

Successful handicappers know every detail in regard to the horses upon which they are intending to place their money.

The minute that a man loses his balance on the race track he is like a horse that is trying to run away.

A man cannot divide his attention at the track between horses and women.

All consistently successful players of horses are men of temperate habits in life.

The racing man should arise in the morning cool and clear headed and should then take up the problem of the day.

Some horses will run good races over certain tracks, while in the same company under similar conditions on other tracks they will run very disappointingly. Study the likes and dislikes of a horse in regard to tracks.

If there are two or three very fast horses in a race, one or two of them will quit before the end of the journey. Hence look out for your intelligent jockey.

Many killings are attempted but few are accomplished.

In handicaps the top weights are at a disadvantage always unless they are very high class horses.

There are few trainers who can send a horse to the post the first time out in perfect condition.

One race for a horse is equal to two or three private trials.

Horses are the same as human beings where condition is the test of superiority.

Winners repeat frequently while the defeated are apt to be defeated almost continuously.

The majority of horses will go further over the turf than they will over the dirt course.

Mud runners are usually good on the turf.

Time enters into the argument under certain conditions but if depended entirely for a deduction it will be found wanting.

The ability to tell whether a horse is at its best before a race is acquired only after years of the closest kind of study.

Special knowledge is not a talent. A man must acquire it by hard work.

A horse that frets is a very dangerous betting proposition.

The majority of the riders and horses are game and will fight for victory no matter where they are placed.

Some jockeys excel on heavy tracks.

A good mud rider will frequently bring a bad horse home.

You cannot be a successful horse player if you are going to get the worst of the price all the time.

The basis of all speculation is the amount of profit to be obtained on an investment.

It is not always the heaviest wager that is collected. The weight of the bet does not make a horse win. A poor man's horse and his $10 speak as loudly as a $10,000 wager from a millionaire. It is the horse that must be considered.

The clocker is something like the scout in the army.

Honest horses, ridden by honest boys, are sometimes beaten by honest trainers. Instructions are given to the riders which mean sure defeat when intended to be the best.

The resistance of the wind is very great in a horse race and it is a correspondingly great when acting as a propeller. Wind and atmosphere have considerable effect on horses that are troubled in their respiratory organs.

Class in a horse is the ability possessed by it to carry its stipulated stake weight, take the track and go the distance that nature intended that it should go,

I figure that two-year-olds can give considerably more weight away to horses in their class, than can horses in the older division excepting in isolated areas.

There is enough natural inconsistency in horse racing without having it forced upon the public by unscrupulous men, yet there is not one-tenth of one per cent, as much crookedness on the turf as it is given credit for.

A horse that is not contented in his stable cannot take on flesh and be happy.

Every horse I ever owned improved after I had him long enough to study his disposition.

A horse expects to race if he is a thoroughbred, just the same as a game chicken is anxious to fight.

When you feel yourself getting out of form then take a rest and freshen up.

What is frequently right in form is wrong in condition. If a horse is not in good condition he might as well be in the stable.

Look for improvement of mares in the autumn of the year. They train better and more consistent.

There are mud riders as well as mud runners in the racing world.

A jockey should not be overloaded with instructions.

It is not bad speculation to pick out two or three sure looking bets and parlay a small amount.

Cut your bets when in a losing streak and increase them when running in a spasm of good luck.

Double your wagers when you have the bookmakers' money in hand.

Condition has more to do with a horse winning or losing a race than the weight it carries.

A horse in poor condition cannot beat one of his own class.

A high class horse could not win a race with a feather on his back if he is not in condition.

Watch all the horses racing closely. You may see something that will be of benefit later on.

It is well to play horses that are in winning form. A horse in winning condition generally repeats or runs into the money.

Different tracks cause decided changes in form frequently. Study horses' whims and fancies for certain tracks and you will see a good "lay" or a good "play." But a high class horse will do his best on any track.

The less one thinks of crookedness and trickery in racing the more successful will be his handicapping.

Look for defect in your own calculating rather than cheating of others.

Learn to finance your money to advantage.

Know when to put a good bet down and when not to.

-- From "Racing Maxims and Methods of Pittsburgh Phil," by Edward W. Cole

Wise words from financial experts

Originally written by Max Gunther, reprinted from www.bfportal.com. Initially written for financial trading, but just as relevant for sports punters and traders.

On Risk:
- Worry is not a sickness but a sign of health - if you are not worried, you are not risking enough.
- Always play for meaningful stakes - if an amount is so small that its loss won't make any significant difference, then it isn't likely to bring any significant gains either.
- Resist the allure of diversification.

On Greed:
- Always take your profit too soon.
- Decide in advance what gain you want from a venture, and when you get it, get out.

On Hope:
- When the ship starts sinking, don't pray. Jump.
- Accept small losses cheerfully as a fact of life. Expect to experience several while awaiting a large gain.

On Forecasts:
- Human behaviour cannot be predicted. Distrust anyone who claims to know the future, however dimly.

On Patterns:
- Chaos is not dangerous until it starts to look orderly.
- Beware the historian's trap - it is based on the age-old but entirely unwarranted belief that the orderly repetition of history allows for accurate forecasting in certain situations.
- Beware the chartist's illusion - it is characteristic of human minds to perceive links of cause and effect where none exist.
- Beware the gambler's fallacy - there's no such thing as "Today's my lucky day" or "I'm hot tonight".

On Mobility:
- Avoid putting down roots. They impede motion.
- Do not become trapped in a souring venture because of sentiments like loyalty and nostalgia.
- Never hesitate to abandon a venture if something more attractive comes into view.

On Intuition:
- A hunch can be trusted if it can be explained.
- Never confuse a hunch with a hope.

On the Occult:
- If astrology worked, all astrologers would be rich.
- A superstition need not be exorcised. It can be enjoyed, provided it is kept in its place.

On Optimism & Pessimism:
- Optimism means expecting the best, but confidence means knowing how you will handle the worst. Never make a move if you are merely optimistic.

On Consensus:
- Disregard the majority opinion. It is probably wrong.
- Never follow speculative fads. Often, the best time to buy something is when nobody else wants it.

On Stubbornness:
- If it doesn't pay off the first time, forget it.
- Never try to save a bad investment by "averaging down".

On Planning:
- Long-range plans engender the dangerous belief that the future is under control. It is important never to take your own long-range plans or other people's seriously. In essence these axioms point to the benefit of having an investment strategy and sticking to it, regardless of what other investors say or do. If you don't have an investment strategy, you could do worse than adopt these principles. However, don't be afraid to add or subtract ones according to what works for you.

The same rules apply for punters who bet with a bookmaker. It's important to understand how the bookmaker works; how they set their odds, why they change them as the betting progresses, why they have maximum bet amounts and the types of bets bookmakers gain the most money from. Of course, the latter is very important because a bookmaker gains what the punter loses and just like a football coach, if we fully understand how a bookmaker works, then we can gain the edge over them.

Bookmakers have numerous ways of setting their odds but to understand it fully, we have to look at the bookmakers which are generally the first to 'price-up'. Different bookmakers scattered around the world will be the first to produce odds for certain betting markets - you won't find one being first out for everything. In doing so they will generally have a team of experts amongst them that formulate prices based on their opinion. Setting odds at the start can be a very risky business. Their opinion might differ to that of the betting public, which may result in some heavy action on the options the market determines to be mispriced. It's no coincidence, therefore, that the bookmakers who produce the earliest of odds have large bookmakers' margins.

A bookmaker's margin is basically the net return that bookmakers should profit over the long term. An example of a tennis match, priced up by bookmakers:

Rafael Nadal 1.53 (8/15)
Andy Murray 2.37 (13/8)

The bookmaker's margin here is calculated by summing the reciprocal of the odds as below.

Let's say that £6,535 was bet on Nadal and £4,219 was bet on Murray. No matter what the outcome, Bookmaker X here would make a profit of £755. Given that £10,754 was bet on this event, their profit on turnover is equal to

which, of course, is a sound position for bookmakers but a far less desirable market for punters. Bookmakers who release odds earlier than other bookmakers will usually price-up in a conservative manner by reducing their prices and thus increasing their margin. The margin can be thought of as a 'buffer'. The greater the buffer, the less their potential liability they will have as a result of pricing-up incorrectly.

Of course, in the example above, the exact amount quoted won't always be as balanced, and more often than not a bookmaker's book will not be balanced. What this means is that more money has been bet on one side than the other, to the extent that they could lose money should one of the players win. This, however, will result in an increased gain should the option that has been laid loses.

This is where we as punters come in. Bookmakers with margins of around 107% will never make 7% on turnover in the long term but will usually make an amount smaller than this because what the punters bet on will influence the bookie's price. Prices move because too much money has been bet on one outcome, giving the bookmaker a large liability should that player win. Like punters, bookmakers are always looking to reduce their liability and to do this, they will attempt to attract money on their opposition. In essence, they attempt to balance their book. To do this, the bookmaker will increase the price on the opposition to make the price more appealing to punters while shortening the price of the runner which has been well backed in an attempt to discourage further investment on that selection.

Let's assume that we had the same amount of money bet on Nadal and Murray, as listed initially above, before assuming that a lot of money has subsequently been bet on Nadal. There could be injury concerns on Murray, or perhaps other bookmakers have opened up the betting on the market, with prices leaving Bookmaker X the best price for Nadal. In other words, later opening bookmakers rate the chances of Nadal higher than Bookie X and offer prices of 1.48 and 2.5 for Nadal and Murray respectively. This will result in punters betting on Nadal going to Bookie X and bettors of Murray going to the later opening bookmakers, as these are the best prices available.

We assume £10,000 is bet on Nadal at his current odds of 1.53. At this stage, should Nadal win, Bookie X will be out of pocket by £4,544, but would gain £10,754 should Murray win. Bookie X can do a number of things. They could lay off the bets, which we will talk about later, or they can change the odds to be more in line with other bookmakers.

Let us say that they decide to change the odds, and re-price Nadal at odds of 1.45 and Murray at 2.60, which still keeps their bookmaker's margin of over 107%. If £5,884 is bet on Murray at these prices, Bookmaker X's books will be exactly balanced and they gain a profit of £1,340. Their profit has gone up because their turnover has increased. Their bookmakers' margin, however, has in fact gone down. Now out of the £26,638 that has been bet, they are only now making a profit on turnover of 5%, as opposed to the earlier 7%.

As stated before, bookmakers will never make the amount that their margin is calculated at. Of course, in the above example it might not matter how much the bookmaker decides to change his odds, he may never balance his books. In fact, bookmakers rarely do and are not fussed with losing or gaining money on any one individual event. They are primarily concerned about the long-term profit (which should be our aim as punters too!).

So what other options does Bookmaker X have if they don't balance their books? Well, they could take the risk on for this particular match and hope that the outcome will favour the side that they will gain money on.

However, it could be that one of the players is under a serious injury cloud and they decide that it's best to "lay-off" so as to eliminate any risk and potential loss. Because Bookmaker X has a high bookmakers' margin, this means that they will easily be able to find several bookmakers that have good odds that are better than their own. Let's just say that even though they changed the odds, no other bets got matched, and hence they have £16,535 bet on Nadal at odds of 1.53 and £4,219 bet on Murray at 2.37.

As other bookmakers have better odds despite the odds changing, Bookmaker X has found odds for Nadal and Murray at 1.5 and 2.75 respectively. By matching the £10,000 bet on them with £10,000 of their own at odds of 1.5 they eliminate any risk that they might incur. It is also quite often that bookmakers will 'lay off' on betting exchanges, so even though you believe you are betting against other punters, you are in actual fact also betting against other bookmakers on the exchanges.

Bookmaker X no longer has any liability for this event and will make a profit of £456 if Nadal wins and a profit of £754 if Murray wins.

Bookmaker X also offer odds for set betting for Nadal vs. Murray and the odds given are as shown below:

If we calculate the bookmakers' margin for the odds listed above, we obtain a result of 120.6%. This is a lot larger than before and means that punters have to be 20% better than the bookmakers in order to start gaining a long-term profit by betting on these results. This ultimately means that it is very hard to find an edge betting in such markets. In fact, the more possible results there are in a market, the higher the bookmaker margin will be. This is because if there are more options to bet on, generally the odds will be higher. The added bookmaker's percentage insures against the potential liability from the bookmaker's perspective.

What you will find is that bookmakers make a large amount of money from punters betting on events where there are a large number of betting outcomes possible (e.g. Correct Score, First Goalscorer). This is no surprise, as the bookmakers' margins are so high. Unless one can pick obvious errors in the bookmakers' prices, punters are best to stay away from such high percentage markets.

This leads us to the favourite / long-shot bias that is found in bookmakers odds. As we mentioned above, bookmakers compensate for the larger liability by increasing their margin, so as to gain a large amount in the long term. The same actually happens when we have events where there are big outsiders.

Let's suppose that Bookmaker X are pricing up the odds between St. Helens and Castleford in the Super League, the former a traditional powerhouse, the latter a regular struggler. Let's presume that they believe St. Helens has a 90% chance of winning. Given this, they should price St. Helens at 1/0.9 = 1.11 and Castleford at odds of 1/0.1= 10. The market here is 100%. The bookmaker will then want to add their margin in and as such, they decide to make the odds 1.05 and 8.50. Notice here that if someone were to place a large bet on Castleford at odds of 8.5, then they would be exposed to a large liability whereas if the same amount was placed on St. Helens at odds of 1.05, the risk would be minimal in comparison.

To counteract this, bookmakers work a favourite/long-shot bias into their odds. Instead of offering 1.05 and 8.5 on the two teams, they might offer 1.1 and 6.2 on St. Helens and Castleford respectively, hence reducing the risk of Castleford's large price. Bookmakers in general want to lay the favourites as they are the most popular with punters, and the risk is far less than taking on the outsiders.

In fact, this favourite/long-shot bias is prevalent in just about every betting market. As a very general assumption, this means that proportionately the odds for an underdog are not as good as the odds for a favourite. This doesn't mean that we should only bet on favourites. It does, however, mean that we only need a smaller advantage to gain in the long-term betting on favourites (with bookmakers) than what we do betting on the underdogs.

So how does a bookmaker set his original odds? We mentioned before that most of the early bookmakers will have a number of experts in each sport and they will come to a decision as to the opening prices. However, it is important to note that the odds they set are not based on the true probability of the teams winning, but rather what the general betting public perceive the true probability to be.

This important difference is subtle but extremely important. In fact, it is the reason why professional gamblers can make long-term profits out of bookmakers. The goal for most bookmakers is to balance their books, and in doing so ensure a guaranteed profit. Let's just say, however, that they thought that Nadal was an 80% chance to win versus Murray. A probability of 80% is equivalent to odds of 1.25, but the bookmaker would not want to be too obvious about what the bookmaker's intentions are, especially considering that all other bookmakers are around the 1.45 mark. Instead a bookmaker moves his prices slightly so that he might get more bets on Murray than Nadal. He might offer 1.4 for Nadal, which in turn would push Murray out to, say 2.75. In this case, if you fancied Murray, then these odds of 2.75 are the best you can get. However, if you fancied Nadal, then the current bookmaker doesn't have the best odds at 1.4.

Here we have a situation where a bookmaker is deliberately moving his odds away from the norm in order to make the amount of money bet on each team lopsided. So this particular bookmaker is not trying to balance their books but rather is having a bet themselves with the bookmakers' margin still on their side.

Of course, it is impossible to work out the actual true probability of a team winning; if we could, then we would be amazingly rich! But one can attempt to approximate it. Whenever we bet we are approximating probabilities in our heads. Even if you don't understand what probabilities are, you are still making a judgement that the odds offered are greater than that of which you believe and hence, you bet on them.

And this is the gambling game which we play. The better the judge you are at approximating the true probability of a team winning, the more profitable a gambler you will be.

The original version of this article was written by Matt Elliott - co-owner of Australian based leading sports and racing forum PuntingAce

There are thousands of licensed bookmakers around the world - how many of them do you honestly think do all the hard work themselves? Realistically, very few.

Most bookies have an area of expertise, as there simply aren't enough hours in the day for them to price up every market for every match in every league around the world by themselves. And with more and more pricing services supplying the industry, there are even some bookmakers who use no opinions at all.

Do some homework - work out which bookmaker is good at certain events, for example the less popular football leagues. You could spend months working out who the best judge is on the English Premier League, but the matches are so popular and the exchange markets so tight, that it is very hard to make it pay as a 'trader'. The smaller and less popular the market, the more time you have to prepare.

Let's take a look at something more obscure as an example - the English Football Conference. After a few weeks following which bookmakers take an opinion on a match (by offering best prices rather than being 'vanilla' or the same as everyone else), you are now prepared to follow them by offering the same figures or slightly better than their prices on Betfair. The best part? You can set your risk amount to as much or as little as you like.

After a few weeks' research you notice that XYZBookie.com have had great opinions recently. You decide you want to lay any team they have best odds for.

So from their market of Kidderminster v York, you see that they are best price around on the home side at 1.80, with conservative prices of 3.30 the draw, 3.80 for York - a market of 112%. Unless you are first to price the market up on the exchange, you will have to improve on those prices to jump to the front of the queue and get matched.

Laying a book

Click on 'Lay All', then offer a slightly better price on all selections - say 1.82, 3.40, 4.10 - forming a market of 108.7% - check this by using the Book % function at the bottom of the My Bets slip (you will need to enter default stakes first). You are now top price on the favourite, but still in the mix on the others, and with some margin (the 8.7%) up your sleeve to manoeuvre later.

Click on 'Liability' to set how much you are prepared to lose on each selection. If you are keen to lay the home side as per the 'expert opinion' of XYZBookie, then offer to lay Kidderminster to lose £100, with just £50 of risk on the other pair. With your conservative prices on the draw & away options, you might not get matched anyway. If you wanted to lay all three options for the same amount, use the Payout link instead of Liability. Look at the potential profit & loss figures amongst the teams (you must have the 'What If' feature ticked) rather than the individual liability/profit on the bet slip.

Note that when you are entering an amount as the 'lay' figure, this is the stake that the backer can take on the other side, NOT the risk- so to risk £100 on Kidderminster at 1.82, you will need to offer £121.95 on your lay.

Minor markets

In smaller markets, don't expect these funds to be matched instantly. You may need to wait several hours or even a couple of days. Check back on the market every few hours to see your position. If you are still head of the market, then be patient. But if someone has jumped ahead of you, you will have to tweak your odds a little, remembering to keep the percentages in your favour. This might sound like a lot of hassle, but it can reward you greatly if you take the time to mould the market your way.

Popular markets might have thousands of people monitoring them and wanting to have a bet - it is very hard to be smarter than every one of them. But in a market where only 20-50 people are interested, your chances of success are much greater!

And remember this - if you get to the market first, you can post offers as short as you like. The vast majority of exchange punters are market TAKERS rather than market MAKERS - they either don't understand the concept of value or aren't prepared to risk it. Be prepared to ask for a price and have patience. The majority of punters lose - good reason to avoid what most people do. Lay low, back high and you'll be well on the road to success on the exchanges!

Backing Short Prices

Too often we hear racing media pundits use the phrase 'Any price a winner'. This guarantees only one thing... that the media pundit is doing the job because he needs a job - he does not win on the punt.

Let's get one thing clear - price is important, just how important you make it depends on your style of betting.

Look at it this way - if the average price of your bets is 2.0 (evens), then you need to make 50% of your bets winners just to break even. So 51 winners out of 100 makes you a slight profit, 49 winners a slight loss.

Even money is easy to work out - how about the leviathan punters you hear about that lump on the heavy favourites? For every 1.5 shot you back (1/2), you need to get two out of every three correct JUST to break even. A little shorter? At 1.33 (1/3), you need three of every four to come home to break even.

If those numbers are starting to look depressing, just imagine how many of those 1.01s need to succeed for you to profit.... Just one shock result in 101 events means you can do no better than break even.

Outsiders

Punters who prefer to back outsiders have to be prepared to sustain losing runs - the length of which is determined by their average price. Backing horses at an average of 4/1 means 20% of your tips must win to break even. One week three in a row might land, other weeks could see a losing streak of at least ten races without a collect.

If you're a fan of longshots, then you obviously love a juicy payout. You'd better be prepared to wait a while for each collect though. At 34 (33/1), you're looking at a 3% chance of winning, so about three times in 100 you'll be looking to collect.

Value

The price at which you place a bet is entirely up to the individual, some people would rather get the occasional selection right for a big collect, others want to win nearly every time.

The trick is betting at a better price than you think your selection should be. If after all your research you decide that a certain selection has a 50% chance of success the price in a 100% book should be 2.0 (Evs). If the price available is greater than 2.0 this represents value. Likewise, if you can lay at a lower price than 2.0 this too is value. To win in the long run all bets placed should represent VALUE.

Many punters talk about betting 'overs' (overlay bets) or laying the 'unders' (a selection priced at under the odds they believe it should be). Bear this in mind - every time you back what you think is a 2/1 shot (3.0) at even money (2.0), you have to improve your win ratio by 16.7%.

If you're after a 50% winning strike rate on selections, your average price needs to be even money (2.0) to break even (ignoring commission). However if you are returning an average price of 5/4 (2.25), you are getting a 5.5% advantage on winners needed (you now need four out of nine rather than five of ten to break even) - you're actually making 25% more money.

To quote leading Australian racing analyst Steve Moran - "Value - you can't eat it, but you must have it in order to survive."

1. Planning

You must be prepared, have a plan.

"Without preparation you will fail before you begin."

I can't emphasise enough how important it is to be prepared. Without decent plans in place you won't have any structure or rules to follow. Trial and error can be a very costly and painful experience that I definitely wouldn't advise. In order to become successful at anything you definitely need to have a good plan laid out before you begin, without one failure can be assured.

Racing is no different than any other investment. Being prepared and following a good plan means knowing which type of races produce the best and most consistent results, which type of methods & systems to use on those races, and what kind of staking plans work best.

All races are not created equal...
You should definitely not bet in about 80% of them. Most defy rational form analysis and produce very inconsistent results. However betting on the remaining suitable 20% will give you a far greater chance of success. After all that is how the most successful trainers get regular winners, by placing their best horses in races they have a very good chance of winning.

If you want to make consistent profits from racing, you need to be prepared, and have all the right tools and information available to you.

2. Patience

"You need plenty of patience to become a profitable punter"

We have all heard the saying patience is a virtue, now this probably applies to racing more than most things in life. Believe me when I say you need patience. Most punters have very little and think that they can place a few lucky bets each week to win loads of money using small stakes, if only. It is very unlikely that they will win anything on a regular basis and losses are pretty much assured. You can only expect a consistent return from your bets if have done your homework and follow a proven plan. Classic mistakes to list a few are betting on too many horses, betting in the wrong races or in combinations of silly bets like Tote exotics, Yankees, Scoop6 and Placepot etc. If you look in any bookie's window, or on their web site you will see these types of bets are very heavily promoted because they make an absolute lorry load of cash week in week out.

The actual chances of winning these types of bets are very slim and the bookies know this. It's the mania of mug punters, who might win a few hundred from a small stake once every couple of years if they are extremely lucky. Let's face reality the odds are heavily in favour of the bookies.

One bet you rarely see the bookies advertise is the single, "why" you might ask? A single bet carefully chosen on the right horse in the right race will be successful more often than not, if the truth is known this is where our friends the bookies would love not to accept bets from the public.

This type of bet is where they lose the most money.

Look at the results at the end of any race day and you will see a fair amount of reasonably-priced favourites who have won their individual races. So if you want to profit long term from racing don't bother with silly combination bets. They offer no value at all even if you do only use very small stakes.

"Remember be patient and wait for the right races to come along before you decide to place a bet, this takes a lot of discipline. Believe me it will definitely be worth it, because you will begin to profit almost instantly."

3. You need to be consistent

Most punters continue to lose on a regular basis because they are not emotionally prepared and don't follow even the most basic betting essentials.
In order to have consistency when betting you need to follow a proven system. Even following a system there will be the occasional loss. Losing runs are an unavoidable part of racing. Even a really profitable system will have the odd losing run.

Systems rarely stay in profit all year round, there are just too many random factors in racing that can affect their performance. However systems offer us the best way of making consistent profits, and any sequence of losing bets will ultimately be followed by a sequence of winning ones. Once you understand this fact consistent profit will never be far away.

Most punters don't use a system for long enough before they start to chop and change things so they never end up making any consistent profit. Very often they stop using a system after a few losses. Ultimately they revert back to their old stupid behaviour of no plan wagering.

Conversely punters that follow a proven system are informed and prepared, and have past experience of betting patterns. They know that any losing run encountered will not affect the long-term goal of making money. It's the same for any other investment; such as ISAs or the Stock market, one month they are up and the next maybe down a little, but they perform well long-term if managed properly.

The dynamics of long-term investment aren't as you would expect, and even bookmakers lose money. You have to have a "Positive Expectancy" which means although you may lose sometimes on the whole following a proven system you should expect your profits to outweigh your losses.

Learn to think with a "Positive Expectancy" and with a good plan you will succeed and be profitable in the long-term. It is important to keep your expectations realistic, focused and attainable. If you want instant wealth, forget racing and buy a lottery ticket. Bearing in mind the odds of actually winning the top prize in the simplest lotteries are an astounding 13,000,000 / 1.

4. Greed will lead to losses

Most punters are greedy; this greed clouds their view of what to realistically expect in return from bets. They spend virtually no time on the selection process, and are falsely overconfident considering they lack the knowledge needed to back up their decisions. They either back big prices, or odds-on shots mostly because of their attachment to money, or don't see that these bets realistically have no chance of being successful with any consistency.

Their obsession with money means that they don't look any further than the 15/1 shot winning them £75 off their £5 stake, or the odds-on dead cert that can't lose.

You should be positive in your decision to place a bet, but don't be greedy! Only expect to win long-term if you follow a good plan and execute discipline at all times. Being greedy will lead to failure and wipe out any money that you have built up. More importantly it will damage any faith or belief you had to succeed.

Punters that lose on a regular basis always try to regain their losing stake money regardless of a suitable opportunity being available. This crazy action usually causes them to lose even more money. Irrational behaviour of this kind can easily be rectified if simple logic and common sense are applied.

What they fail to realise is tomorrow is another day and there is racing seven days a week in the UK. There will be plenty more opportunities to profit from, but not necessarily on the same day. Patience, observation and planning will regain the winning thread sooner if not later.

There is no such thing as "Bad Luck" really as studies of self-made millionaires have proven. In one of those studies the most successful people were asked why they were so fortunate, nearly all of them replied; the best definition of luck is...

"Preparation meeting opportunity"
Have the patience to learn a skill properly - build your profits gradually, and only increase your stakes once you have gained confidence in your ability and reached a higher level of skill.

To summarize greed:
Don't behave carelessly and chase losses. If you do it won't take too long for your betting bank to be seriously depleted, or even worse wiped out. Be warned, if on any day's betting, AFTER YOU HAVE PLACED ALL YOUR BETS you still incur losses. See it as a temporary hitch on the way to your long-term profit goals; stop and walk away until the next day. Professional punters may only find three or four bets a week on occasions, but they will be very strong bets indeed.

5. Discipline

"Lack of discipline will undermine your progress"

Why do most punters still lose even when they use a good racing system patiently? They lack the discipline to follow the system religiously to the letter. The one thing all good systems have in common is a clear set of rules to follow, leaving you no room to second guess your decisions, or even worse let the element of human emotion get involved.

Emotion will undermine your long term plan. Now I'm not suggesting that you have to have a heart of stone to succeed, but if something doesn't fit the criteria of the systems rules, then it's a no bet, simple as that. The minute you cross the line and ignore the rules you will lose money and that's a fact.

A professional punter has clear, concise rules that he follows religiously, that is what separates him from the losing punters. If a system has been proven to work long-term stick to it and don't make any changes. Unless in a rare situation when something in racing changes, which makes a particular rule redundant.

On occasions we will all suffer from the odd lapse of discipline; after all we are only human not machines; but be aware of these errors of judgment. Betting regularly on the wrong type of horses being talked up by the racing journalists is the quickest way to the poor house.

When it does happen don't punish yourself learn from it and move on. Ignore hype and rumour about horses, sometimes it is justified but usually not. If you stray once too often it can leave holes in your betting bank, and also lead to bad habits creeping back in.

For a more in-depth explanation of emotive gambling see the section below (10) on emotion.

6. Laziness

"It is a natural human characteristic to get away with putting in very little effort."

You can't just spend 10 minutes looking at the Racing Post, or pick the same selection as your favourite tipster and expect to win long-term. Racing is a complex sport. You need to invest time initially and at the very least learn the fundamentals in order to gain an edge over 95% of punters. After all if it was that easy every man and his dog would be making a mint from the horses.

The main difference between punters who profit regularly from racing and those that don't is....

Successful punters invest lots of time and energy into learning what works, and just as importantly they know what to avoid. There are many strategies that you can use to profit from racing. The key to success is learning to know which strategies to employ on which types of races.

To help you I've listed a few examples of the more obvious mistakes made by the majority of punters when selecting a horse to bet on.

• Following hype horses.
• Following trainer - jockey - Blindly
• Following tipsters - Blindly
• Backing or laying Favourites - Blindly

Other crucial factors most punters ignore are changes in the going, and the effect a non-runner can have on the potential outcome of a race.

7. Learn from your mistakes

"Gain a valuable edge and take advantage from past mistakes, by keeping good records."

Another area where punters fall down badly is, they fail to learn from past mistakes, and continue to make the same stupid mistakes over and over again. You should definitely try to improve your performance, and keeping good records will help you to do this.

Document areas where you could improve, make notes of any particular areas of racing in which you have performed well in the past.

Try to specialise in a particular type of racing that you like. I personally prefer the jump racing to flat or A/W racing, and so my performance is more profitable in this area because I know a lot more about National Hunt racing. There is far too much racing in the UK these days for anyone to follow it in-depth. Knowing more about one type of racing is more productive and profitable than knowing a little about all types of racing.

When I first started to analyse races my main mistake was to try and look at too many cards in a day. Subsequently I became overwhelmed by the sheer volume of information available, which ultimately left me paralysed and unable to focus on what was important. You need to understand we all have a limited amount of mental space to dedicate to any one task. Trying to do too much causes panic; experience has taught me that panic leads to making mistakes in the selection process, which ultimately costs money.

Focus only on factual information that is relevant to the selection process, again ignore hype and rumour.

Keeping good records will help you to monitor performance. You will be able to highlight any problem areas and focus on profitable angles. For example there may be a particular course that you just can't pick a successful selection at, if so it could be worth avoiding that course until you can find out why. It may not be your lack of ability, but rather the course statistics over the years clearly show that certain race types are best avoided for betting purposes.

8. Betting banks

"Why you should never bet without one."

Betting banks are absolutely essential for anyone who wants to take punting seriously. If you want to profit from racing long-term you must put some money aside and use this money solely for the purpose of betting. This money must be totally separate from all your other finances that you need to live day to day. This will remove emotion from the decision making process when you are betting; how you might ask?

Think about it for a minute. Would you put the week's shopping money down on a horse? No of course you wouldn't, but unfortunately some people do. These are generally punters with no method, no plan and definitely no betting bank.

Understanding how to recognise your emotions, and what part they play in the decision process is the key to your success or failure in betting, or trading of any sort. If you know that the money you use to bet is not linked to your everyday expenses then you will be able to relax more, and be positive about your decisions when placing bets.

How much money you can afford to put in a betting bank will of course depend on your own individual circumstances. Then you need to decide how much money you will use for each bet this is called a "Staking Plan" or point betting. In other words each bet will be one or two points depending on how strongly you feel your selections chances are.

You should divide your bank into 50 - 100 points in my opinion. This will allow for any losing runs, and will overcome the risk of an emotional response to a series of any unusually positive or negative results. In the next chapter I will explain how it works. But first you must understand the overall dynamics of smart money management, and always...
Start off small, and bet with money you own, not money transferred from your credit card.

The best way to start backing or laying horses is with a small betting bank, as your experience and confidence grows so will the profits, which will be mainly made up of money you have won and not deposited from your bank account or credit card.

The advantages of this approach are...
• Betting with winnings will allow you to relax more. Using money you have won is far less emotional than betting with money deposited from your bank account.

• Using a small betting bank has the distinct advantage that if at first you aren't getting it right the stakes are very manageable. Losses are far easier to deal with emotionally when betting with smaller amounts.

• Be patient and you will succeed. At first try to view the whole method as having no money attached to it. This will allow you to solely concentrate on the selection process, which ultimately will make you far more money once you are getting it right.

• Don't try to run before you can walk. In order for anything to become a reality you must believe that it is attainable, your mantra should be...

"Learn to BELIEVE and YOU will SUCCEED."

There is no such thing as LUCK in my opinion; it's a case of...

PREPARATION MEETING OPPORTUNITY

9a. Staking Plans and Betting Banks - backing

"How they work."

(Backing Horses to Win)
Let's say for example you decide on a betting bank of £500. Dividing that by 100 will mean one point is £5. So let's say you carefully select three horses that you believe have a good chance of winning, you would place £5 on each one.

Example 1.
1st horse you back at 3/1 for £5, the horse loses = -£5
2nd horse you back at 2/1 for £5, the horse wins = +£10
3rd horse you back at 6/4 for £5, the horse wins = +£7.50
Your total stake outlay would be £15 for the 3 bets
Which as the above example shows you would have returned a profit of £12.50

Example 2.
1st horse you back at 5/4, for £5, the horse wins = +£6.23
2nd horse you back at 13/8, for £5, the horse loses =-£5
3rd horse you back at 4/1, for £5, the horse loses =-£5
Your total stake outlay would be £15 for the 3 bets
Which as the above example shows you would have made a loss of £8.77

Example 3.
1st horse you back at 11/8, for £5, the horse loses =-£5
2nd horse you back at 7/4, for £5, the horse loses =-£5
3rd horse you back at 9/2, for £5, the horse loses =-£5
Your total stake outlay would be £15 for the 3 bets
Which as the above example shows you would have made a loss of £15.00

Example 4.
1st horse you back at 11/8, for £5, the horse wins =+£6.88
2nd horse you back at 5/1, for £5, the horse wins =+£25
3rd horse you back at 9/2, for £5, the horse wins =+£22.50
Your total stake outlay would be £15 for the 3 bets
Which as the above example shows you would have returned a profit of £54.38

So over a period of four days betting using a good system your profit would be £43.11. Not bad at all, you would have almost doubled your money. As you can see from the above four examples using a good staking plan along with a disciplined attitude will keep any losses acceptable and manageable, and your betting bank will grow steadily over time.

This is only one example of a simple staking plan using £5 stakes, there are quite a few different variations, but the fundamental principles are the same. Use a betting bank divide it up by 100 or 50 points, stick to your staking plan and you will profit long-term from racing - as long as you have chosen the right selections of course.

9b. Staking plans and betting banks - laying

"How they work."
(Laying Horses to lose)

The following single stakes plan is safe to use when laying horses.

When laying horses you need a different type of staking plan which calculates a maximum liability for each bet based on value. It's no use laying horses at ridiculously big odds, because when one does eventually win you will find yourself needing too many bets to break even again.

So based on experience I would advise you never lay a horse above the maximum decimal odds of 4.7. Preferably lower in most instances.

Staking plan 1 for total beginners
You decide on a betting bank of £200. If divide that by 100 then one point would be £2. So let's say you've carefully narrowed down your selections to one favourite that you believe has the least chance of winning. You should then place a £2 lay bet on it.

Example 1 All your lay bets are successful
DAY 1: You lay the favourite at 2.87 (15/8) for £2, if the horse loses you win £1.90: That's the stake returned minus your maximum 5% commission. If the horse won you would pay out £3.74 with no commission to pay.

DAY 2: You lay the favourite at 3 (2/1) for £2, if the horse loses you win £1.90. If the horse won you would pay out £4.

DAY 3: You lay the favourite at 3.25 (9/4) for £2, if the horse loses you win £1.90. If the horse won you would pay out £4.50.

DAY 4: You lay the favourite at 3.5 (5/2) for £2, if the horse loses you win £1.90. If the horse won you would pay out £5.

DAY 5: You lay the favourite at 3.75 (11/4) for £2, if the horse loses you win £1.90. If the horse won you would pay out £5.50.

DAY 6: Saturdays are optional but can be a great profit-boosting day as usually you will find a least two horses to lay: If you layed two favourites both for £2 - one at 4 (3/1) and the other at 2.75 (7/4) you would win £3.80 if both lost. If the 2.75 (7/4) favourite horse won you would pay out £3.40; if the 4.0 (3/1) favourite won you would pay out £5.90.

On Saturdays there can be lots of races to look at and we don't want to get bogged down studying too much form, so we stick to selecting favourites from one particular race coursee. It can be rewarding and boost the week's overall profits. The racing is on the better grade courses, with more prize money on offer so the races tend to be pretty competitive making it ideal lay territory. Often you will be able find at least two good lay bets, in the end it's entirely your own decision.

DAY 7: No lay: On Sundays there is a limited amount of information for each race on the R.P. web site. It is not really wise to bet without being aware of all the facts.

As you can clearly see if you do lose the odd bet you are always just one or two bets from being back in profit as long as you don't go over on the 4.7 maximum. If you lay a drifter earlier in the day it is often possible to get even better odds so your liability is considerably less than if you laid just before the start of a race.

Staking plan 2 is the same as above, but increase the stake size according to the size of your betting bank.

The key to making long-term profit is make sure you use a proven system and only lay one horse a day, always stick to the staking plan no matter what. You will be able to increase your stake size in no time at all. If you do prefer to use a 50 point betting bank when your confidence has grown that's fine. The 100 point bank is designed to give you plenty of leverage at the start.

Discipline and money
If you combine the disciplined approach of a successful system with strict money management techniques, you will not only be miles ahead of 95% of the betting public, but also become profitable over the long-term.

10. Emotion

"Learn how psychology and emotion can undermine your success."

Learning to control the way you think and react to situations that arise in your betting patterns will lead to consistent success. If you stick to a proven plan you won't start to question your judgment or ability. Have faith in your own opinion and be wary of hype and rumours.

What I do if I hit a losing run is look back through my past results and see clearly that I have profited over time by sticking to my proven methods that I know work. Any losing run that I do encounter will soon pass and profit will be just around the corner.

Races should be viewed as singular events, and you should learn to understand that one race has no connection to any other race; they are not related in any way at all. Most punters bet with fear and lack of understanding of this fact.

This is one of the many reasons why they lose most of the time; not having the patience to wait for a suitable race, and just jumping in irrespective of the form or actual realistic chances of winning. These guys just want to win the money back they lost in the first race and so the losing cycle continues. Basically this is what's known as chasing.

Psychologically these punters are unsound because they lose most of the time. Subconsciously their minds are programmed to accept this and the bookies clean up. As discussed before in this report in order to be successful you need to have a very positive mindset, which means that you should expect to win more than you lose, which is something you will only achieve when using a proven system.

Too much emotion involved in your betting decisions will be your undoing and drastically affect your confidence. This in turn will lead to fear and bad habits creeping back into your betting patterns; such as chopping and changing methods that has been proven to work long-term. You must understand that systems and strategies need to be monitored over time in order to assess whether they are successful or not.

It's no good trying a system for a week or two then changing the rules around when you hit a few bad results. If you do follow this practice it will lead to erratic up and down results and long-term losses.

So to summarize - Emotive gambling should be avoided at all times. Learning to control your emotions is one of the main ingredients to betting profitably. Once you do so, you will look back at your previous bad betting habits and it will become very clear why you lost most of the time - Lack of Emotional Discipline.

11. Take some time out

"When we take a break our minds become refreshed and more focused on what we have to do."

Some times in life it seems like we can't do anything right no matter how hard we try. Unfortunately that can be a problem in itself, trying too hard can be as bad as not trying at all. The human mind can only learn so much information at any one time.

You will have noticed some times information can seem difficult to absorb, and your attention starts to wonder from the job in hand onto other things. This is a perfectly natural human trait; our brains weren't designed to solely concentrate on one thing all the time.

When it does happen to you don't worry, there are many possible reasons to name a few: lack of enthusiasm, tiredness, or even the need to take a break. My advice to you as a punter is, "Don't pursue what you are doing if you feel you lack the true concentration needed to focus and make the right decisions."

You will come across days when there are no bets to be had according to your chosen systems criteria. Don't under any circumstances try to find bets that aren't there through sheer frustration and impatience, you will lose money. Take a break, have a day off, spend some of those winnings, just stay away from racing. Especially if you have hit a slight losing run, which as you know is an inevitable part of racing.

You need to stay strong and clear your mind for the job ahead, which is to make consistent profit using the rules outlined in your chosen betting plan.

Never consider analysing races if you feel you don't have time to do it properly. Your approach must always be careful, methodical and realistic and always make sure you have access to all the relevant facts. Never base your betting decisions around hunches, guesswork or media hype.

"JUST STICK TO THE FACTS PRESENTED TO YOU IN BLACK AND WHITE"

This series of articles has been written by Jonathan Burgess, a Betfair Accredited Trainer and author of www.false-favourites.co.uk. As an experienced punter, he has some wide advice to share, however his advice and opinions represent his personal views and not those of Betfair.

Enhance your betting education with a lesson in price leveraging. The key point to note here is that every form of investing is gambling, whether it is buying shares, investing in property or backing the favourite in the 14:45 at Ascot. There are risks involved in all of them; there is no guaranteed way of making money.

Real life analogy

Forget about gambling for the moment. Imagine you have found some land and built 10 apartments on the property. The total cost of the land and construction is £1 million. For the sake of simplicity, we will ignore stamp duty, taxes and other charges. At what average price do you need to sell each unit to break even?

Hopefully all of you would answer £100k.

But imagine if the market was booming while you were developing the apartments, and you wanted to cash in on that. You sell two units at £250k each off the plan. What are you then left with? What's your new break-even point?

£250k +£250k = £500k

For the remaining eight apartments, you only have to make £500k to break even, so your new break-even point is 500/8 = £62.5k.

By selling two units at a better price, you have leveraged the price of the remaining asset into a very favourable position. You could withstand the market collapsing all the way down to £62,500 each before you would be looking at a loss. And that is the concept of price leveraging.

Price Leveraging

The objective - to get a better price than has been available so far by trading, in order to keep a position until the end or create a time buffer before that price is the correct one.

Football is the easiest example to use as price trends in-running are dictated by the scoreboard and the clock. But you can adapt this to any market. The first thing to be clear on is that you are not worrying about the result of the match/market, only the price trends after 5, 10, 20, 30 mins.

The scenario:

You are confident today's game won't be a draw but it is likely to be low scoring. You don't fancy either team to score in the first half-hour. You have several options:
1. Take a 90 minute approach and lay the draw before the game (approx 3.4) as your only bet.
2. Wait 35 mins until teams step up the pace and start going for it a bit more, meanwhile the price about the draw has dropped to just under 3. Laying at this price means risking less to win the same amount.
3. Watch the first 5-10 mins, get a feel for the game and then trade the draw as the price begins to move.

Key point - the draw price rarely moves more than a couple of ticks (3.4 to 3.3 equals two ticks) in the first 10 minutes, so backing it early only provides you with possible downside early in the game if a goal is scored. With over an hour to go, the draw price can't shorten a great deal so there is no benefit for the trader who wants to back then lay so early.

Lay column is in yellow for visual effect and as an extra precaution against hitting lay when you mean to back. Change your lay column colour via the More Options link.

So you back the draw at 3.2 after 12 mins with the intention of trading out 20mins later if all goes to plan (i.e. no goals). When the draw hits the price you were looking for, say 2.9, you have several options to trade out including:

A - Take your initial stake back

B - Use the payout link to balance out your green book

You must click on the word 'Payout' directly above the lay stake box, then add together your risk (red, £20) plus potential profit on selection you are trading (green, £44) for the correct figure to input. Ignore the minus signs.

C - Change tack completely and lay the draw for more

You now have a position where you have effectively laid the draw for £20 at 2.6, (-32, +20) a price which has yet to be seen. This means you have 15-20 minutes of 'buffer' before that figure is the true price of the Draw.

Summary

There is no 'right' way to do it - the choice is yours. How you trade it depends on your risk profile, or how you wish to trade. Always consider what can go wrong, not just what can go right.

Using the What If and Payout functions, you can check your maths, propose bets etc to see what your book would look like if everything went to plan. But bear in mind, if everything went to plan every time, there'd be no such thing as bookmakers or betting exchanges!

Let us suppose that you we have just read a book about some of the greatest stock market brokers in the world. In fact, the book was written by the investor, who made the most money trading stocks last year. In the book, he tells all the secrets, the no-no's, and tips to become as successful as he was.

No doubt he made a lot of money by trading shares, and is making even more now that people are reading his book. However, we have to ask ourselves, how much of it is due to chance and how much is because he actually is a really good stock broker?

To find an answer we look at an example. Suppose there are one million traders in the stock market, and suppose that every single one of them was trading blindly. In other words, they were just buying and selling stocks irrespective of whether the company was doing well or not (sounds like some gamblers)! Now naturally, there would be some winners and some losers. Over the case of the year, if the stock market has increased (which it generally does), then there will probably be more winners than losers. However, there will always be one person at the top, the person who has gained the most amount of money.

Now obviously, in this case, we know that he has gained the most amount of money just through pure luck as he, along with everyone else, was trading blindly. There is, however, a good chance that this person is selling books and making a fortune giving seminars about how to make money in the stock market.

The same happens with gambling. There are countless 'systems' and 'tipsters' out there who have very good records. We shall assume that there are a thousand systems out there, and that all of them bet blindly as well. Because the odds are against you with gambling (although the real professionals turn it in their favour), let's say 60% of these tipsters and systems lose and the other 40% win.

Now, no one wants to follow a losing tipster do they? Therefore, these tipsters stop their services, perhaps change to other names, new web pages or something of the sort. We then find that there are 40% of the thousand tipsters, or 400 tipsters out there who are making money, but we know that it's just due to pure luck! All of a sudden everyone starts purchasing systems or following tips of successful tipsters, who are only there because of luck, and according to the theory of regression to the mean, will most likely lose in the long term.

Notice that previous sentence ended with the words 'long term'. It is the 'long term' with which we are really concerned. How do we know if tipsters, systems, or stock brokers are successful, because they have expertise in their fields and not just luck? We decide, based on the long term.

The stockbroker, who won heaps of money last year, might have done really well that year, but how did he perform the previous years? If he was still gaining in previous years, we could say that he probably is good at what he was doing. If he lost or only just started trading, then it is possibly due to chance that he is at the top.

If we are looking to follow a tipster, a system or even a friend who tells us he is doing well at gambling, then we do not just find out how well he has done in the last month, last six months or last year but find out how well he has been doing in the last three to four years. Luck doesn't follow someone for three to four years and if someone is still making profits over this time, consistently each year, then it is obvious that they know what they are talking about.

Similarly, with your own gambling, if you're doing really well over the past three to six months, don't put all your eggs in the same basket. The regression to the mean theory will come back and bite you. Expect future loses as well as wins, and only when you have a long term successful betting history behind you, can you then increase the ante a little because you know that it was not all luck that put you in the position that you now find yourself. It requires two or more years of successful betting history before one can tell if luck has, or has not, played a part.

By Matt Elliott - co-owner of Australian based leading sports and racing forum PuntingAce

Reverse Dutching

Hopefully by now, we've all come to terms with laying and the risks and rewards involved. If not, then skip this article, and study up on this section.

A lot of punters like to lay short-priced favourites in horse racing, but shy away from getting involved in laying horses when the race is wide open. This is one of the reasons why the matched volume on a quality handicap race appears to be far less than a much weaker class race with an even-money jolly. Concerns are understandable - after all, laying a horse at 6 could blow your bank several times faster than laying horses at 2.5. But why not lower the risk by spreading the liability over more than one selection?

If you can lay one runner at 2.5 and another at 3, you effectively have 5/1 for 'the field'.

If you can lay two selections at 6, you have effectively layed the pair of them at 2/1.

Confused? It's all about the percentages, and the features on the Betfair site will help you do this, even if you struggle with calculating percentages.

The first thing you need to do is make sure you have your 'What If?' function turned on. This is found in More Options, beneath the Refresh button on each market, to see your potential profit and risk before you submit your bets. That section will also allow you to change your Lay column to yellow, just to make it stand out more, and hopefully prevent you from clicking lay when you mean to back.

Here is an example of a race with a couple of fancied horses, and then several others relatively close behind in the market.

You think the two favourites are a risk, but aren't sure exactly which horse will salute the judge. You decide to lay the favoured pair.

How much do you lay them for? The key part here is laying for the same amount, not stake, not liability, but payout. Level stakes laying is only good at the same prices. Liability is important for a single selection only - it doesn't account for incoming stakes when you are laying more than one runner. When a bookie lays a book to 110%, the theory is for every £110 coming in, he only pays out £100 - getting the payout balanced is crucial. You must click on the word Payout, not the dot (radio circle). Up comes a box, we choose to enter £60 for the payout.

Now look at your position if both of these bets get matched. The Payout function sets the stakes for you, and your potential position, if both get matched, is shown on the right of the >> symbol.

Hit Submit and that position is then realised.

But that's only half the strategy. What is your net position now on the race? It's just a comparison of your red and green figures. It's close enough to even money (risking £30 to win £30). You effectively have laid the two favourites at 2. Adding up the percentage of the two runners you have opposed (3.5 = 28.57% and 4.6 = 21.73%) shows you have layed close to 50% of the market.

This gives you a strong position to work from. You could lay another selection to improve your position further before the race, or wait until it goes in-running and try to lay any other runner at less than 2. Or several of them collectively at over 50% (three horses at 4.5 or 22%). The options are endless but like everything in life, remember it won't work every time and practice for small stakes first before progressing to your regular stakes.