In this, the second of a three-part series, Heale Hartley continues his in-depth look at staking plans and makes some interesting conclusions about a variety of staking plans and concepts.
Before looking into progression betting and betting to prices, I will look at some more general staking concepts and explain the meaning of profitability.
I will first consider the question of whether you should continue to bet once you have reached a given profit for the day.
Many punters stop betting once they have reached a given profit for the day while others will go on. Is one approach more profitable than the other?
You may recall how last month I looked at the difference between punters who bet small amounts on long shots and those who bet larger amounts on more favoured horses. As I did then, I suggest the difference is one of cash flow.
If you only have a small bank then it may be better for you to go home while you are in front. By doing so you don't risk running out of money. Of course you forgo the possibility of winning more but at least you go home with more money than you had to start with.
If you have a much larger bank then you may be able to cover losing all your winnings and more until you start winning again. What is important to realise is that the only factor really relevant to your decision is the size of your bank relative to your bets.
As I mentioned last month, your individual bet size should be a small proportion of your total available bank. Small bettors may benefit from going home while they are in front, not so much because they bet in small amounts but because they normally bet a larger proportion of their bank than they should.
If you take $50 to the races then you should probably be betting in units of $1. If, however, you bet in units of $5 you are much -more likely to lose it all and therefore would be wise to stop betting if you were fortunate to reach, say, $60 or $70.
Although finishing for the day while you are in front rather than going on may help your cash flow situation, doing so will not increase your overall profit. In fact it should neither increase nor decrease your profitability.
To give you an idea of why this is so, say you are $10 in front after race 3. You could go home with your profit in hand and not bet again until the next weekend. Alternatively you could start betting again on the same day on the very next race.? Is there any real difference?
From a percentage profit point of view none at all because in theory one group of races should contribute no more to your profit than any other.
PROFITABILITY
Now is an appropriate time to discuss the concept of profitability. We all know what profitability is but do you know how to measure it? There are two types of measurements we can use so let's look at some examples to see what they are.
Suppose you go to the races or TAB with $50 and come out with $60. One thing is certain-you've made a profit of $10. The most obvious measure of your profit is the $10 difference between what you started with and what you ended with. Add these figures from week to week and you will have a running record of your absolute profit.
Another measure of profit relates this so-called absolute profit to total turnover or bank size. We will refer to it as percentage profit as it is most commonly expressed in percentage terms. For example, a $5 profit from a bank of $50 is a 10 percent profit. To calculate such a number you divide 5 by 50 and multiply the result by 100.
Profit on turnover is calculated by taking the profit and dividing it by the turnover. For example, although you may start with a $50 bank, you may only turn over $25 for the day. This being the case, a $5 profit would represent a profit on turnover of 20 percent (5 divided by 25 and multiplied by 100).
There is a significant difference between profit on turnover and profit on opening bank, particularly over a long period of time. This is best shown by referring to some further examples.
Let's say you start with a $50 bank and make a $5 profit each and every week for 50 weeks and that your turnover is exactly $25 each week.
Your total profit for the 50 weeks would be $250 ($5 times 50) and your total turnover for the 50 weeks $1250 ($25 times 50). This leads to a 20 percent profit on turnover for the period-the sme as for each individual week. As a profit on turnover figure, it reflects the fact that on average every dollar bet returns a profit of 20 percent.
Your profit on your opening bank, however, is quite different. It is $250 profit against an opening bank of $50, in other words a massive 500 percent (reflecting the fact that your $250 profit is 500 percent of your opening bank).
This figure increases from week to week and can be a bit misleading as it increases according to the period of betting used in its calculation. It is best quoted over a fixed period of one year as it can be compared, for example, to interest rates charged by banks.
If this is all a bit confusing I just remember that all that is important is the amount of profit made, over which period it is made and how much investment was required. As you have seen, the profit on turnover may sound smaller, for example 5 percent, but it can lead to a much higher annual profit on opening bank, say 500 percent.
Hopefully you will keep this in mind when comparing the profitability of systems and services-particularly those advertised in the racing press.
PROGRESSIONS
Before going any further I must confess that I've always been a bit sceptical about the use of progression plans for staking. After all, some say you should increase your bets under certain circumstances
while others say you should decrease them. And many use a seemingly random set of numbers against which to calculate your bet sizes.
Perhaps you will understand my feelings after I take you through a 'thought experiment' on progressions.
Consider using a progression plan on a day when you have 10 bets to make. The size of each bet will be determined by the progression plan. Chances are the progression plan is simple to operate and appears to be designed to decrease your chance of losing all your money.
Hang on a second! That sounds fine but what if you accidentally wrote your ten bets down backwards and in fact they were to occur in the reverse order? Your bet sizes would then be completely different.
This may seem a bit far-fetched but consider the stay at home TAB bettor who places all of his or her bets before the first race. To such a person it wouldn't matter what order the bets are in as none depends on money from the outcome of any of the others (unless they were the new variety of 'all-up' bets).
See what I'm getting at? Progressions are of no consequence if you are putting all your bets on in one go. I suggest they are only of any use to bettors placing bets one at a time and that even then they only assist from a cash flow point of view. They may help you arrive at a profitable situation for the day, at which point you can stop betting, but I would argue, that their use does not increase your percentage profit on turnover.
BETTING TO PRICES
You've probably all heard the phrase 'betting to prices'.
What it means is to bet in accordance with price probabilities so that the smaller the price the larger the bet. The prices used are not necessarily actual prices. They may be the punter's own set of prices based on his or her rated prediction of the outcome of the race.
The amounts bet are proportional to the bet size required to return 100 units at the price in question. For example, you would place 10 units on all horses you thought were 9-1 chances, 20 units on horses you thought were 4-1 chances and 33 units on all horses you thought were 2-1 chances.
As far as I'm concerned this is the only way to bet if you are backing horses across different price ranges. After all, it makes good sense to put more money on the more favoured horses (or those you think should be more favoured) as they will win more often. In fact there are two very good reasons why this should be so. First, you at least have a roughly constant return for each bet and, second, your money goes further when it comes to horses prone to having a longer run of cuts.
Of course, there's a bit more to 'betting to prices', namely the concept of value that says that horses should only be backed if the price available is better than the assessed price for the horse. However, even if you don't adhere to this concept, you should at least bet to prices to the extent of putting more money on the more favoured horses and less on the less favoured horses.
Next month I will look at grading races with a view to determining their suitability for betting on.
Click here to read Part 3.
Click here to read Part 1.
By Neale Hartley
PRACTICAL PUNTING - NOVEMBER 1988