Leveraging Multi race exotics [Archive] - Horse Racing Forum - PaceAdvantage.Com

Robert Fischer

09-15-2007, 05:12 PM

I voted "rarely"

but would like to learn

Using "Leverage" in multi-race exotics like the pick 4 and pick 6 is something I really am not very experienced with. In theory there are times when it could be profitable. I am sticking with paper and pencil for a while and see how it works out.

I ended up picking a boring example for the day. Out in the 1st leg and a $10 loser :D. (I'll have to rewrite it tonight to include the #9 Dance away Capote in race 7, for the sake of practice)

ryesteve

09-15-2007, 10:21 PM

Your chart looks like you could end up betting a lot of money on horses you didn't like in the first place. If your handicapping is sound, all you're doing is killing your edge.

Tom

09-15-2007, 10:26 PM

You poll doesn't offer "Never."

Dave Schwartz

09-16-2007, 12:04 AM

Robert,

This looks very interesting (if I am understanding it correctly).

At first i thought you were "hedging" but maybe "leverage" is a better word.

Would you please take the time to walk through this in depth?

Regards,
Dave Schwartz

HorseRun

09-16-2007, 12:13 AM

yes i would like that also as i dont understand what it is i am trying to see as the end result

but if you are leveraging your wagers, i am very interested in that, as with a nice rebate on all the churn of this "levearge" if you are able to show how to protect you investment while churning away, that becomes a very powerful system with rebates

bet $1 million a year on a ROI of .92 and a Rebate of 12% and you are a winner of $40,000

Robert Fischer

09-16-2007, 09:28 AM

Your chart looks like you could end up betting a lot of money on horses you didn't like in the first place. If your handicapping is sound, all you're doing is killing your edge.

Robert,

This looks very interesting (if I am understanding it correctly).

At first i thought you were "hedging" but maybe "leverage" is a better word.

Would you please take the time to walk through this in depth?

Regards,
Dave Schwartz

Hedge vs Leverage. Hedge is a little more conservative to minimize losses, and Leverage is a little more aggressive to maximize gain. Hedge is probably the better term here. Although you could say had I stayed alive I would have soon leveraged my losses yesterday.

In race 7 where i wager (4567810) in the first leg and then put the others over all in the exacta (1239 w/ALL)- That was a "Hedge" although I could have got lucky and had had it come in with a longshot. Some of that was error on my part. The 9 horse was teetering on the fence of my pick 4 and the 1,2,3 were all longshots. I think the correct play to start would have been to use the 9 as part of the pick 4 and then just had 123 w/all. I could have waited to see how the odds (and probables) developed in the first race before finalizing my wager. The ultimate goal would be to either be Showing a Profit for the wager series or Alive going into the next race. This is probable a good summary of what I am trying to accomplish.

In theory it is all going to come back to probability and payout odds. One problem I experienced in my test run, is that I have a poor understanding of the payout for multi-race exotics. For example I "leveraged" $24 for a $22 Daily Double :blush:. Lesson learned about Daily Doubles especially with small fields and lacking any big bombs.

ryesteve

09-16-2007, 09:55 AM

I just looked again at your decision tree, and I realized that you're starting the sequence by putting EVERY horse in the first race in either a pick 4 ticket, or on top of an exacta. Unless your getting a massive rebate that's close to the takeout, I can't see how one can make money by spreading so thin all over the board. My initial comment that your hedging will lead you to bet "too much on horses you didn't like in the first place", might not be applicable, since if you're stating the sequence in this manner, it doesn't look like you really do have horses you like in the first place.

The takeouts on exotics are so high, you need to be using horses that you perceive provide an edge. By using so many horses in different combinations in different types of wagers, you're using lots of horses that aren't providing any edge, and will be killing your bottom line. Even though the concept is attractive, I can't see it being sustainable over the long haul.

prank

09-16-2007, 07:40 PM

Some things that come to mind:
1) It looks like the tree has a lot of manual decision making involved, unless I'm misreading it. If it can be automated, try monte carlo simulations to determine the appropriate wagering for subsequent rounds.

2) I didn't see any calculations based on the expected returns. Maybe that's a separate component, but it seems it should go hand-in-hand with your wagering strategy.

3) It looks like you're not betting enough to shift the odds much, but if you are, then you might want to address the risk versus the return for each increment in dollars bet.

And if you've got a hot jockey, be sure to include that in your model. :)

PRank

Dave Schwartz

09-16-2007, 07:58 PM

Robert,

I think I am most interested in the thought-process at each step. That is, what are you trying to accomplish?

Thank you for taking the time.

Regards,
Dave Schwartz

Robert Fischer

09-17-2007, 10:07 AM

I think I am most interested in the thought-process at each step. That is, what are you trying to accomplish?

My execution wasn't very good, but this was my thought process -

For the 1st leg of the exotics i was looking at, it was a wide open turf stakes. I wanted to cover a lot of horses. The thought was to either be alive going into Leg2 or show a profit with the exacta. (which was an error to toss the 9- where i would have fit the scenario or come close enough to consider).

If i were to stay alive on the ticket, each successive win would build potential-value, in particular winning legs other than the favorites or common selections.
The idea was to "hedge" against that potential value. You can't hedge so much in the first race or any single leg that you exceed your minimum acceptable profit for the multi-race-series. Not every race has any exploitable value in it to leverage or hedge. The decision tree was a tool to try to plan out the strategies and then see where I went wrong.

Different multi race strategies would offer different opportunities and the decision tree would look a lot different.

Robert Fischer

09-17-2007, 11:32 AM

"The racetrack is a terrible place to buy insurance!" :D

Dave Schwartz

09-18-2007, 09:55 AM

Robert Fischer

09-18-2007, 12:13 PM

Robert,

I understand what you are trying to accomplish. What gave you this idea?

Let me tell you what I am thinking about...

I am thinking more of single-race plays. I want to play my win bets (usually 2 per race) very agressively and hedge the longshots in the exacta pool.

Any thoughts on how you might accomplish that?

Regards,
Dave Schwartz

Dave see if this is in the ballpark -

Win / exacta hedging (using multiple winners)

It starts out simple and then can get as complicated as you like...

Lets refer to Sunday's 5th at belmont because it represents one possible spot play approach (balance) http://www.brisnet.com/cgi-bin/instant_pdf.cgi?type=inc&country=USA&track=BEL&date=2007-09-16&race=5

so for the example we are betting $2 win bets and here we chose the two favorites.(ignore the "2"'s that run down the whole column) A minimum winning profit is calculated as well as a Weighted Average which uses probability. (for now we are using "fair" tote probability but it can be manually changed to input user specific data)

anyway we have $3 to mess around with per the example. We could pick our best place horse of the top 2 and put 3 other horses on top for example.

We want to calculate our TOTAL(different from winning profit) Weighted average profit/loss at the end including the exacta half of the wager.
To be profitable long term it looks like we need to find overlays in the win category as well - meaning using our own probability estimations rather than converting straight from tote-odds.

If you want i can pm you the spreadsheet , i have a meeting to go to now.

Valuist

09-18-2007, 08:53 PM

IMO, there are two keys that determine if you should hedge: 1) The amount of money you put into the pool, 2) The probable pays for the last leg. If you bet more than usual and you caught the 12-1 in the opening leg and are alive going into the last leg of a P3/P4 with sizeable will-pays, I would hedge and use a horse or two that I thought could beat me. But if the payoff isn't sizeable, it isn't worth it. But it is frustrating to hit a 12-1 and 10-1 and come away empty handed in the final leg.

Dave Schwartz

09-18-2007, 09:43 PM

Robert,

Thank you for your effort.

I'd love to look at the spreadsheet.

Just email it to me directly, please.

Dave

formula_2002

09-19-2007, 04:39 AM

Hedge vs Leverage. Hedge is a little more conservative to minimize losses, and Leverage is a little more aggressive to maximize gain. Hedge is probably the better term here. Although you could say had I stayed alive I would have soon leveraged my losses yesterday.

In race 7 where i wager (4567810) in the first leg and then put the others over all in the exacta (1239 w/ALL)- That was a "Hedge" although I could have got lucky and had had it come in with a longshot. Some of that was error on my part. The 9 horse was teetering on the fence of my pick 4 and the 1,2,3 were all longshots. I think the correct play to start would have been to use the 9 as part of the pick 4 and then just had 123 w/all. I could have waited to see how the odds (and probables) developed in the first race before finalizing my wager. The ultimate goal would be to either be Showing a Profit for the wager series or Alive going into the next race. s is probable a good summary of what I am trying to accomplish.

In theory it is all going to come back to probability and payout odds. One problem I experienced in my test run, is that I have a poor understanding of the payout for multi-race exotics. For example I "leveraged" $24 for a $22 Daily Double :blush:. Lesson learned about Daily Doubles especially with small fields and lacking any big bombs.

You are very correct, except it's not "In theory", it is all in the odds, probability and risk.

Robert, your post caused me to visit what is becoming my second "home",
Wikipedia, the free encyclopedia.
Looked up hedging, leveraging and decision tree.

They have an example for a decision tree analysis, which I got correct using excel.
Every thing comes down to booking percentages, that how I got right.

It's impossible for the "tree" to have any importance without knowing the % , edge and the risk (standard deviation), so unless you are a crackerjack odds maker or have some other way to determine the overlay probabilities, a "tree" is useless (unless of course it's a money tree)
But it is a neat excercise!

formula_2002

09-19-2007, 06:49 AM

Here is some exacta stuff for LAD that I happend to have in a database I'm working on.
9173 exacta combination, 1128 winners (12% winners).

if you got fair tack odds in the win pool, no vig,
you would lose 15% in the exacta pool

235 exacta "overlays" (2.5%) based on fair track odds returned 1.19 roi

I mention this because, w/o handicapping this is what is available to anyone.
It's also what the professional handicapper has to beat..

formula_2002

09-19-2007, 07:04 AM

ryesteve

09-19-2007, 09:32 AM

235 exacta "overlays" (2.5%) based on fair track odds returned 1.19 roi

I mention this because, w/o handicapping this is what is available to anyone.
In theory, absolutely... in practice? Impossible. The ratios between closing odds and closing exacta probables bear little resemblance to the ratios you'd see at 0 MTP when you'd need to get your bet down.

formula_2002

09-19-2007, 09:49 AM

In theory, absolutely... in practice? Impossible. The ratios between closing odds and closing exacta probables bear little resemblance to the ratios you'd see at 0 MTP when you'd need to get your bet down.

ofcourse, thats why one must create their own odds line ( also, just about impossible) ;)

here is a clip from a recent post. In this specific case even a 55 edge in the win pool was not enough to return a profitable exacta.

http://www.paceadvantage.com/forum/showthread.php?t=39760

http://www.brisnet.com/cgi-bin/instant_pdf.cgi?type=inc&country=USA&track=DEL&date=2007-09-17&race=4

Quote:
Originally Posted by cj
You never seem to get this point. The exacta may have paid 1/3 of the "fair" payout based on the tote board odds. That does not mean they weren't "fair" odds based on the individual handicapper's assessment of the race.

Ofcourse, you have a point. A guy that has a 55% (profitable) edge on both those beast in the win pool would have not quite broken even in the exacta pool!!.
check me out see if I did that right.

alysheba88

09-19-2007, 10:11 AM

Pick 3's and 4's have lower takeout, not higher

ryesteve

09-19-2007, 11:02 AM

ofcourse, thats why one must create their own odds line ( also, just about impossible) ;)
And even if you did, you still have the problem of not being able to place bets at the closing odds. What one would need to do is assess how well overlays at 0 MTP perform... but 0 MTP pool data is not readily available.

alysheba88

09-19-2007, 12:49 PM

Will never understand the rationale of "hedging" See it with sports parlays all the time. Someone will play a five teamer, hit the first four and then hedge the 5th. Makes no sense to me at all

Dave Schwartz

09-19-2007, 11:10 PM

Sheba,

Makes huge sense to me.

I had a user tell me a story one day where he was live in the pick6 for a rather large sum - possibly several hundred thousand. He had every horse in the last race except the 2/1 favorite and an 8/1 horse.

He took all the cash that he had with him and all he could borrow from friends - about $2,000 - and dutched the two remaining horses. The favorite won and he came home with about $4k. That turned out to be far better than nothing.

Regards,
Dave Schwartz

ryesteve

09-19-2007, 11:45 PM

I had a user tell me a story one day where he was live in the pick6 for a rather large sum - possibly several hundred thousand. He had every horse in the last race except the 2/1 favorite and an 8/1 horse.

He took all the cash that he had with him and all he could borrow from friends - about $2,000 - and dutched the two remaining horses.
The reason this makes sense is that the amount he hedged was only about 1/2 of 1% of what he stood to make; when most people start hedging, they're doing it with a far larger percentage of their prospective profits, essentially eating away the edge they had in the first place

Dave Schwartz

09-20-2007, 12:45 AM

Steve,

I certainly see your point.

But, as the old joke ends: "...we're just haggling over price."

<G>

Dave

alysheba88

09-20-2007, 07:58 AM

The reason this makes sense is that the amount he hedged was only about 1/2 of 1% of what he stood to make; when most people start hedging, they're doing it with a far larger percentage of their prospective profits, essentially eating away the edge they had in the first place

Thats it exactly.

Thats why I say many players are afraid to win. When they get in position to make a score they panic. The fear of not making a big score consumes them. They look to reduce/eliminate the pain. They say "well better than collecting nothing". When at the mountaintop instead of going the last few yards they look for the quickest way down. Afraid to win.

If I hit a big priced horse on a pick 3 I am thinking great, this could be a real nice hit, not oh God what if I dont hit the last two legs I'll get nothing. If thats the mentality then one should not play a pick 3 or pick 4. To say nothing of the fact that if a big priced horse wins a leg and you dont have other money on it besides the pick 3/4 something is wrong.

ryesteve

09-20-2007, 09:18 AM

To say nothing of the fact that if a big priced horse wins a leg and you dont have other money on it besides the pick 3/4 something is wrong.
I might disagree with that. I've been doing a lot of db work lately, and what I'm finding is that horizontally linking horses that are slightly unprofitable in the straight pools will generate profits in DDs and Pk3's. If true, then there are situations where having other money (which I assume to mean straight pool money) on such horses is a long-term losing proposition.

ArlJim78

09-20-2007, 11:12 AM

Thats it exactly.

Thats why I say many players are afraid to win. When they get in position to make a score they panic. The fear of not making a big score consumes them. They look to reduce/eliminate the pain. They say "well better than collecting nothing". When at the mountaintop instead of going the last few yards they look for the quickest way down. Afraid to win.

If I hit a big priced horse on a pick 3 I am thinking great, this could be a real nice hit, not oh God what if I dont hit the last two legs I'll get nothing. If thats the mentality then one should not play a pick 3 or pick 4. To say nothing of the fact that if a big priced horse wins a leg and you dont have other money on it besides the pick 3/4 something is wrong.
I think this is the correct way to look at it, although it took me a long time for it to sink in. When I'm faced with the urge to place back up bets to hedge on a potential big pk3 or pk4 score, I try to ask myself if i would make those bets if i wasn't facing the big payoff. If not then why make them now? I do better if I keep my money working on my primary plays, and not using lots of it to buy expensive insurance.

Pell Mell

09-20-2007, 11:38 AM

ryesteve

09-21-2007, 09:59 AM

I think there is an exception when it comes to hedging and that's when rebates are involved. When I was betting with Pinnacle with the 7% rebate on ALL action I used to hedge a lot. Even if you only break even on these bets you can create a lot of churn which can pay off nicely at 7% return.
Strictly speaking, is that still considered a hedge? If you're making 7% profit, that's just good wagering. In my mind, a hedge is a bet with a negative expectation that is placed as insurance. But if the expectation is positive, is it still a hedge?? :confused:

Robert Fischer

09-21-2007, 11:53 AM

Strictly speaking, is that still considered a hedge? If you're making 7% profit, that's just good wagering. In my mind, a hedge is a bet with a negative expectation that is placed as insurance. But if the expectation is positive, is it still a hedge?? :confused:

I tried to do this in an example in the selections forum(http://www.paceadvantage.com/forum/showthread.php?t=39808).
It was a 7X2X4 $56 pick 3.
I ended up betting all told $139 and had a chance to hedge a profit in each race. With the 1st leg guaranteed.

In the end I made $9 or a 6.5% profit.
It would have paid more had the favorite not won the 1st leg which was the key value race.
There was also the chance that all the favorites could have won and I would have won less, or any of my hedges could have won and I would have won between $5-100 , Or one of the couple horses I totally eliminated from legs 2 and 3 could have won and I would have had a total loss.
Im not sure that I didn't flirt with a positive expectation, but I am willing to say that it was still likely a bit negative.

Robert Fischer

09-21-2007, 11:58 AM

Another thing about multi race wagers is that, you are weighing the risk/reward of including a horse.

example:
leg1 - Using 5 horses
leg3 - Using 4 horses

*DECISION- do you single your best in leg2? or use both contenders? The price for each contender in leg2 will be $20.

Answer - it depends on all the factors :p

ryesteve

09-21-2007, 12:56 PM

a chance to hedge a profit
I'm not quite sure what this phrase means. If there was a "chance" your hedge bet would be profitable, I guess there was also a chance it wouldn't be... and I think you're also agreeing that your hedge bets have a negative expectation, so as best as I can tell, we're in agreement.

Robert Fischer

09-21-2007, 04:14 PM

Robert Fischer[/b]]
a chance to hedge a profit

I'm not quite sure what this phrase means.

for the example i did yesterday- the 1st leg was guaranteed either to be alive or out-with-a-profit. Legs 2 and 3 I eliminated a few horses from either win or the entire exacta. The eliminated horses represented a chance to lose everything. Had I lost the pick 3 and any of horse other than those eliminated had won - it would have been a profit.

I did another one today, but it was a different scenario.
I eliminated one horse from the win slot in leg1 - so it was not a guarantee situation.
The first leg also wasn't so much a free for all like the others I tried.

I did a pick 3 and pick 4 at the same time starting with race 2. To keep it simple i just used the same picks with the pick 4 up to the last leg.
http://www.paceadvantage.com/forum/showthread.php?t=39863

got lucky again. This time I didn't win the pick3, and was out in the 2nd leg with a profit of $34. Had I continued to leg3 I would have been out with a profit on the exacta(a better exacta). So today's trial worked out very well. Made some mistakes as well. Still a paper and pencil activity- Small samples can easily be a mirage :eek:.