One of the main methods of loss retrieval as a layer is the ‘stop at a winner’ system.
When you take a bet on the betting exchanges, it is easy to see yourself as a bookmaker. You’ve set up your virtual stall at a race course or football stadium and you can already see yourself in a sheepskin coat, puffing on a cigar with the mantra ‘you never see a poor bookmaker’ cascading around your head. Then you’re jolted back to reality with a shock as the no hoper you wanted to make £5 on scrambles over the line first and you have to pay out £200 of your hard earned cash!
Whenever you take just one bet on an event, you are not a bookmaker, but a punter backing something to lose. Therefore, loss retrieval systems have got as much chance of succeeding long term as before, ie, precisely no chance.
The ’stop at a winner’ method is designed for horse racing, and involves deciding what your daily target gain will be (for example, £50) then take stakes of that amount on the favourite.
If it loses, you’ve won your target amount for the day and can go down the pub. If it wins, you take the losses, add your target for the day, and 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!
Here's an example
First race you take £50 bet on Plucky Bob the 2.1 favourite in a modest maiden stakes race. Liability £60.50 if he wins. He does!
Next race you take losses so far (£60.50), add £50 target, so take a bet of £110.50 on the 3.5 favourite, Dynamite Diva, in a tasty looking 1 mile nursery. Oh dear, Diva blew her field apart and cost you £276.25! With nerves of steel you take 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 Here We Go Again at odds of 6.8 (liability £1892.25). Guess what, the nag won by a short head after a photo prolonged your agony!
You’re in a fortunate position because you have (sorry 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, Returnofthebeegees, 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, a Group 3 listed 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 would appear to be 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 layers 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!