This part of the guide to betting on steamers and drifters on Betfair looks at the mechanics of a trade. This Betfair trading guide described a steamers and drifters on the previous page. Before we look at how to trade horses that become steamers or drifters lets see if it’s possible to profit from simply betting on these horses.
Some people at Betfair noticed that horse race commentators often talk about horses that have odds that moved significantly in won direction or the other as a ‘dead cert’ or a ‘no hoper’. Betfair carried out a study, based on the assumption that people believe that steamers are more likely to win and that drifters more likely to lose. What the people at Betfair discovered was that there was no significant trend both steamers and drifters win about 50% of the time.
Horses where defined as steamers or drifters if the percentage probabilities moved more than 5%. The result of looking at 65000 horses showed that steamers barely win more often than steamers. In fact you would have made money if you backed all the drifters. But, a relatively small amount considering you would have placed 65000 bets. The conclusion was that the “analysis cannot be easily turned into a profitable betting strategy”.
What moves horse odds on Betfair?
Markets tend to over react to information. The betting market on Betfair is no exception. Most of the time odds are moved by propaganda and hype. When Betfair members jump on a ‘bandwagon’ the odds can move to extremes and do not reflect the true probability of a horse winning / loosing. This would explain the results in the above study where it was shown that backing steamers and laying drifters does not produce a meaningfull return.
Therefore if the market forces a steamer to be too short it could be profitable to lay the selection. If the odds are short you don’t need to pay out much if the horse wins. Used in conjunction with a good horse laying system this works well.
In reverse, if a drifter’s odds are forced too long then it can be good to back the selection. However, it is more difficult to spot winners because only one horse can win. Whereas, the rest lose.
Remember to test any system before you commit large amounts of money.
Sports arbitrage trading
The two previous types of betting are open ended. Sports arbitrage enables you too create risk free trades (or reduced risk).
In laymen terms; backing and laying (or vice versa) the same horse so that you lock in a small profit whether the horse comes first or not. A significant move of the odds in one direction is required. Before we look at what moves the odds lets look at how to trade drifters and steamers.
How to trade steamers and drifters on Betfair
Back the horse to win when the odds are longer. After they shorten lay the horse to lose.
Lay the horse to lose when the odds are short and back the horse to win after the odds lengthen.
The profit depends on the difference between the odds and the size of the stake. If you you use £1000 on backing and laying a horse and the odds move by 10% (steam or drift) you receive £100. Befair will deduct a small commission for hosting the bet.
Here is a worked example for a drifter. The decimal odds are 5.0 to lay the horse. The stake is £1000. If the horse loses the profit is £1000 (as you lay the horse to lose). At those odds if the horse wins the loss would be £4000. If the odds drift to 9.0 you can back the horse for profit. A £600 win bet would return £4800 (winnings and stake). A £600 loss if the horse loses.
If the horse wins the net effect of both sides of the trade produces a £800 profit (£4800 – £4000). If the horse loses, the trades produces £400. The £1000 win on the first (lay) bet minus the £600 loss (back) on the second bet. Depending on the outcome you either win £800 or £400.
The skill in using this method of betting on steamers and drifters is picking the horse before the odds move. Once the odds have moved there is no opportunity to profit.
Opinion of the members (of the betting exchange) betting on Betfair. The driver of Betfair members’ opinion is information. If the odds steam members think the horse is more likely to win. If they drift the opinion is that the horse is more likely to lose. In reality steamers do not win significantly more that drifters. They win about 3% more.
However, it is hype, rumour and propaganda that really move odds. When the odds start to move more people tend to enter bets for fear of missing the boat. More and more people jump on board. This produces extremes of opinion. In fact these trades are often self perpetuating. The odds are moved as more traders enter the trade.
Don’t forget that Betfair is like any market. Market manipulation is not uncommon. Insiders why be circulating rumours that a horse is less likely to win so to lengthen their odds meaning that they offer more value.
Again the skill is knowing how to stop them, when to enter and when to exit.
The million dollar question is how to select steamers and drifters?