PRE-RACE Auto Trading in Horse Racing By Marc Chawner

This month I am going to take a look at a slightly different angle to “Automated

Trading” within the Horse Racing world.

It is in the area of PRE-RACE trading……

Like most people, I have tried this a little in the past and like most people have
failed miserably. At times I become very sceptical whether it really can ever be
mastered on a consistent basis. I have watched many videos and seen these so
called experts trade very successfully EVERY time. Sometimes I come to the
conclusion that the people that make these videos are really just scamming us in
order to sell us their products and that the concept of the existence of a
successful pre-race trader is just a myth. On the other hand it maybe just the fact
that I am jealous that I cannot mimic these so called super traders.

Anyway, I thought I would give it one more go. So I wrote down what has gone
wrong for me in the past. I constructed this list:

1. Did not cut my losses quick enough.

2. Became too greedy.
3. Became bored and impatient.

Unfortunately, being a typical human being, I fail miserably on all of those three
concepts.

So I asked myself the question, how can I train myself to be more disciplined….?
The answer was that I could not.

However, I then came up with the idea that I could “Train” my “AutoBot” to trade
for me. It certainly would not possess any human emotions that would cause it
NOT to cut its losses or become too greedy. It also would never become bored or
impatient.

So this month’s AutoBot has been designed to trade the Horse Racing markets in
the five or six minutes leading up to the start of the race when the activity is at its
highest.
I have watched every single video ever made on pre-race trading and I have come
up with these rules which I have told my AutoBot to execute to the letter.

The system is based on our old friend the “Weight of Money” theory.

I am not saying that the Weight of Money theory works all the time, but what I
am saying is that When/If it does work, then our AutoBot will beat any human to
the trade.

Here are the rules that have been built into the AutoBot……

Let us first assume that our AutoBot is looking to BACK a selection.

I have told it to wait for a LARGE amount to appear wanting to BACK a selection.
This amount must be right at the money.

  4.6 40
  4.5 30
  4.4 500  Amount A
         Amount B  50 4.3  
         Amount C  100 4.2  
75 4.1  

                                                                                                                                                                                            
                                                                                                                                                         
The above diagram represents a small segment of a ladder setup for a typical
horse in a Betfair horse racing market.

There is a large £500 chunk of money waiting to BACK the horse at the price of 4.4
(Amount A). Note that if the £500 was waiting at the price of 4.5, then this would
NOT fit our criteria because the large chunk of money must be waiting at the
lowest BACK price. There is a small amount of money waiting at the highest LAY
price (Amount B) and another small amount of money waiting one tick lower
(Amount C).
This fits our criteria. The theory is that the pressure of money is certainly pointing
downwards i.e. LOWER prices are expected.

Our AutoBot spots this situation and fires off a “Fill or Kill” BACK trade @ 4.30 for
say £20. As soon as we are matched, totally or partially, it will fire off a LAY trade
@ 4.20 hoping to effectively BACK @ 4.3 and lock in some profit by LAYING @ 4.2.
The amount that it LAYS for @ 4.20 will be calculated based on the amount that
was matched with our initial BACK trade @ 4.3 and using the “Greening” concept
i.e. locking in the same amount of profit regardless to what subsequently
happens.

Remember that our initial BACK trade @ 4.3 was a “Fill or Kill” instruction which
means that if there was only £15 available to be initially matched then the
remaining unmatched £5 will be instantly cancelled.

So now we wait for our LAY amount @ 4.2 to be matched and hence locking in
our profit.

So what can go wrong from this point…..?

The obvious problem is that the £500, which was the reason why we entered the
market, disappears. In this situation our UNEMOTIONAL AutoBot will give up on
this trade and cancel the unmatched LAY trade waiting @ 4.2 and switch it to cut
our loss by firing in a LAY trade @ 4.5 and hence taking a small loss. The amount
that it attempts to LAY @ 4.5 is based on the unmatched amount that was left @
4.2, again using the “Greening” concept, although in this scenario it will more
likely be using a “Reddening” concept.

Please note that Amounts “A”, “B” and “C” are set up by the User of the system.
Personally I have been using Amount “A” as £300, Amount “B” as £50 and
Amount “C” as £100. I have also been using BACK trades of £20. That may sound a
lot but remember, normally, going back to the above scenario, we BACK for £20
@ 4.3 and if it goes bad in that our protecting £500 amount @ 4.4 disappears,
then we would have to LAY @ 4.5 for an amount of £19.11 which represents a
loss of 89 pence either way.
The AutoBot can focus on as many horses as the User desires. Each horse will be
traded as a completely separate entity. Personally I would only trade on the
horses at the top end of the market where all the Activity/Liquidity is. The User
also specifies how many seconds before the start of the scheduled off time that
he wishes the trading to commence. Personally I have instructed my AutoBot to
start trading 600 seconds before the start i.e. 10 minutes. Similarly, the User also
specifies how many seconds before the scheduled off time that they wish the
trading to stop. Personally I have instructed my AutoBot to stop when there is 30
seconds left before the scheduled start.

Note that any trades that are left unmatched at the time of the start of the race
will be converted to “Take SP”.

The big question is…..does this actually work….? As I mentioned above, if you are
a great believer on the “Weight of Money” theory, then our AutoBot will be there
to execute the correct trades VERY quickly because at a refresh rate of 0.1, our
Auto Bot will be scanning ALL the horses that the User wishes to be traded TEN
times every second. So if some bookmaker is desperate to reduce his exposure
and put in a £10,000 trade at the market price of 5.0, our AutoBot will fire in our
trade @ 4.9 within one tenth of a second knowing full well that other “Humans”
will be following us in……

Watching the AutoBot in action can get very exciting……Especially since

everything that I have mentioned above is completed reciprocated in the LAY
world. i.e. If the User desires, the exact same rules that apply for the BACK trades
Will/Can be replicated for LAY trades.

Once a trade is put into the market for a selection, then the AutoBot waits about
one second and if the same criteria still exists, it will be more than happy to
trigger off the same trade again and again….However, in practice, whilst our BACK
trades are being matched, the corresponding LAY trades, one tick lower, will be
INCREASING Amount “C” and hence reducing the chance that our criteria is still
being met.

I have seen some thin markets where the AutoBot effectively takes full control as
the “MarketMaker” and is quiet happy to trade with itself……

So a brief summary so far…..

When the AutoBot spots a large chunk of money trying to BACK a selection, it will
jump in front of it with its own “Fill or Kill” BACK trade. If the BACK trade is
instantly matched, an appropriate LAY trade, one tick below the matched BACK
trade, will be submitted into the market. This LAY trade will lock in some profit. If
however, the market starts to go the wrong way, the initial LAY trade will be
cancelled and be replaced with a “Stop Loss” LAY trade to minimize our loss.
Whilst this is all happening, the exact same process is occurring in reverse i.e. The
AutoBot will be looking to submit LAY trades if a large chunk of money is trying to
LAY a selection. The AutoBot scans the market for some action TEN times per
second on as many selections as the User wishes to monitor. If at the start of the
race there are some trades still left unmatched in the market, these unmatched
trades will be converted into taking the Betfair starting price.

Does this system really work?

Having discussed the mechanics of the system, let me tell you why this works……

As I have mentioned above, it is very well known these days that Bookmakers will
use the Betfair Betting Exchange to reduce their exposure for a given horse. So
with two or so minutes to go before a race one will often see large amounts of
money coming into the market trying to back a horse. People know exactly what
this money is all about and they will watch for this occurrence knowing that the
bookmaker, if he is not matched immediately, will be lowering their unmatched
bets to ensure a fill. So in anticipation of this, people will try to back this selection
as well at lower prices in anticipation that the price of the horse will inevitably
trade lower. This is where the AutoBot will come into its own since, whilst it is
scanning the market ten times per second, it will beat any human reflexes that
are trying to replicate what the AutoBot is doing. This will ensure that a BACK and
subsequent LAY trades will be matched very quickly.

The actual system comes in the form of an Excel Spreadsheet that can be found at
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx within the Betting School
Website.

The Spreadsheet AutoBot will only work with the BetFair Betting Exchange.
The spreadsheet works in conjunction with the GRUSS (Betting Assistant)
software. If you are unfamiliar with the Betting Assistant platform then you just
need to visit http://www.gruss-software.co.uk where currently you can download
the software for a free month’s subscription to try it out.

The help facilities and the user forum within the website are very helpful and you
should be up and running with this spreadsheet in no time.

When you open the spreadsheet, the only fields that you need to potentially
populate are the ones that are shaded in yellow.

Column “AC” is where you indicate which horse(s) you wish to trade. The User
just places a “Y” alongside the horse(s) that you want to trade. E.g. by placing a
“Y” inside box AC5 the FIRST horse will be examined to see if it meets the criteria
for a trade to be placed. You can trade as many horses as you wish.

Whilst you do NOT populate a “Y” in any of the cells in column “AC”, NO trades
will be submitted. However, this will give you a chance to see the action in front
of your eyes. This is because columns “AM”, “AN” and “AO” will light up in GREEN
when the criteria for amounts “A”, “B” and “C” has been met for a BACKING
trade. Likewise “AP”, “AQ” and “AR” will light up in GREEN when the criteria for
amounts “A”, “B” and “C” has been met for a LAYING trade. Remember that the
AutoBot is waiting for the criteria to have been met for all THREE fields. Only
then, providing we are in the correct time range, will trades be submitted for the
horses that have been flagged up to be traded (The Column “AC” against the
horses name has been populated with a “Y”).

Here is a brief summary of the other fields that you need to populate within the
Excel Spreadsheet and the function that each field performs.
Fiel
Name Brief Description
d
     
The Initial
AD2 The stake in pounds sterling.
Stake

The time in seconds BEFORE the scheduled start time that the AutoBot will
AF2 Start Time START trading e.g. 300 means that it will start 300 seconds before the
scheduled start i.e. 5 minutes before the start of the race.

The time in seconds BEFORE the scheduled start time that the AutoBot will
AF3 Finish Time STOP trading e.g. 30 means that it will STOP 30 seconds before the
scheduled start of the race.

This is how often the market will be examined. 0.5 means that the market
AH1 Refresh Rate will be examined every 0.5 of a second. The lowest value that can be used is
0.1 which represents 10 examinations per second.

BACK Action When this field is set to "Y", the AutoBot will look for potential BACKING
AD1
Indicator situations. The field is not case sensitive.

LAY Action When this field is set to "Y", the AutoBot will look for potential LAYING
AF1
Indicator situations. The field is not case sensitive.

This is the size of the LARGE Amount "A" that the AutoBot is waiting for,
which will instigate the initial trade. The amount is in pounds sterling. The
AD3 AMOUNT "A"
AutoBot will wait for a value of at least this magnitude before it will initiate
a trade.

This is the relatively SMALL Amount "B" that the AutoBot is waiting for, to
initiate its trade. It is this amount that will be matched with our opening
AH2 AMOUNT "B"
trade. The amount is in pounds sterling. The AutoBot will wait for a value
LESS than this value to be in place before a trade will be initiated.

This is the relatively SMALL Amount "C" that the AutoBot is waiting for, to
initiate its trade. The field that contains this amount is where our offset
trade will be placed. We want this field to contain a small value so that our
AH3 AMOUNT "C"
chances of being matched are very high. The amount is in pounds sterling.
The AutoBot will wait for a value LESS than this value to be in place before a
trade will be initiated.
I have already shown you what kind a situation triggers off a BACK trade,
below is a diagram showing you what would trigger off a LAY trade.

It is obvious from the diagram that the pressure of money will be forcing the
market upwards in the very near future.

The £600 is our starting point. This is the LARGE Amount “A” that our AutoBot
is looking for. The test that it is applying is for the amount alongside the price
of 4.3 is LARGER than the amount populated on the spreadsheet within cell
“AD3”. If it is, then it will next look for the SMALL Amount “B”. The AutoBot
needs to see weakness on the side opposite to our LARGE amount. It needs
the Amount “B”, which in this case is £40, to be SMALLER than the amount
that we have populated into cell “AH2” within our Spreadsheet. Similarly, it
will test our SMALL amount “C” which in this case is £70, to be SMALLER than
the amount that we populated into cell “AH3” within our Spreadsheet.

If our AutoBot sees that all THREE of our criteria have been met, provided that
we are in the correct time range, it will attempt to place a “Fill or Kill” LAY
trade into the market at a price of 4.4. Even if there is no money there, it will
still use the price of 4.4 as its attempted laying price. If the LAY trade is
matched, albeit partially, a BACK trade will be instantly placed into the market
at the price of 4.5. The amount that is BACKED at the price of 4.5 is calculated
based on trying to even out our profit regardless to the eventual outcome. i.e.
It will attempt to GREEN our position. If our BACK trade gets matched, then we
have locked in some profit regardless to whether the horse eventually wins or
loses. If the market turns against us, then our BACK trade will be quickly
cancelled and re-entered as a STOP LOSS trade with a BACK trade for the
appropriate amount at a price of 4.2. Apart from our initial trade, which is a
“Kill or Fill” trade, all other trades are “Keep” trades which means that if they
were to remain unmatched at the start of the race, they would be converted
to “Take SP” trades.
   4.6 40
  4.5 70  Amount C
  4.4 40  Amount B
         Amount A  600 4.3  
         100 4.2  
75 4.1  

Now that we have set up our Spreadsheet, we now need to have the Spreadsheet
communicating with the correct Betfair market. Anyone who has used the Betting
Assistant platform before will know what to do. However, for everyone else, it is
the easy task of having our Spreadsheet open. It is probably a good idea to check
that there are NO “Y”’s populated in column “AC” at this stage otherwise there
could be some premature trading. We now log into the Betting Assistant platform.
We then call up the race that we want to trade. Now by clicking on the “Excel” tab
at the top of the Betting Assistant screen we can click on “Log current prices”. In
doing this, we will be presented with a panel which will need to have some of its
boxes ticked. The first thing to do is to make sure that the Workbook name is
focusing on our spreadsheet. The Worksheet name should default to sheet1
which is correct. Now tick the box that says “Enable triggered betting”. Now tick
the four boxes in the bottom left of the panel i.e. the ones that say, ‘CLEAR’
trigger…..Clear Bet refs……..Clear Bet refs…..UPDATE trigger.

Now it is important that none of the “Additional columns” boxes are ticked on the
right hand side. Now click ok and you should see your spreadsheet spring into
action.

It is VERY, VERY important that once the AutoBot has started trading on a
particular race that you do NOT jump to another race until at least the race has
started. In theory you could always set up additional sheets within the
Spreadsheet if you wanted to trade more than one race simultaneously.
Once the race has started and all the bets have been matched, you just need to
click on another race, first make sure that the “Y’s” in column “AC” have been
deleted to avoid any premature accidents.

By clicking on a different race either via the “Tree” or the Quick Pick List” the next
race is ready to be traded without any more setting up.

In theory, you could designate one sheet within the spreadsheet to a particular
race meeting and have it auto roll over by itself but watch out for unscheduled
delays in the running times.

It goes without saying that initially trade with very small amounts so that you can
appreciate the amount of exposure that you are potentially generating.
Additionally, make sure that you start off by trading the shorter priced horses.
The last thing you want to be doing is LAYING horses at odds of 900 even if it is for
only fifty pence.

Now some important things to point out.

1. Cell “AA1” indicates how many seconds that there are to go before the
start of the scheduled start of the race. The cell will turn GREEN when the
time to go is within the trading time parameters otherwise it will remain
RED which indicates that NO trades will be placed.
2. When a trade has been successfully matched in the market, the column
“AB” will flash up with the word “TRADE” against the horse that has been
traded. The word “TRADE” will have a GREEN shaded background.
3. It is important that you have set your PC clock to the correct time.
4. To gain an advantage over the humans who are doing this, it is important
that you set the refresh rate (Cell “AH1”) as low as possible so that the
market is scanned many times per second. Please note that this special
refresh rate will only be applied during the time interval that the AutoBot
will be doing its trading. It is important that you set the throttling
parameter within Betting Assistant to a value such as 10 to ensure that you
do not incur any data charges from Betfair.
5. Column “Z” contains the last traded price of the horse.
Now some things that should NOT happen but may happen and you need to be
aware of:

In a VERY fast moving market one’s stop loss could be left unmatched. i.e. Going
back to our very first BACKING example where if the market moved against us,
the AutoBot would attempt to put a STOP LOSS LAY trade in at 4.5. In fact the
AutoBot is cleverer than you think in that if there is NO money to be traded at 4.5
it will actually “Look” where the next piece of money is. So if 4.5 was empty, it
would put its STOP LOSS LAY trade in at 4.6. However, even that does not
guarantee us that we will be matched since by the time our attempted trade hits
the market the market could have spiked up and leave our trade unmatched. It is
not the end of the world since our STOP LOSS trade will remain there and if it is
still unmatched at the time of the off, it will be converted to a “TAKE SP” trade.
However, Betfair do have some quirky rules when non-runners occur. In the
scenario that a significant non-runner occurs just before the off and Betfair do not
have time to reorganise the market then ALL LAY trades are removed even if they
have a keep clause although I have never really ascertained from them whether
that applies to “Take SP” Keep bets.

So what I am saying is that, be aware that you may need to hit the “Cancel ALL
Trades” and then the “Greening” button if something unusual starts happening.

The nature of the Stop Loss processing does highlight that there really does need
to be some good liquidity in the market, otherwise you may end up taking some
very bad valued prices. This is one good reason that the AutoBot should only
focus on the market just before the off at short priced horses e.g. below 20.0.

Now some EXTRA thoughts:

Once you really think you know how this works then you could get braver and try
to take more than the one tick out of the market. If you wanted to be a little
greedier, then amend Cell “AA2” from its present value of “Tl1” to “Tl2” or “Tl3”.
This will have the effect of putting in your profit taking trade in at two or three
ticks away from your initial trade. Additionally you can relax the stop loss
parameter by amending Cell “AA3” from its present setting of “SL1” which
equates to one tick of stop loss to say a setting of “TL3” which equates to a stop
loss of three ticks of stop loss.
If you were to set the Cell “AF3” to a negative number once the race had started
this would have the effect of trading the race in-running which can be fun but
potentially dangerous since the liquidity is pretty thin.

In theory, this AutoBot can be used in other sports.

At the end of the day, the factor that is going to determine whether you win or
lose money is the setting of Amounts “A”, “B” and “C”. You can be very cautious
by setting say Amount “A” to £1000 whilst Amounts “B” and “C” are set at say
£100. I am sure that would guarantee success albeit not many trades.

If you discover any optimum values then please let me know……Or on the other
hand, if you have any sense…..Keep them to yourself.

If you wish to discuss anything related to this concept, then please do not hesitate
in contacting me at zen37798@zen.co.uk.

Good Luck.

-Marc