Some Thoughts On Loss Retrieval for Layers

One of the main methods of loss retrieval as a layer is the ‘stop at a winner’ system. When you first experience a degree of success laying horse racing selections on the betting exchanges, it is easy to consider yourself as successful and consistent as a bookie; after all, you are in effect acting like a bookie and you never see a poor bookie do you? Then you are rudely awakened back into reality with a shock as the no hoper you wanted to make £10 on scrambles over the line first and you have to pay out £400 of your hard earned cash! Whenever you take just one bet on an event, you are not a bookie, but a bettor backing something to lose. Therefore, loss retrieval systems have got as much chance of succeeding long term as before, i.e., precisely no chance.

The ’stop at a winner’ method was primarily designed for horse racing, and involves deciding what your daily target profit will be (for example, £100). You then take stakes of that amount on the favourite. If it loses, you have won your target amount for the day and can go down the pub. If it wins, you take the loss amount and add to it your target for the day. You then take a bet on the next favourite. You basically keep going until you win, or until the favourites keep winning until you run out of money!

For Example:

First race you take £50 bet on Horse A the 2.1 favourite in a modest handicap race. Liability £60.50 if he wins. He does... On to the next race, you take losses so far (£60.50), add £50 target, so take a bet of £100.50 on the 3.5 favourite, Horse B, in a 1 mile nursery. Oh dear, Horse B wins and costs you £276.25! Undaunted, you take your losses so far (£276.25) and add the £50 target. You decide to pick the 2nd favourite in a handicap race this time because you think that’ll do the trick. So you take £326.25 on Horse C at odds of 6.8 (liability £1892.25). Horse C wins! You’re in a fortunate position because you had a £10,000 bank - including £3000 following 3 successful months of profit using this loss retrieval method. You briefly consider returning to a £50 stake and taking the loss but know in your heart of hearts that this bad run cannot continue much longer. Back to the betting and the favourite in the next race is odds on at odds of 1.8. At least you don’t have to risk as much money this time, and you think the horse, Horse D, is overrated. So you take the losses so far (£1892.25) and add the target amount yet again to take a bet of £1942.25 (liability £1553.80). Your heart sinks to your feet as the favourite romps home, and after 4 straight pay-outs your losses amount to £3496.05. The favourite in the next race is trading at odds of 3.2, if you took the losses and added the target again, you’d be taking a bet of £3546.05 at odds of 3.2 (liability £7801.31). Before you took that bet you’d have to top up your bank, which is now down to £6453.95.

Could you do it?

Although this example is quite extreme, it doesn’t really matter how long it takes to reach 4 straight pay-outs because it will get there at some point. The pattern for all loss retrieval systems is that lots of small gains are interspersed with infrequent but massive losses. All loss retrieval systems rely on one of the most enduring myths associated with gambling - that because something happened in the past the chances of it happening again have reduced. In other words because the favourite has won each of the last 3 races, the chances must be less of it happening again. When you consider how quickly the losses stack up when a run of pay-outs begins, I would say it’s even more vital that lay bettors avoid loss retrieval systems altogether.

You could reduce the chances of a payout by analysing the event to see if you could identify an edge - something that you think you know that others don’t. In the example of horse racing, perhaps you could avoid taking bets unless you thought the favourite was a ’false’ favourite, and that at least 3 or 4 other horses had an equal
chance of winning.

That’s the beginning of a sound strategy in selecting the horses you want to take bets on. But in the end it will come down to your opinion against the backer as to which one of you secures the ‘value bet’ based on the odds and the outcome. If you’ve got an edge it will quickly be apparent. If you have not, no amount of loss retrieval will save you.

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