Why Do Odds Move Pre-Race?

We all know that the odds move due to the progression of a race relative to the bias of traders at large. However, what drives the odds before the race commences?

After all, there is not so much activity in the market; what then is the cause of this weird movement?

Let’s have a look at the external factors that drives the odds even before the starting gun:

• Horse News: News surrounding each horse could significantly affect price movement. A common example of such news is injury rumours. If a top horse is rumoured to be injured before the race, the odds to back it would significantly reduce.
• Sentiments: There are some weird sentiments surrounding certain horses. For example, the crowd may be attracted to horses with names depicting speed. This superstitious sentiment may not be well-rooted, but it still has a say in odds change.
• Insider Tips: As long as no one admits it, this is also a major factor. It isn’t necessary, right, but some confidential information about certain horses may leak to the public, affecting the odds.

How to Trade?

First, you need a mainstream race or what you will term a major race. If you want to profit, you need decent movements in those markets, and you will only find it in volatile markets. Major mainstream races are the more volatile ones.

Traders use two approaches for this strategy; either they scalp or hold trades longer. It depends on which one suits your personality.

Let’s consider the two:

Scalping Pre-Race

You should suspect that it involves entering and exiting the market very quickly from the name.

When scalping pre-race, you aim at catching only a few ticks. Scalpers typically exit the market after getting three to five ticks.

To scalp pre-race, you need some research to know the major races and the favoured horses. Those two things are crucial if you want enough market movement to make you profit. 

Also, this strategy is best applied when the race is very close; you can do it ten to twenty minutes before the off.

The highly favoured horse is most likely to generate just enough movement to give you profits.

You could also monitor news outlets for injured horses and lay them. The goal is to find something that will give you a few ticks. 

Swinging Pre-race

Swinging in this scenario does not mean holding your positions for days. Once the race starts, it is no longer a pre-race strategy.

Here you are willing to hold the trade a little longer than scalping.

The catch is that you won’t open your positions close to the race. Rather than trading ten minutes to the off, you can do 30 minutes before the race or even more. 

Your goal this time is to make a tangible amount with better tick movement.

You can only see such volatility when you select the right games.

Whatever profit you make, you need to close out the trade before the game commences.

Example

Learning a strategy and applying it are two different things, so let’s consider a scenario thirty minutes before a race. Let’s assume there is an obvious favourite, and most traders will certainly back the horse during the race. 

Assume you are stalking news outlets and start seeing rumours of the favourite horse potentially with an injury. Such rumours and news significantly affect price movement.

You don’t need to wait until the race starts to capitalise on the news. You can get into a position with pre-race trading as soon as possible.

As more news outlets cover the news, there would be more price movement, and you would be in good profits. Before the race starts, you close your position. So whether the horse wins or loses, you made your profits.

Don’t force pre-race trades

Pre-race trades are not your typical everyday trade. You need to be highly selective when you want to use this strategy.

If you don’t see things align in your favour, don’t force the trade. Forcing trades could get you stuck in non-volatile markets and potentially big losses. Always wait for the right one.

Start small and compound

The best advice is to start by scalping a few ticks before you go bigger in holding trades. Few ticks may not look much to you, but you will appreciate the profits with compounding. In trading, think long-term and compound your profit.

Do proper research

Do proper research before opting for a pre-race trade. You need to visit news outlets, check sentiments and other necessary information. Not only will it give you a higher winning probability, but you will also get better confidence. It is also important that you get your news from verified sources. Some websites specifically publish false news to trap the masses.

Keep Your Emotions in Check

Pre-race horse trading volatility is marginally different from in-play trading; you may experience a slow start.

The markets may not move immediately as you expect. Since the volatility is lower, don’t expect fast movements.

This is where you need to keep your emotions in check; many panics and get frustrated before they are in profit.

Some even exit the trades before making any profits; it is not good for you in the long run.

Have a Risk Percentage

Profitable traders have everything properly planned out, including their risk per trade.

Always have a set risk percentage per trade, even in pre-race strategy.

Since volatility is lower, you could set a lower risk than the one you use for in-play trading.

Risk to Reward is King

Irrespective of your strategy and technique, the risk to reward is king. When calculating your profits, always factor in risk to reward.

Place the strategy on a ten games sample with a random distribution of wins and losses and see if it is truly profitable.

You will be less worried about losses if you have the right risk to reward ratio.