I have been reading with great interest the posts in this forum and there does seem to be a lot of educated traders (or punters as I like to call them) who frequent the place.
It brings me to post this little insight of mine.
I have been trading thoroughbred horse racing with the same ferocity for the last 10 years that a lot of the people in here seem to trade stocks. I have never really been one for trading stocks as I do not know enough about it but on the other hand I also make a very comfortable living from trading horse racing.
At the end of the day I think it is important that no matter what you are trading be it tomatoes, stocks, cars or horse racing that you need to have a very strict regime inplace for trading and also a very good grounding of knowledge base with your chosen field of interest.
I personally started out backing horses to win on Australian racing but with the advent of betting exchanges (a medium that allows two punters to bet against each other by offering set odds, taking the bookmakers and tabs out of the equation) I started to concentrate on Uk Racing trying to find loserswhere liquidity is over $1 million AUD per event. I also do not bet to win anymore but now only let other bet on a horse to win by offering odds on that runner in the hope it will lose. This practice is called laying.
Look at the logistics. In a field of 10 runners only 1 horse can win whilst 9 of the others have to lose. What I do is find the one horse who is under the odds of 10/1 which I feel has the least chance of winning and let people bet on it. This means each time I am successful I make atleast 1% on my capital as I risk 10% of my capital on every horse I decide cant win.
Mathematically if a horse is traded at 5/2 or 3.50 then I would make 4% (10% divided by 2.5)
Mathematically if a horse is traded at 8/1 or 9.00 then I would make 1.25% (10% divided by 8)
I used to make a good return of 35% on average per month betting to win but now that I lay horses I have been consistently averaging in excess of 80% profit per month.
Betting exchanges are obviously proving to be very popular with the public who know of them and this can be gauged by the consistent increase in liquidity on events since their inception to the wagering market place some 4 years ago now.
It is also interesting that the most successful and largest betting exchange in terms of liquidity (Betfair) was started by 2 stock traders who came up with a model of allowing two punters to bet against each other without the need for TABS or Bookmakers.
I feel the big importance in their rise in popularity has been the simple fact that punters are getting a fairer go for their dollar now.
Instead of trying to beat the TAB who takes a minimum of 15% out of a pool before paying out on the winner you have a lot of people competing against each other to secure and offer the best odds meaning that you can now bet into markets set at 101-103% instead of the TABS whos markets are set to a minimum of 115%.
Another great advantage of betting exchanges is something that stock traders would be familiar with. Arbitration.
If you have good knowledge you can find plenty of situations where a horse may be at 3/1 or 4.00 early in betting and then be heavily supported into 2/1 or 3.00. Under this instance you can say back the horse to win by outlaying $500 early to win $1500 at 3/1. Then when the odds come in to 2/1 allow others to back the horse with you to win by letting them have $650 on it at 2/1 to win $1300. If the horse wins you collect $1500 but pay out $1300 for a gauranteed $200 profit while if the horse loses you have outlaid $500 whilst collecting $650 from others backing it also to win. A gauranteed profit of $150. No matter which way you look at this scenario you are going to make either $200 or $150 dependent upon the result before the race has even run. I hope that makes sense.
All in all I do think that the old adage of betting on horse racing being a losing end is nuissance. What it comes down to simply is knowing you chosen format of "investing" inside out and sticking to systems you have set down.
Interested to hear others thoughts on this idea.
I have got to s stage now where my laying of horses is so consistent and successful that others are now using the information I produce to do the same thing. I don't charge them an upfront fee to get the information either, merely a percentage of the profit they generate each week. This way it allows people to tap into something and odd to their investment portfolio without having to outlay large fees for a racing program or stock program when those funds should be dedicated to their investing bank.