I've been using the GTX software from TRB for three years now and have just locked into a fourth without hesitation.

Our WFA Performance Ratings are now an integral part of the GTX Horse Racing Software.

Punters can now use these state of the art ratings to help with form analysis and to create personal assessed prices for any TAB race in Australia. They save hours in analysis time and allow you to assess horses more accurately and with confidence & consistency.

You may also like to view our online video GTX for the Ratings & Priced Base Punter below. 

Maintaining expectations in line with the reality of betting is one of the most important elements in being a successful punter. Unrealistic expectations eventually lead to frustration and disappointment. Such emotions are dangerous from a betting perspective... they make it hard for you to think clearly and often lead to hapharazard betting decisions, which you later regret.

Experiencing those emotions often enough leads many punters to question whether they can really win at this game? Such mental uncertainty and frustration is a barrier to winning that many punters never break though and it all stems from having unrealistic expectations.

Perhaps the most basic yet important expectation that influences our state of mind each day is what we think our winning chance is on each bet. If you’re like me, you only bet when you are confident that your horse or one of the horses you are backing will win…sounds obvious, doesn’t it? You might have varying degrees of confidence with each bet, but in your mind you expect to win on the race or go close... that’s why you are betting in the first place, it’s as simple as that.

However do you really stop to reflect on what your actual chance of winning on a race is? In my experience many punters subconsciously overestimate their chances of winning a particular bet. 

What is your winning chance?

Your winning chance is best reflected in the price of the horse you back. If the horse you back is $5.00, then on average your winning chance is anywhere from 18% to 22%. Long-term this creates a profit range of  -10% to +10% on turnover.

If you think about your mindset when you watch one of your bets go around at this type of price, is that the sort of expectation of winning you have in mind? I would bet that many punters expectation is at least double that (closer to 40%), if not more.

Let’s face it, you had enough confidence to bet in the first place so it’s natural that you would watch the race with a high expectation of winning, especially when your horse is near the top of the market.

The reality is though that you won’t win nearly as often as your subconscious expectations and that’s where the trouble starts.

Odds-on horses

These short priced hopefuls have a unique effect on the mindset of punters. For some reason, many punters seem to believe that when a horse tips into the odds-on range, it’s obliged to win almost 100% of the time and when one does get beaten, it's a major shock!

Backing a few odds-on losers in a row see's frustration quickly build and can often lead to illogical thoughts that odds-on horses are more difficult to profit from than others... that somehow the fact that the horse is odds-on has an extra negative influence on the its winning chance. I’ve never understood why punters view odds-on horses differently to others.

Consider a horse at $1.80… realistically you can expect these types of bets to win anywhere from around 51% to 61% of the time. Even at the upper end of that range, close to 4 in 10 will still be beaten.

It's probably fair to say that when most punters watch a $1.80 chance go around they're expecting it to win more like 80% to 90% of the time. They expect it should be a rarity to see a horse at this price get beaten, rather than expecting that it will lose almost just as often as it wins. 

What about at an even shorter price? If you are backing horses at $1.50 and maintain a strong 12.5% profit edge, then you are making plenty of money, but will still lose 1 in 4 bets. Judging by my experience in seeing punter's reactions when a $1.50 chance is beaten, their subconscious expectation of winning is significantly greater than 75%... perhaps closer to 95%, almost a certainty!

If you reflect back on your thoughts when watching a $1.50 chance, do you subconsciously look at the horse as virtually a good thing that is only beaten on very rare occasions?

The conflict between such expectations and the reality of winning chances is a major source of frustration and disappointment for many punters. 

Longer priced horses

The importance of having realistic expectations about your winning chance is even more important when it comes to horses approaching $10.00 in the market and longer. Realistically you have approximately a 1 in 10 chance of winning, yet most punters watch the race with a much higher expectation.

If I wrote a number between 1 and 10 down on a piece of paper and then asked you to guess it, your expectation of success would almost certainly be lower than on the $10 chance you last backed, but in reality the two are the same. It's likely that if I asked you to bet me on guessing that number on the piece of paper, you would be much less confident and bet less than you did on the $10 horse racing chance. That is the best way I can think to demonstrate what it means to have an unrealistic expectation of winning.

Consequences

The impact of unrealistic expectations becomes magnified when the inevitable nature of betting comes to the surface and you experience a losing run.

If your expectation of success on each individual bet isn’t in line with reality, then a string of losses can spell disaster for your state of mind. Unfortunately that’s where many punters end up.

Maintaining Perspective

One of the keys to maintaining a healthy punting mind is to watch each race with a clear thought of your realistic winning chance and most importantly to keep the outcome in perspective. 

If that $1.70 chance you back gets beaten, there’s no reason to curse all odds-on horses. Simply recognise that at least 1 in 3 are at that price are likely to be beaten. Also recognise that even at $1.70 you can expect to experience three, four or even more in a row being beaten. That's what maintaining the correct perspective means.

If you win two out of three in the long-term you will still show a significant profit.

Equally, when you back a $10 chance, recognise that regardless of how confident you are, the reality is that you only have a 10%-12% chance of success. Don’t get too disappointed or frustrated when a string of them are beaten. At this price you are likely to have significant losing runs, much longer than you subconsciously expect. 

In Summary

There are no absolutes in betting, only probabilities. Having a good understanding of probability and what it means to your real chance of winning is absolutely essential. The more effort you make to master this aspect of betting and avoid unrealistic expectations, the more successful you will be.

Bet Smarter!

Daniel 

“There’s no substitute for experience”… It’s a phrase we often hear in relation to business, sports or life in general and there is no doubt that it also applies to punting. Regardless of what you read, what you’re told or what somebody shows you, there are many keys to punting success that can only be learned through experience. Gaining that experience though doesn’t happen automatically, it must be an active process on your part.

Consider the following question…

“Do you have ten years punting experience?

Or one years punting experience ten times over?”

The difference is significant and enormously important to understand. Being in the game for 10 years doesn’t guarantee you 10 years experience and mean that you will have learnt all of the lessons that are essential to success. .

To learn those valuable lessons you must actively reflect on your punting behaviours, actions and decisions (or lack of them) and use those insights to make changes and move forward. This creates further experiences and lessons that you can reflect on… and so the process continues.

If you’re not reflecting on your behaviours, actions and decisions then much of the practical wisdom you need to be a successful  punter will simply go by the wayside.

For example, it’s impossible to learn how to deal with losing runs by reading articles or listening to others talk about it… it’s something that can only come through experience. However if you never stop to reflect on how you actually deal with losing runs, how productive that is and what changes you need to make, then you can continue punting for 10 years and you still won’t know how to effectively deal with them. 

The same patterns will continue repeating and it will ultimately prevent you from achieving your goals. The same principles apply to making selections, betting decisions, managing your money and other aspects of punting psychology.

Many of the keys to punting success can only be gained through experience; so don’t fall into the trap of repeating this years experience next year and the year after that. Commit yourself to actively reflecting on your experiences and learning from them. Implement changes to the areas of your game that need improvement and make the next 12 months a noticeable improvement on the last. Continue that process each year and the goals you set for yourself will be within your reach.

Bet Smarter!

Daniel

The title of this article itself is enough to provoke objectionable opinion from any number of people, especially those not involved in any form of wagering. To call betting on the races or anything for that matter an "investment" is just as irresponsible as it is incorrect. It's gambling, plain and simple... or so the argument goes.

However the reality is that betting on the races (punting) can be the most profitable form of investment that most people ever have access to in their lifetime. By definition it's easy to class betting on the races as gambling, but it's equally easy to classify it as investing, especially if you are good at it (I will leave you to check the definitions for yourself).

On the other side of the coin, when you consider the high failure rate of start up businesses, it's easy to argue that putting your life savings into becoming your own boss or some other venture capital opportunity is just as much gambling as it is investing. It's no different in nature to punting. 

It is true that punting carries more risk than leaving your money in a term deposit or even Sharemarket managed fund, but a fundamental principle of investing is risk-return trade off. That is, low levels of uncertainty (risk) are associated with low potential returns, while high uncertainty (risk) is associated with high potential returns.

That means punting isn't an investment for everybody, but when you break down the numbers it more than stacks up. They key lies in a punter's ability to turn over their investment capital many times during the year, therefore magnifying the returns compared to traditional forms of investment.

A COMPARISON OF INVESTMENTS

Let's say you have $100,000 to invest and you're prepared to let that capital work for at least 3 years before drawing on it.

Managed Sharemarket Fund

The median annual return over the last 3 years of the top 50 performing managed funds in Australia is 12.5%. Mind you, with hundreds of funds to choose from there's no guarantee that you'd be invested in one of the top performers. Some of the better known funds have delivered significantly lower returns. However for the sake of this exercise, let's work with a generous 12.5% return.

I've also made the following assumptions:

• You obtained a 100% rebate on entry fee (can be 4% to 5% of the upfront investment)
• Management expense ratio (MER) was a competitive 1.5%
• There's no dividend income along the way, all gains are capital gains
• All returns are reinvested

After 3 years your $100,000 nvestment would be worth approximately $137,000.  

If you then sold out of this investment with a capital gain of $37,000 you'd also be liable for capital gains tax. Using the discount method and assuming a marginal tax rate of 37% then capital gains tax would be approximately $6,800.

At the end of all transactions, your $100,000 investment has grown to become approximately $130,000.

Punting Investment

Rather than invest your $100,000 into a top performing managed fund, you decide instead to invest it into punting.

• Staking: A conservative collect target to help protect capital during naturally expected losing runs leads to an average bet size of 1.0% of the bank... or $1,000 in the first year. 
• Number of Bets: This can vary a great deal depending on how much time is spent betting and the strategy chosen. I will use a moderate 20 bets per week (1,040 per year) which is easily achievable betting 2 days per week (3 at most.) 
• Profit Edge: Can vary significantly, but again I will be relatively conservative and use a 3% profit on turnover edge. 

Following is the progress of your investment over 3 years:

• Year 1: $100,000 starting capital - $1,000 average bet x 1,040 bets = $1,040,000 turnover. Multiplied by 3% POT = $31,200 profit.
• Year 2: $131,200 starting capital - $1,320 average bet x 1,040 bets = $1,372,800 turnover. Multiplied by 3% POT = $41,184 profit
• Year 3: $172,384 starting capital - $1,720 average bet x 1,040 bets = $1,788,800 turnover. Multiplied by 3% POT = $53,664 profit

Ending capital: $226,048

Nett gain: $126,048

The punting fund no doubt carries more risk than the managed sharemarket fund, but the nett gain of $126,000 compared to $30,000 more than compensates (remember the principle of risk-return.) 

Also remember that 20 bets per week with a 3% profit edge is a relatively conservative operation. There is potential for upside on both the number of bets and profit edge. 

For example: 

• 35 bets per week at the same 3% profit edge would deliver a nett gain of $269,000 in 3 years. 
• 35 bets per week an a 5% profit edge would deliver a nett gain of $597,000 in 3 years.
• Even if you had a much more selective 10 bets per week and made a corresponding higher 6% profit on turnover, the nett gain after 3 years is still $125,000 vs $30,000 in the managed fund.

They key is that with punting you can turn you upfront capital over multiple times during the year. In other words, you can make the amount you have available work much harder than in a traditional investment. 

Of course the risk is there with punting that you could lose in a given year or in multiple years. However there is also risk of loss in any form of investment. You only need to look at sharemarket returns over the long-term to see that. There are plenty of examples over time where a given 3 year period has produced negative returns.

Conclusion

While there is naturally more risk, the level of returns that can be achieved by investing capital into punting cannot be matched by any other traditional form of investment.... it's a total mismatch. 

Of course the challenge is in the individual actually being able to achieve that profit edge, even those conservative figures used in my examples. Most punters do not achieve these results, but that in itself does not diminish the attractiveness of the investment opportunity. Most fail due to fundamental mistakes in strategy, execution and self management... not because the nature of the game makes it impossible. 

With the right knowledge, tools and information these results are readily achievable and the truth is that once you have a handle on how to be a winning punter, the risk is not anywhere near as great as some people might think. That doesn't mean it's guaranteed or easy all of the time... results can be volatile even when you are doing everything right. However the long-term picture is a very attractive one.

That brings me back to earlier assertion that punting is by far the most profitable investment opportunity most people will ever have access to in their lifetime. What else gives you the opportunity to earn anywhere from a 100% to 500% return on your capital within 3 years? And that's based on very realistic assumptions of betting volume and profit edge. It doesn't matter whether you have $100,000 to invest or $1,000... the returns are all relative and punting is streets ahead of other opportunities.  

There's no doubt that it requires the right mindset and a level of knowledge & skill, but they are all things that can be learned. The key point is that it's achievable... all it requires is a commitment to learning, continuously improving and becoming the best punter you can be. 

Bet Smarter!

Daniel

The way you stake your bets as a punter is just as important to success as being able to back the right horses. If you don't get it right, then it won't matter how profitable your betting decisions are in the long-term... inevitable losing runs will eventually force you to lose all confidence in your approach and / or go broke. 

I receive regular emails from punters asking advice on the best way to bet, so I thought it was worthwhile to outline the basics of what I do, which is similar to many other professionals. 

Firstly, it's important to understand that the fundamental goal of staking your bets is to:

 "Maximise real profit dollars within a risk threshold you are comfortable with."

It is however worth making a key point about the last part of this statement. Whatever approach you take to staking, the most important thing is that it sits within your comfort zone.  If at any time you start to feel uneasy about the way you are betting and in particular the amount you are betting, then it's time to review and change. If there's anything certain to guarantee failure as a punter, it's betting out of your comfort zone. 

THE KELLY CRITERION 

My recommended approach is a modification of the popular Kelly Criterion, which was created in 1956 by American scientist John Kelly. It provides a way to calculate the optimal bet size for a given situation, so that the long-term growth of your bankroll is maximised. It does this better than any other method.

Basically, when betting "Kelly" you are betting to WIN a certain percentage of your bankroll based on the odds received. The percentage of your bankroll you are aiming to win depends on the overlay being offered about the particular horse. 

There are however a number of practical issues for punters in using what is termed "full Kelly", which include:

1. The punters ability to precisely know their true advantage on any race (we tend to overestimate.)

2. The incredibly large bets called for at short odds (a 10% edge on a $1.50 horse suggests you should bet 20% of your total capital.) 

3. The overall volatility that results from the approach, which virtually guarantees to take a punter out of their natural comfort zone.

To put it simply, the Kelly Criterion method maximises the profit aspect of the goal statement I mentioned above, but largely ignores the risk threshold an individual punter may be comfortable with. 

It's generally accepted these days that something like 25% to 33% of the full Kelly bet size is workable for punting and many of the big betting syndicates across the world use such an approach. 

These syndicates however have the right intelligence and historical proof of calculating their true advantage on a particular bet. The average punter does not have that certainty and it's therefore very easy to overestimate what your winning edge really is. That's very dangerous when following the Kelly method.

RECOMMENDED APPROACH - PROPORTIONAL BETTING

This approach takes the principles of the Kelly Criterion and modifies them to cater for the practical issues described above. 

In staking each bet you should:

"Bet to COLLECT 4% of your bankroll based on the price you receive from the market."

The first key point is the concept of your bankroll. It's not the amount you have for betting that day... it's total amount of capital you have for betting.

If you don't have a specific betting bankroll put aside and tend to draw funds from your wage or savings to bet each week, then you still need to think about how much you can theoretically draw over a year as a betting bank. Allocate an amount in your mind that is realistic, even if you don't have that entire amount right now.

To make the maths simple I will use an example of a $10,000 betting bank. 

Each bet you make will therefore be to collect $400 (4% of $10,000) based on the price you receive from the market (or your best estimation of the price if betting top fluctuation.)

Bet Size Examples 

• Horse is $2.00 in the market: your stake = $200 (400 / 2)
• Horse is $3.50 in the market: your stake =$114 (400 / 3.5)
• Horse is $4.00 in the market: your stake = $100 (400 / 4)
• Horse is $8.00 in the market: your stake = $50 (400 / 8)
• Horse is $20.00 in the market: your stake =$20 (400 / 20)

If you are backing multiple horses in a race then the maths doesn't change. You simply calculate each bet size as an individual.

This approach is easy to understand, practical to apply and takes away any external influences on your staking decisions.

Most importantly it maximises the growth of your bankroll, while keeping a moderate level of risk and individual bet sizes that most punters should be comfortable with, especially at shorter odds.

Another observation you might have made is that your bet sizes are proportional to your winning chance. A $2.00 chance is twice as likely to win as a $4 chance and your bet size using this method is twice as much. That's why it's called Proportional Betting. 

In reference to the Kelly Criterion, this approach results in an average bet size somewhere in the 25% to 33% range of "full Kelly" I mentioned above, assuming an edge in the 7% to 10% POT range.

Where your average bet size falls in that 25% to 33% Kelly range using this approach will depend firstly on the odds mix of your bets and secondly how your actual profit on turnover relates to the balanced 7%-10% assumption I've made. Overall though your average bet size will be somewhere in that range, or just below, which is perfect. 

A Key Point

It's important at this time to highlight that you are using the market price to determine your stake size, not your own assessed price. The 4% collect target already includes a factor for the notion that each bet you make has a profit edge (the 7% to 10% edge I mentioned above.)

Using your rated price moves you into dangerous territory in so far as your ability to precisely know the real chance of each horse, and therefore your real advantage. It's far better to assume a 7% to 10% edge than risk going the other way and staking far too much because you are routinely overestimating a horses true winning chance vs the market.

Think of it this way, if every horse you priced at $3.00 that was available at $4.50 in the market was in fact closer to a $3 chance as you assessed, then you would be making 50% profit on turnover from those bets. Rating a horse at $2.50 and backing it at $3.20 might be common occurrence for you, but that would suggest you are making 28% profit on turnover from those bets.

The key point is that it's very easy to think your price is right, but across a large number of bets the actual profit on turnover achieved reveals a much lower edge, even if still profitable. 

For that reason it's far more astute to assume a constant and realistic profit edge and then use the market price to collect the 4% of your bank. 

Stepping Outside the Boundaries

There may be times that you feel very confident the market is making a big mistake, resulting in a far greater advantage than the normal.

In such cases I certainly modify my collect target so I am fully capitalising on that mistake. I might aim to collect somewhere between 6% and 10% of my bank.

Having the intuition to make the most of your very best value opportunities is key part of successful punting. However it does require very good judgement and a clear case in your mind as to why the market is making a much larger mistake than normal. It's not something you should do without careful consideration. 

Increasing or Decreasing Your Target

A natural flow on question from my recommended approach is "a what point should I increase or decrease my target?"  The right answer depends entirely on what you are comfortable with. 

Technically you can adjust your target after every bet. If your first bet at $4.00 wins, then your bankroll becomes $10,300 and your new collect target is $412 (4% of $10,300). This will give you the optimal result in the long-term.

If the practicalities of adjusting after every bet is too much trouble then you can alternatively recalculate at the end of each day, or set markers that make you recalculate when your bank increases or decreases to a certain level.

For example, you might recalculate when your bank increases or decreases by 20%. So if your bank increases to $12,000 then your new collect target would become $480. If your bank fell to $9,000 then your new collect target would be $360. 

The most important thing is that you feel comfortable with the level you are betting at. If you're bank has grown rapidly to $20,000 but you still don't feel comfortable betting to collect $800 then don't scale it down a bit. If you continue to enjoy success then your comfort level will increase over time, don't rush it.

At the same time, if you start going through a losing run and feel uncomfortable with the bet sizes your are making, then reduce your target to 3.5% or 3% of your bank. The difference is often minor, but enough to make you feel more at ease and that is the single most important thing you can do, especially during losing runs. Once things turn around for the better, that profit comes back much faster than you imagine. 

Closing Thoughts

Always remember that the way you stake your bets is just as important as the horses you back. Using a proportional betting approach like I have outlined strikes the right balance between optimising your profit growth, while maintaining a risk level you can feel comfortable with. 

Just as importantly, it helps to provide structure around your betting and eliminate the need for you to make subjective decisions on how much to bet, which as we all know can be influenced by a whole range of undesirable factors.

The end result is that you will be able to bet with much more purpose and ultimately make more profit!

Bet Smarter!

Daniel