Flip Of A Coin
First, a simple mental exercise. Let's flip a coin. The number of possible outcomes is two, heads or tails. The chance of flipping a head on any one toss is 50% and the chance of flipping a tail on any one toss is 50%. You may be lucky enough to have a run of ten or more heads in a row, but if you flip this coin hundreds or thousands of times, heads will be successful approximately 50% of the time and tails will be successful approximately 50% of the time. The mathematical subject of probability and statistics can verify this.

Let's make this mental exercise more interesting by trying to predict the result of this event and making some money upon successful results. We will 'stake' or risk $1 on each prediction. If we are successful, our stake of $1 plus a profit of $1 will be returned to us. If we are unsuccessful, we lose our stake of $1.

Strategy 1 - We will only choose heads. After playing for a few hours, and many thousands of tosses, we look at the pile of coins in front of us and notice that it has not changed significantly.

Heads was successful 50% of the time and we received $1 profit each successful prediction.
Heads was also unsuccessful 50% of the time and we lost our $1 investment on each unsuccessful prediction.

Strategy 2 - We randomly pick either heads or tails. After playing for a few more hours and thousands of tosses, we notice that our pile of coins still has not changed significantly.

When we picked heads, we were successful 50% of the time and we received $1 profit on each successful prediction.
When we picked heads, we were unsuccessful 50% of the time and we lost $1 on each unsuccessful prediction.
When we picked tails, we were successful 50% of the time and we received $1 profit on each successful prediction.
When we picked tails, we were unsuccessful 50% of the time and we lost $1 on each unsuccessful prediction.
We will change the rules now and make it a bit more interesting. The return price offered to us will now randomly fluctuate between $0.90 and $1.10. We will know beforehand what the return price is. Upon successfully predicting the result, we will receive our $1 stake and either $0.90, $1.00 or $1.10 as profit.

Strategy 1 - We will only choose heads. After playing for a few hours, and many thousands of tosses, we look at the pile of coins in front of us and notice that it has not changed significantly.

Heads was successful 50% of the time
33% of this time we received $0.90 profit each successful prediction.
33% of this time we received $1.00 profit each successful prediction.
33% of this time we received $1.10 profit each successful prediction.
Heads was also unsuccessful 50% of the time and we lost our $1 investment on each unsuccessful prediction.

Strategy 2 - We randomly pick either heads or tails. After playing for a few more hours and thousands of tosses, we notice that our pile of coins still has not changed significantly.
When we picked heads, we were successful 50% of the time
33% of this time we received $0.90 profit each successful prediction.
33% of this time we received $1.00 profit each successful prediction.
33% of this time we received $1.10 profit each successful prediction.
When we picked heads, we were unsuccessful 50% of the time and we lost $1 on each unsuccessful prediction.
When we picked tails, we were successful 50% of the time
33% of this time we received $0.90 profit each successful prediction.
33% of this time we received $1.00 profit each successful prediction.
33% of this time we received $1.10 profit each successful prediction.
When we picked tails, we were unsuccessful 50% of the time and we lost $1 on each unsuccessful prediction.

Strategy 3 - We randomly pick either heads or tails AND only bet when we will receive $1.10 profit. After playing for a few more hours and thousands of tosses, we notice that our pile of coins had increased significantly. We could only bet 33% of the time when we were able to secure $1.10 return price.

When we picked heads, we were successful 50% of the time and we received $1.10 profit each successful prediction.
When we picked heads, we were unsuccessful 50% of the time and we lost $1 on each unsuccessful prediction.
When we picked tails, we were successful 50% of the time and we received $1.10 profit each successful prediction.
When we picked tails, we were unsuccessful 50% of the time and we lost $1 on each unsuccessful prediction.
We were able to make approximately 5% profit on each dollar that we invested. After hundreds and thousands of these predictions, we were able to make a significant profit.

Unless you are able to find value for money in horse racing you will lose.

[ This Message was edited by: White Turnip on 2004-03-30 07:04 ]

[ This Message was edited by: White Turnip on 2004-03-30 07:05 ]

It's all been said/done before.

To give tips without putting a value on(odds / probability) is a waste of time.

To follow techform or other newspaper ratings without knowing what the value translates to is a waste of time.

They may give you some winners but at what cost???

Fairly detailed way to state the obvious White Turnip.

Turnip,

When someone asks you the time, do you tell them how to make a clock?

Your heads and tails analogy is very neat but not relevant to racing. If a true even money chance were on offer, the tote would give you about $1.75, the bookies maybe $1.85.

But the real question is, what is an even money chance? Ask 100 different people to rate a race and they'll come up with a dozen different prices for a certain horse. Ask 100 people whether it'll be heads or tails and it is 50/50. Don't attempt to make a complicated situation too simple.

If I get 30% winners and average $4, I don't really care whether my horse is "value" or not. I'm getting 20% POT so why does it matter?

Hi Hammers,

You answered you're own question.
If you get 30% winners and get more than $3.33 average dividend you're aready getting value. Perhaps you could shop around a bit on prices to increase that value.

White Turnip,

Apart from informing us with an exhaustive analogy that the sky is blue [ backing value = profit ], how about a fool proof method of recognizing 'value' most of the time ???

Cheers.

[ This Message was edited by: crash on 2004-04-02 07:24 ]