I’ve written several posts alluding to the importance of the Start Price (SP) and how it can be used to ‘measure’ the value in your pre-race bets. By incorporating my research & findings from previous posts i’ve recapped on all the key points. The result is a ‘Punter’s Guide to Beating the SP’. If you find a way to beat it, then you’ll be earning steady profits…
For those that are new to this site, this post is a great place to start learning about smart ways to bet.
Introduction: The Accuracy & Significance Of SP Odds
In my post ‘The Accuracy & Significance Of SP Odds‘ I wrote about the importance of the odds you accept in relation to the SP.
I highlighted that the SP odds mark the latest possible pre-race point, where the most money has been matched before going inplay. This is significant because at this moment the odds incorporate all the opinions of the public — both retail and professional — from the lead up to the race. The odds are, on average, the most accurate they will ever be.
But How Can the SP Odds Be “Accurate”?
To fully appreciate the “accuracy” of SP odds, it’s a good starting point to skim through my post on the Wisdom Of Crowds Theory. In this post I conclude that by the SP the betting markets naturally form a strong “aggregation of diverse opinions” and a “wise” (and generally accurate) representation of the true probabilities for horses to win a race.
Therefore it’s actually very difficult to find value from the SP. The “crowd” (i.e. the betting public) has eliminated most, or all, of the vastly incorrect prices.
The Meaning Of “Beating The SP”
From a trading perspective, Beating The SP can be achieved in one of two ways:
- If your accepted odds rise drastically by the SP, and you Layed this selection at an earlier, lower price.
- If your accepted odds fall drastically by the SP, and you Backed this horse at an earlier, higher price.
So if you’re able to ‘beat’ the SP on every one of your bets then you’re onto a winner. Even if you observe fluctuations in the odds throughout the lead up to the event.
Note: Beating the SP isn't unique to horse racing. It can be applied to other sports.
In the next section I prove that there’s a strong case for punters to focus on beating the SP.
The Relevance Of Drifters & Steamers In Beating The SP
At this point you may still be unconvinced in the accuracy of the SP. You may be asking yourself:
- Can the market be relied on for accuracy? and
- Does the SP really show us what bets are “good” and those that are “bad”?
Analysing Drifters & Steamers sheds light on these questions…
Horse Racing Bettors are Interested in Drifters & Steamers for a Reason
I was very reluctant to believe in the idea of market efficiency when i started out on Betfair, and I learnt the hard way.
My firm belief now is that on average (and i do stress average) the SP is surprisingly accurate and “fair” — meaning it’s difficult to consistently find a positive or negative edge from those prices. A full analysis on this subject can be seen from my post on Drifters & Steamers. Indeed the results are very clear cut, and I’ve summarised them below.
The Steamers: all bets in a sample strategy with odds at a lower value by SP
This Streamers’ strong positive trend precisely illustrates the importance in achieving a higher price at any earlier point. The odds fell by SP.
Despite there being many losing bets in the sample, the overall value in beating the SP by obtaining better odds is indisputable.
The Drifters: all bets in a sample strategy with odds at a higher value by SP
The strong negative trend (which is seemingly a reflection of the Steamers), underlines how backing at lower odds than SP loses you money.
What I’ve learnt is the importance of:
- Selecting bets which end up lower by the SP, and
- Closing out of bets that appear to be moving against you (i.e the odds are rising).
No "closing out" process was used in this Back only strategy. So no action was taken to lessen the impact of Drifters or Steamers. Hence the deleterious effect the Steamers (in pink) had on the profit.
Ideally every bet you place would fall into the “Steamers” category — but that’s an unrealistic goal. You should however aim to improve your profitability by trying to maintain a high ratio of Steamers to Drifters (at similar average odds) amongst your selections. This should ensure that the profitable Steamers carry a yield which outweighs the negative yield of the Drifters.
Beating the SP by Backing Early Steamers is Consistently Profitable
If you ever read that beating the SP is a myth, or that betting markets aren’t efficient, or that Drifters & Steamers don’t mean anything, then please turn your eyes back to those graphs. It should alleviate any doubts you have.
I’m not saying that every Steamer is a winning bet. But the key to finding value in sports betting is beating the SP by the biggest margin you can, as frequently as possible. Backing a price just before it massively steams is the best outcome you could wish for.
GodsOfOdds concurs that it’s vitally important to beat the “closing line” (the American term for ‘Start Price’), and have used simulations to demonstrate the merits of doing so.
Cold Trading For Beating The SP
There’s more than one ‘cold‘ way of trying to identify odds that are likely to beat the SP.
In case you haven’t read my post on Cold Trading, then I’ll recap. Cold Trading is betting using only market information, without the support of additional knowledge relating the sports event. It may come as a surprise to some of you that many Horse Racing traders know very little about the form, jockeys, trainers, pedigree, the going — and some don’t even watch the racing whatsoever. These kinds of “cold” bettors exist in both the financial and sports betting worlds.
Cold Trading lends itself to beating the SP, because what you’re doing is basically a game of “higher or lower”. You want to bet higher than final odds. And achieve this doesn’t necessarily require knowledge on the specifics of the sporting event.
Most traders enter the market late, making the odds increasingly efficient by the SP
Weight Of Money
Cold Traders may be able to obtain better odds prior the majority crowd arriving late in the market (as shown in the above graph). One approach is to monitor the Weight Of Money on the early prices in order to predict the direction the odds will head.
Be warned though: the odds don’t simply ‘choose’ a direction — up and down fluctuations are normal.
For trading on the exchange I recommend using Geeks Toy or BetTrader. It’s inexpensive and superb value. Without the use of a Betfair trading tool you’re already at a disadvantage in competitive markets.
Human factors influence market movements.
Our nature leads us to form opinions — no matter how irrational it might be. When humans get it wrong, it creates value betting opportunities. The most common human factors which influence Horse Racing markets are:
- Superstition & Random choice: Horses are chosen for the most peculiar reasons such as the name, colour, or even just a “feeling”. The opinion isn’t necessarily well founded.
- Herd Mentality: Odds rise or fall as a result of momentum. Once the market has moved in one direction many bettors jump on the back of it and push the odds further in the same direction
- Pre-race Observations: A horse’s equipment or appearance in the parade ring plays a part. Its gait, sweating, or restiveness can influence our confidence, and this goes for any sporting event: think about watching football players as they stand in the tunnel before a match. The public observes signs of strength or weakness, as tenuous as they may be.
Being able to identify exaggerated market movements is a challenging, but potentially rewarding approach to beating the SP.
Other Predictive Methods
Monitoring arbs and acting on these signals as quickly as possible is one way of betting on value, and beating the SP. I recommend the best arbing software in the post What’s The Best Sports Arbing Software?.
My favourite arb finders are:
Rebelbetting is without any doubt the best, most professional service on the market. It’s fast, user-friendly and the most actively developed arbitrage solution today. If you sign up today then you’re entitled to a free trial period that turns into a monthly subscription at the end of the week. And it’s straightforward to cancel the subscription.
Using Historical Data To Beat The SP
Popular Data Items
For horse racing there’s certain key facts that influence most punters’ selections:
- Horse-specific: How the age, sex, fitness, and weight-over-distance ability compares with the other horses
- Form: For example, the Jockey/Trainer strike rates
- Race type: How horses are likely to perform on a specific race type based on their track record
- Weather conditions: How the horses typically perform under the current weather conditions.
If there’s an opportunity to take a good (high) price, and it evidently doesn’t account for a key piece of criteria… then the sooner you strike, the better! The market will eventually iron out these opportunities if you don’t act fast.
Read more on selection criteria from my post ‘What Causes Pre-Race Market Movements?‘
It is however quite difficult to use historical data as a way of beating the SP. Punters need to be selective and strike only where there’s a very good chance of the bet having an advantage.
Here’s some of the complications:
- You have to be able to tell when the market has incorrect prices — which is difficult. Often there isn’t a simple recipe for finding an incorrect or exaggerated price either. In fact, the market incorporates so many opinions and diverse points of view that you’re more likely to get it wrong yourself.
- If your selection method is the same as many other bettors’, then you’re unlikely to have any strong advantage. You need to know something that the others don’t.
- If the odds you calculate are too closely in-line with the odds on the exchange, then you may have only achieved a method for compiling odds. This isn’t necessarily going to help find you value.
- A good strategy may work for a while, but if it’s not discreet or secretive, then it’ll attract volume. As a result of this the odds will be brought quickly into line. If you’ve found an advantage, you need to consistently be first to the punch.
Using betting criteria to beat the SP is a bit like buying a house…
You may identify a house that has exceptionally good transport links, a larger-than-average garden and ultra-modern decor compared to similar homes in the local area. But if these attributes are factored into the PRICE of the property, and it's worth more as a result, then you’re not getting VALUE for money. You're spending more and getting more.
Betting is no different. You need to be buying your odds at value for money in order to generate consistent profits.
I’m planning on writing a post of my own experiences using historical data to compile odds and highlight value. So stay tuned.
Using Pedigree Data
Pedigree data is used by punters seeking an advantage. The pedigree tells us a horse’s capability based on its genetics.
It can be advantageous to use this information — particularly for horses in maiden races, or horses debuting on a new surface. In these situations there’s not much of a historical record for punter’s refer to, and thus very little is known about their performance. So the markets tend to form the odds based on public news, gossip or speculation. The public doesn’t put too much emphasis on the bloodline.
Historically the offspring of good sires are more successful than those which came from mediocre sires. Therefore if you know nothing more about an unraced (or lightly-raced horse) than the identity of its sire you would already know something of value.
Admittedly, pedigree data can be overwhelming. As a result of this, horse racing fans shy away from using it altogether. But remember: the more research your betting system requires, the less chance there is of others are doing the same thing. This increases your likelihood of finding that competitive advantage. So it’s worth getting to grips with some of the pedigree jargon to perform different analyses to what the majority of punters are already doing.
You can find horse pedigree data from:
Learn more about the pedigree from my post on Horse Pedigree.
Hopefully there’s enough information on this page to get you started with Beating the SP. Or any aspect of value betting! To delve further into any of the topics covered in this post, click through the links I’ve provided.