The main point of compiling betting tissues is to arm yourself with a weapon that can help you spot value bets. But to capitalise on your hard work, it is very important that you stick to a disciplined staking plan.
Before explaining the two options I believe you should consider, it is worth considering how to use your tissues to select bets.
When is a bet a bet?
No matter how good you become in compiling tissues, you can never hope to be perfect. With this in mind, to be profitable you will need to be more subtle than simply backing anything that is a bigger price than your book suggests it should be.
The key is to allow yourself a safety margin so that you only back a horse that is significantly bigger than the price you think it should be. Because you have already allowed around 0.5% per runner as a safety margin when compiling your book, any horse at a bigger price with the bookmakers or exchanges offers some value against that book.
However, given that you basically have an unlimited number of races (and horses) to assess for value, there is no harm in giving yourself a greater safety margin.
For example, if you have a horse at 9-2 (5.5) and it is available at 5-1 (6.0) with the bookmakers, there is no real need to get involved when the margins between your tissue and the real bookmaker tissue are so small. If that horse was available at 6-1 (7.0), you might think it was worth a bet, however.
Where do you draw the line?
It is important to understand that the relative difference in terms of a horse’s % chance of winning is the important factor to assess — not the absolute difference around a price.
For example, there is just ½ point between an Evens (2.0) chance (50%) and a 6-4 (2.5) chance (40%) in absolute terms, but in relative terms, that 1/2 point represents a huge difference in that horse’s chance of winning (10%).
On the flip side, that same ½ point difference between a 15-2 (8.5) chance (11.8%) and an 8-1 (9.0) chance (11.1%) represents a very slight relative difference in that horse’s chance of winning (0.7%).
So, while you would almost certainly be backing the horse on offer at 6-4 (2.5) that you think is an Evens (2.0) chance, you probably wouldn’t be backing the 8-1 (9.0) chance that you think should be available at 15-2 (8.5).
The point at which you draw the line is down to personal choice, but I generally only back horses that have at least a 2.5% greater chance of success on my tissue than on the bookmakers or exchange tissues.
A disciplined staking plan can be the difference between being profitable and not. My advice is to use either a level-stakes method or a variation of the Kelly Criterion method.
In either case, make sure you keep a betting bank for all of your bets, and only use this bank.
Once you have spotted a value bet you simply place a pre-determined amount on that bet. I would advise you to place 0.5% of your initial betting bank on such a bet. So, if you have a betting bank of €5,000, each bet would be €25.
Some people use a points-based system within this general level-stakes framework, such that a bet could be 1 pt, 2 pts or 3 pts (e.g. €25, €5o, or €75), depending on your confidence that the bet offers good value. Note that your perception of value is key here — not the likelihood of the horse winning.
A 3 pt (maximum) bet should only be placed when a horse has a much higher chance of success based on your tissue than the odds you are able to get suggest, rather than on a horse that you think simply has a very good chance of winning.
I follow the general framework below to decide how much to stake on bets that I place. Based on my betting tissues, I place:
- 1 pt on a horse that has a 2.5% — 5% better chance of success than the bookmakers/exchanges offer
- 2 pts on a horse that has a 5% — 10% better chance of success than the bookmakers/exchanges offer
- 3 pts on a horse that has more than a 10% better chance of success than the bookmakers/exchanges offer
With the critical point that you should bet more on horses that offer more value in mind, we come on to another (more advanced) staking plan option.
Kelly Criterion and one-fifth Kelly Criterion
The Kelly Criterion staking plan uses a fairly simple mathematical equation to determine how much of your betting bank you should place on a given bet based on the perceived value you are getting on that bet. So, when the value is greatly in your favour, you will be betting more of your bank than when it is less so.
The formula is (BP – Q) / B
B = the decimal odds available – 1, P = the probability of success based on your tissue, and Q = the probability of failure based on your tissue. Note that probabilities range from 0 (impossible) to 1 (certain); so, a horse on your tissue that is 6-4 (2.5) has a 40% chance of success and a 60% chance of failure. That horse’s P value is thus 0.4, and its Q value is 0.6.
You can use the Kelly Criterion calculator below to see how this works.
< Insert Kelly Criterion calculator >
A recommended (safer) variation — one-fifth Kelly Criterion
There are two main problems with the Kelly Criterion; firstly, probability dictates that results are often volatile over short periods, and such runs can hit your bank balance hard if you go through a bad spell in which you back lots of losers; secondly, the Kelly Criterion depends greatly on the accuracy of your tissues. If you are a long way out with your assessments, it can be catastrophic, because the equation will suggest you bet far more than you should.
Play around with different circumstances in the calculator above and see this for yourself (e.g. see how much you would invest on a 6-4 (2.5) shot that you think should be Evens (2.0), and then do the calculation supposing your assessment was wrong and the horse should actually be 5-4 (2.25), or even 7-4 (2.75) or 2-1 (3.0)).
By using the one-fifth Kelly, you can mitigate against these problems to a degree. Whatever percentage of your bank the Kelly Criterion calculator suggests you bet, simply multiply that by 0.2 (one-fifth) and adjust your stake accordingly.
The downside to this approach is of course that if you are extremely accurate with your tissues, you will win less than you could by only betting one-fifth of what the Kelly Criterion suggests you should.
But given how difficult compiling tissues for a living can be, I would prefer to take the safer option, and certainly advise others starting out with this plan to do the same.