Pricing up a market: an essential skill you really should learn

Betting Strategy RSS / Simon Rowlands / 14 November 2007 / 5 Comments

Building your own book is a must to turn punting into profit says racing journalist Simon Rowlands in this week's Rowley File

I got round to reading "A Bloody Good Winner" - the book by professional gambler Dave Nevison - the other day, and a bloody good read it was as well.

What attracted me to the book, as much as anything, was a strange piece in The Irish Field, in which the reviewer described Nevison's method of compiling his own tissue and then betting where he saw value, rather than because he thought a horse "would win", as "unorthodox".

It is not the only way of doing things, certainly, but well nigh every successful punter I have met prices up events at least part of the time and appreciates the concept of value.

Nevison himself does not go into much detail about what is involved in the process of compiling a tissue - creating your own assessment of the odds of an outcome happening - so I thought I'd ask around a few people who know a thing or two about this subject.

First off, a bit of simple arithmetic.

Odds should be converted into percentages and then summed for all possible outcomes. If the likelihood of an outcome is 100% - such as that something will win the race you are pricing up - then the sum of your odds percentages should be the same.

Odds are converted into percentages by dividing 100 by n when dealing with decimal odds (n being the decimal odds themselves) or by n+1 when dealing with fractional odds (n being the fractional odds themselves). A 4.0 shot on Betfair is taking 25% out of the book (100/4). A 2/1 shot at fixed odds is taking 33% out of the book (100/(2+1)).

Ian Dean, a former colleague at The Sportsman and part of the Betfair-Timeform odds-compiling team, looks to get a feel for the overall strength or otherwise of the race before moving on: "A horse's price is a reflection of the opposition, as well as of itself".

Andy Richmond, head of the Betfair-Timeform team, and Paul Smith, Spotlighter with Racing Post, usually try to identify the front two or three in the betting early on and invest more time in getting these "right". The odds of other horses follow more easily from this, they reckon.

I tend to try to "brainstorm" a race in one go and then go back and tweak the prices and incorporate more information after this initial overview. More than about 14 runners tends to make my head hurt and often causes me to move on!

And therein lies one of the advantages of pricing up for yourself. You don't have to price up races you don't like or find too hard. Specialisation is key. Play to your strengths.

What's more, you don't have to be precise about each and every horse you are pricing up, unless you are doing it for publication. Andy Richmond recommends coming up with a range of prices in the first place and then narrowing this.

Some horses are easy to price. Others, perhaps unexposed and/or trained by stables who get the money down when a win is expected, are not. The former may be "between [3.5] and [4.0]". The latter may be "between [2.0] and [8.0]"!

I prefer to concentrate on races where speculation is not a huge issue: handicaps; Group/Graded and Listed races; races for exposed maidens; races where you have got plenty to go on but where the last value has not already been squeezed out of the market.

I also like to refer to the odds at which a horse started the last time it ran. This needs to be viewed in the context of the race it was running in, how it ran, when it ran, and what it is running in now.

We punt, among other reasons, because we think the market is wrong. Sometimes it is.

But it would be folly to overlook the fact that the market is a distillation of an incredibly large amount of information about the competitors in a given race and at a given time.

A 10/1 shot that finishes mid-field in a 12-runner handicap had a roughly average chance before the race according to the market and performed in the race as if the market was right. This is a simplification, but I hope you get the idea.

And finally, as Andy Richmond says: "If you are struggling to price the runners, at the very least you should be able to put them in some sort of order. Get the order right and the prices themselves often follow."

I would strongly recommend anyone who takes their betting at all seriously to give pricing up a go and to compare their results with the markets on Betfair. It is a good discipline - a vital discipline, perhaps - to learn.

And, in spite of the unavoidably schoolteacherish tone of some of the above, it can actually be good fun!

Now, hands up if there are any questions...

Tags: Betting Strategy

Comments (5)

  1. Charlie | 18 November 2007

    Is there such as thing as true odds????

  2. Brian(marksyour)Card | 21 January 2008

    Bookies are just guessers, they price up from the tissue, and copy the guy in the next joint, try to get decent money on, even with Barry Bismark, and you will be wasting your time. And making your own book is a pointless exercise, because you will be wrong most of the time, "value" is a myth, wake up.

  3. Simon | 14 February 2008

    Thanks for your feedback Charlie and Brian.

    There is such a thing as "true odds", though you or I will not know exactly what the true odds are in any given instance and they will in any case be subject to variance just like any other expression of probability.

    Betting tests the ability of an individual to assess "true odds" better than the next man, whether they are doing that consciously or not.

    No value-based punter should kid himself into thinking that he will always come to the "correct" conclusion, any more than any winner-finding punter should do likewise.

    If "bookies are just guessers" then are the people who compile the tissue also guessers? Someone, somewhere, has got a better grasp of the odds than the majority, and is using that to make it pay.

    For what it's worth, I spent over two years market-making on Betfair with no safety net of an outside tissue. I used my knowledge of form, trainers, courses etc to price races up and, with a grasp of market dynamics, I was prepared to lay and/or back every horse in the 10 or so races I played in each day.

    It was profitable - more so in the early days when the margins were bigger, admittedly - and it rammed home to me that if there were enough variations on the basic theme (the races themselves) then you got pretty much every outcome imaginable.

    If I had been no good at pricing up in the first place I would have taken a caning.

    As mentioned in the original piece, pretty much all of the successful punters I have met have understood value very well.


  4. pete the dutchman | 15 April 2008

    I have a question and a comment
    Comment- have you seen the Racing Post 'My Notes' option on thier website racecards? They offer an over round suggestion for each race which is displayed when typing the odds into the boxes provided and displayes them on the racecard alonside a bookies odds of your choice. I use it often to try and price up a race and can flag up value (in relation to my opinion of course)graphically. This leads in to the question. I use a scoring system to judge how good any horse is for a particular race with a maximum of 20 points for each runner. The odds of each are relative to the proportion of points of the total of all the runners for the race. However I often find that horses are scoring zero. How can you price up horses with no form or even have a clue as to wether they are any good at all. Also how can you judge 'unexposed' horses as being a positive when the term seems to mean that they have no recognised ability with regard to a set of circumstances?

  5. Simon | 22 April 2008

    Pete the dutchman,

    Thanks very much for your question and comment and apologies for my slight delay in responding.

    I was aware of the Racing Post "My Notes" option, but did not know it could serve this function. Thanks for pointing this out to me and to anyone else looking in.

    Regarding how to price up horses with no form, I would say it can be similar to the conundrum of handicapping horses with no previous form (something I have done a lot of). You never really know NOTHING about a horse, though you may often wish you knew a lot more.

    I use Timeform's Statistical Review to identify what could be expected of first-time-out or unexposed horses based on their breeding and who trains them. I also take note of their entries, though this is not so informative as once it was.

    If a Flat horse has not debuted until late at 3 yrs, or even later than that, then there is a good chance that it has had problems, no matter how well connected it might be.

    If a horse makes its debut at a far-flung racetrack that tells you something about it (future Derby winners do not usually start out at Carlisle, for instance), though this must be viewed in context (last time I looked, Sir Michael Stoute had an excellent strike-rate at Carlisle, which he used to win races with some of his stable's lesser lights).

    If, at the end of all this, you still feel that you are stabbing in the dark, then it seems like a good idea to give the race a miss and to move on to something easier!


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