Backing on the Place Market
So this is a theory in progress. I hope some people find it useful as a starting point to trading the place market.
A bad each way race could be for example an 8 or 9 runner race where there is a short odds on favourite and a few high priced rags (33/1 and bigger perhaps). This skews the true odds of a horse placing so that the 1/5 odds offered by bookies is higher than the odds on the exchange "to place" market.
EW arbers identify bad ew races. So they can back each way on the bookies and lay off on the exchange for guaranteed profit. They will make a small loss perhaps on the win part of the bet, but a big win on the place part as it can often be a big arb.
Now ew arbers will generally put alot of money into the exchange. They have no real concept that the lays that they are making on the exchange are particularly good value for them. All that they know is that the lay is smaller than the back price they are getting at the bookie. They usually will find that over time they are losing quite a bit of money to the exchange. In essence they are sharing the value back to the community. So that those who are barred or restricted from backing on the bookies can pick up some of this value.
Take an example here. Look at Midnight Guest. He was available to back at the bookie at 40/1 which means an ew bet at 1/5 odds would give you 8/1 to place or 9.0 in decimal. So you can see there is already an arb there. The ew arbers will be busy trying to back at that price at the bookies and lay on the exchange to realise their profit. This is where you put a back in for the ew arbers to take.
What I want to notice here is:
1. There is a decent amount of cash already in the market (€16,741) - so you can have reasonable confidence in the market's conclusions.
2. The overround on the back side is 301.7% which is pretty close to fair odds/true probablity.
3. There is a big gap between the back and lay price on Midnight Guest.
So you come to the conclusion that 7.0 is a fair price for Midnight Guest to place. Then you can infer that the probability that he places is about 14%. If you can try to back Midnight Guest at about 7.8 for a unit stake then see what happens. Your expected value is lose your stake 86% and win 6.8 stakes (minus 5% betfair commission) 14% of the time, so 0.86 * -1 + 0.14 * 6.8 * 0.95 = 0.066. Okay admittedly it is a small number, but it is a positive number. This translates to 7c expected value (or long term profit) for every €1 that you get matched at that price. To properly remunerate yourself for the time spent in analysing the market you might want €20 value, so your stakes will need to be quite big (€285-ish).
The advantages here are that betfair will not restrict your stakes or bar you like a bookie will. There is easy cash to be made from bookie's, but when your accounts run out this is a possible option.
There are numerous disadvantages or warnings. Just because you queue the back bet does not mean that it will be matched. Also if it is matched then you have no guarantee that the horse wont go on a big drift and all the value that you have will be lost. Also, of course, when you talk about expected value, you cannot win €20 on a single event (unless you trade out your position if you notice the price shortens). Normally when you back €200 @ 7.8 you will be either down €285 or up €1840. So prepare to lose a lot and win a lot and hopefully the long term profit will average out at €20 if you are disciplined and if this theory holds true. However expect a run of losing bets, you could be down €1700 before you hit a €1840 win. These are small margins and long odds. A big run of bad luck could easily ruin you.
If anyone is trading on the place markets in bad ew races and having any success please feel free to share your stories in the comments.
A bad each way race could be for example an 8 or 9 runner race where there is a short odds on favourite and a few high priced rags (33/1 and bigger perhaps). This skews the true odds of a horse placing so that the 1/5 odds offered by bookies is higher than the odds on the exchange "to place" market.
EW arbers identify bad ew races. So they can back each way on the bookies and lay off on the exchange for guaranteed profit. They will make a small loss perhaps on the win part of the bet, but a big win on the place part as it can often be a big arb.
Now ew arbers will generally put alot of money into the exchange. They have no real concept that the lays that they are making on the exchange are particularly good value for them. All that they know is that the lay is smaller than the back price they are getting at the bookie. They usually will find that over time they are losing quite a bit of money to the exchange. In essence they are sharing the value back to the community. So that those who are barred or restricted from backing on the bookies can pick up some of this value.
Take an example here. Look at Midnight Guest. He was available to back at the bookie at 40/1 which means an ew bet at 1/5 odds would give you 8/1 to place or 9.0 in decimal. So you can see there is already an arb there. The ew arbers will be busy trying to back at that price at the bookies and lay on the exchange to realise their profit. This is where you put a back in for the ew arbers to take.
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Place market on bad ew race |
What I want to notice here is:
1. There is a decent amount of cash already in the market (€16,741) - so you can have reasonable confidence in the market's conclusions.
2. The overround on the back side is 301.7% which is pretty close to fair odds/true probablity.
3. There is a big gap between the back and lay price on Midnight Guest.
So you come to the conclusion that 7.0 is a fair price for Midnight Guest to place. Then you can infer that the probability that he places is about 14%. If you can try to back Midnight Guest at about 7.8 for a unit stake then see what happens. Your expected value is lose your stake 86% and win 6.8 stakes (minus 5% betfair commission) 14% of the time, so 0.86 * -1 + 0.14 * 6.8 * 0.95 = 0.066. Okay admittedly it is a small number, but it is a positive number. This translates to 7c expected value (or long term profit) for every €1 that you get matched at that price. To properly remunerate yourself for the time spent in analysing the market you might want €20 value, so your stakes will need to be quite big (€285-ish).
The advantages here are that betfair will not restrict your stakes or bar you like a bookie will. There is easy cash to be made from bookie's, but when your accounts run out this is a possible option.
There are numerous disadvantages or warnings. Just because you queue the back bet does not mean that it will be matched. Also if it is matched then you have no guarantee that the horse wont go on a big drift and all the value that you have will be lost. Also, of course, when you talk about expected value, you cannot win €20 on a single event (unless you trade out your position if you notice the price shortens). Normally when you back €200 @ 7.8 you will be either down €285 or up €1840. So prepare to lose a lot and win a lot and hopefully the long term profit will average out at €20 if you are disciplined and if this theory holds true. However expect a run of losing bets, you could be down €1700 before you hit a €1840 win. These are small margins and long odds. A big run of bad luck could easily ruin you.
If anyone is trading on the place markets in bad ew races and having any success please feel free to share your stories in the comments.
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