How FINOO was born: The logic and reason behind FINOO

First, the good news.

My FINOO reserach is complete and it may now be a matter of 8-10 days for back-testing of some results to be doubly sure of what works for FINOO and what doesn't. So be ready to welcome FINOO in its new, and hopefully, a better avatar.

Incidentally, on August 29, last year, I had written a mail to one of my students who was planning to come to Bombay to meet me, in which, for the first time, I discussed the reason and logic behind the FINOO (Follow-In-Next-Outing-Only) method.

One year and one public trial later, I am putting that mail on the home page today so that those among you, who may be wondering about the genesis of FINOO because they discovered this blog late, will get a fair idea as to how it all started, and decide for themselves if FINOO has lived up to the promise a year down the line.

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Dear XX,

You may try to contact me but I am likely to be in Pune on that day. Family function. However, nothing certain yet. So do phone me to find out.

Now about the FINOO (Follow-In-Next-Outing-Only) list which I would like you to look at as a NEW method of follow horses, unlike the traditional one.

The traditional method of follow horses was generally prepared before a race season began based on the performance of the earlier season. No current handicapping was then done, no files maintained. It's like what they call a paper & pencil method.

You just had a list of horses to follow through the season, and the idea was that you play them over the season (sometimes depending on your view of which distance suits the horse) and try to make profit. Whether this method really earned you profits or not was not really considered important—but the fact that you saved a lot of handicapping time, did not engage in too much betting action (because you would play only the list horses, no other horse) and did not put yourself under the stress of decision making (with the follow horses list, your decisions are made in advance) were considered great benefits.

Today, in the age of computers and algorithms, and speed numbers and pace ratings, and vet reports and change of equipments, the modern student of handicapping has ceased to enjoy racing the way his father and grandfather did.

Look at us! With the stress of monitoring track work, attending races, then watching the race video a number of times, preparing our files, putting in dynamic handicapping formulae, working out track variants, monitoring entries, handicaps and acceptances to have a peek into the trainer's mind (I sometimes wonder if most of them have one), checking track work to find out if it conforms to a trainer's "jobbing pattern" (whatever that means), and then after declarations—chew nails and pick hairs to make up your mind if there is a bet lurking in there somewhere and if it's going to make me some money. Nowadays, only thinking about it gives me the jitters, and when I stand in front of the mirror, I sometimes feel I am staring at the greatest idiot in the world.

What's the point in investing so much time to make so little money, and sometimes, NOT even make that?

With such thoughts crowding my mind all the time, I wondered if DH* & its insights can be harnessed to make life easier and still keep alive the possibility of making profits from this game. It was a long process, and there were many hurdles, it took nearly 4 months but finally I think I have managed it with the FINOO (Follow In Next Outing Only) list.

Why only next outing? Simple. DH is great at "estimating" current form with great accuracy. That's been our strongest point, so ideally we must bank on what sets us apart from the crowd, shouldn't we?

At the moment the results are absolutely great, without any "qualifier rule" for PLACE** betting. You will be shocked but 80+% strike rate seems to be the norm. However, the WIN profitability will NOT work unless we apply some qualifier rules as a filter. I am working on that right now. When that happens I will go for a public trial.

I think I am going to make Dynamic handicappers' life very easy, keep your fingers crossed:).

Prakash

*DH - Dynamic Handicapping

**Readers from the U.S. please note that PLACE in India means exactly what you call SHOW over there.

Some queries these...

Image credit: www.junkscience.com

Since the day I put "Got A Question? Ask me!" link on this blog, I have received nearly 30 queries so far. They range from FINOO to general handicapping to money management to track work to trainer patterns, etc.

I will, from time to time, publish some queries of general nature (and the responses I sent to them), with the hope that there could be more out there among my visitors who may have toyed with the idea of asking similar questions, but did not.

Sample these queries:

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Lakshmikanth asked: "How do u select the horse i have lost about 20000 in last 2 days followong the bets.can i subscribe for this ???i am very new to horse racing"

If you are betting WITHOUT a plan, you are asking to be ruined. I advise you to please STOP and truthfully take a personal test asking these questions:

1. Have you learnt about horses or handicapping?

2. Have you kept record of all your bets? If YES, then have you analyzed that record to see what are your strong and weak points?

3. Are you using surplus, stress-free betting capital for this purpose, and if YES, then are you always betting LESS than 5% of your capital on any single bet?

4. Do you have patience NOT to bet if you don't like a single horse on a day's card?

If the answer to even a single question above is NO, then my advice is you must quit racing immediately. It is not for you.

Hope you will pay heed to my suggestion.

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AKV asked: "is it required that a finoo horse should also possess the good DYNAMIC rating for sucess ? also answers in finoo blog is open for other viewers ? please reply .thank you."

The FINOO horse has to have a good DyR (Dynamic Rating), otherwise it will, in the first place, not get onto the watch list. This qualifying DyR may come from a race or a track workout, after which, the horse gets onto what we call "WATCH list." The horse is then monitored for the next 1 or 2 races to check if it runs in one of the three FINOO patterns identified by us. If it does not run, it is taken off the WATCH list. If it does, it gets onto the FINOO list and becomes a follow horse next time out. If the conditions of the race (trip distance, class level, jockey choice, etc) satisfy the qualifier rules, then the horse qualifies as a FINOO bet.

The FINOO blog at present is active only to collect queries from curious FINOO followers, so it is open to anyone who wishes to contact us through the form on its homepage, like you did.

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Nasreen asked: "I ve heard abt ur choices ,and tips ,Im yet to try. my selection is usually 2,3 bets at the longest odds,as on 6th ,I selected Sunny baba .And I played Van de star. can u do the same?"

No. I cannot do the same.

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Debashish asked: I have heard you run a private advisory for your special clients. I am prepared to pay 5000 a day to become a member. Pl phone 98********.

I don't do the kind of consultancy where a client pays money from his pocket, or on a daily basis.

Members of my small group are more than my clients; some of them have been with me for years through good and bad times, and I only deal with people who have implicit faith in me and my research.

My clients pay me a percentage ONLY if they are NET winners, not otherwise; meaning they pay me ONLY from their NET profits.

At present, I do not know whether your profile qualifies you to join my group, unless I know more about you. You may send your details to Finoo.Club@gmail.com stating name, address, occupation, educational qualifications, racing profie (professional, horse owner, club member or just a punter), and someone from my side will take a call on that.

In the meanwhile, the only sincere advice I can give you is this: The best way is to learn handicapping horses yourself, then test your skills on paper, then try it with small capital before you can invest serious money in racing. All other ways will generally lead to a financial ruin.

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Anthony asked: "Chief due to your passion for horse racing and honesty,your formila for FINOO must be very strong.However will it work for small centres like Kolkata where I am based..Also if there is any method you wanna share you can mail it to me if you dont mind. Lastly thanks for the tips I cant really explain how it helped me regain losses.Appreciate it"

Thank you for your kind words. Only after this public trial gets over, one can realistically assess if FINOO formula is profitable or not. Technically, it should work for any center in the world (at least, on the Turf tracks for sure, dirt tracks may have a different quality). We are adding all tracks except Delhi, Ooty & Madras to the FINOO experiment, so you should be able to get what you need. I am happy if the FINOO tips have helped you, but the current 6 losers in a row have unsettled many people's capital. Wishing you the best.

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Jawnsin asked: "What is that one should be studying whilst following a track work?"

Basically I use track work only to assure myself that the horse is NOT confined to stables! Beyond that, in most cases, I disregard the track work details. The only exception is the last 600m. I do check if there are some sensational times from 34 (very, very rare), 35 or 36 (quite rare) or 37sec (minimum acceptable to NOTE a horse ONLY on the strength of track work), but that's for my usual Dynamic Handicapping process, NOT for FINOO. For FINOO I only check if the horse has had at least one track in the last 3 weeks. But if the FINOO qualifier run was within 21 days, I don't really care about even if there is not a single spurt.

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Exploiting FINOO success by managing money

Image credit: ptboilerroom.com

The last week turned out to be a dream week for FINOO. Mainly because the three winners--Royal Treasure, Ponyta & La Joie De Vie--all paid great dividends. Ponyta paid a handsome 16 to 1 on the Bangalore Tote, indicating that perhaps not only the connections but some of the regular FINOO backers also shied away due to such high odds.

FINOO, as the file uploaded on this blog shows, is now 49 bets old in 14 weeks, with a strike rate of 49% and flat-bet profits of 77.6%. What would be FINOO score if, instead of flat-betting the same amount on all 49 bets, we had resorted to some kind of money management?

My present research about money management involves regularly testing four methods. Let's call them MM1, MM2, MM3 & MM4.

Click here to know what they would have done to your betting pattern if you started with TOTAL bankroll of Rs 1000 only, from which you began risking only 5% on the first bet for MM1 & MM2. You will also be shocked that MM3 & MM4 actually ask you to "lay against" your choices at the odds of 40 paise, but manage your bankroll so brilliantly that they far outperform the first two methods as we progress, and create greater wealth.

But then there is a matter of psychological comfort zone for an individual. Are you comfortable with betting 20% or 26% of your capital on one single bet? If not, they are NOT for you. Who wants to make money and lose health?

But it's not a bad idea at all to study them just for academic pleasure. So go ahead and enjoy.

FINOO - Phase II

Graphic credit: www.hmi.de

It has been one hectic week of looking back.

I looked back on the genesis of FINOO (Follow-In-Next-Outing-Only), its development and application, and its phase of the public trial. It was a hard look. It HAD to be.

I had to lose myself so much in a jungle of data accumulated over the last 14 months, from 3 centers, which filled nearly 110,000 rows with 22 columns.

Trying to again sift from it some coherent method that would logically choose itself without compromising with FINOO's greatest asset and strength--the high strike rate--reminded me of one of the earliest phrases our English teachers taught us in school--looking for a needle in the haystack!

I would have welcomed some help, espcially from Curious No End who has been 'at it' for the last couple of months, but unfortunately he said he was 'busy as hell' this week. The other ever-willing soul, CP, who's so enamoured by FINOO that he always keeps on saying he would take premature retirement if FINOO lives up to its promise (and I suspect and fear he means it!), is abroad. So I had to go all the way alone.

Not that I am complaining. Only, I feel sorry for not putting up any articles this week on the blog. A lot of things were happening, especially at Bangalore. And no man whose concern is racing can pass up those events without a comment. First there was news about D'Artagnan's primary sample testing positive. Then yesterday, came in the news that the BTC cannot (even if it wishes to) organise a new year party at its premises. I mean, technically they can, but packing off at the stroke of midnight when everyone else in the world will be lustily cheering the first minute of the new year 2010, does not look like a bright idea, does it?

Whatever the picture and reasons projected on the surface, the underlying reality is that the fallout (of BTC being forced to shift from the present premises) is the result of a fight between greedy politicians cloaked in altruistic garb on one side and a confused and short-sighted BTC committee on the other. The sad part is, whenver a wolf knocks at a lamb's door, it is always the wolf that wins--unless the Lion steps in and offers protection to the lamb. The only two agencies that can act as Lion in this case are the Bangalore 'junta' and the 'Bangalore High Court'.

From Sharan Kumar's article on his blog, I gather that the junta doesn't care about racing one way or the other, so maybe only the judiciary can help. But the question is, does BTC have the kind of guts to drag the state government to the court?

Unlikely, if you ask me. So finally it may be left for some spirited PIL (Public Interest Litigation) to rein in a chief minister who is acting more like a King with Divine sanction than as an elected representative whose term comes with an expiry date.

Coming back to revisiting the FINOO system, including a re-think of the qualifier rules, I have come to these decisions:

1) The present profitable run of FINOO so far (with old qualifier rules) will be "frozen" here and now, and only preserved for record-keeping's sake as it will not be right to mix up new results (based on different qualifier rules) with them.

2) The new qualifier rules, unfortunately, are too complicated and will have a lot of nuances (too much more work for us). So, at present, they will NOT be discussed on this blog. Because there could be too much useless discussion on them and the main theme, profitability or loss of FINOO, might take a back seat in all that 'galaata' (galaata' is a Kannada word I learnt from Sharan Kumar's daughter Appu, and I believe it means 'a lot of unproductive and useless noise'--I just love this word!).

3) So there will only be TIPS, posted as early as possible after the declarations, WITHOUT ANY ACCESS TO HINT OF ODDS (so that I hope there is no galaata either about tipping 20 paise win or place odds horses).

4) For the first time, FINOO will try to be extra bold and take up an experiment of a unique nature by tipping horses for FOUR separate categories:

i) Win only,

ii) Place only,

iii) Win & Place,

and iv) SHP & Place.

5) Results will be monitored (based on BTC tote odds) for ALL the FOUR categories so that along with our readers, even we will discover if there turns out to be any particular type of bet that is more successful than the other types.

I hope this clears all confusion as to how FINOO is going to look in Phase II starting from tomorrow, Saturday, June 20.

We seek your best wishes for this project.

Prakash Gosavi

Saturday (June 13) races

Einstein (right) from an old file photo was the only saving grace for FINOO just because it was withdrawn. FINOO bets bit the dust one after another in what was the worst day since this blog began. [Pic: RacingPulse.In]

FINOO list horses for Bangalore, Saturday card (June 13):

There are four FINOO list horses on the Saturday card.

They are Man United (4-2), Einstein (6-1), Classic Charge (7-5) and Testarosa (8-4).

Man United (4-2)

a) Running at the same, similar or lower level (From class III, 4y to class IV, 4y)

b) Running within + or -200m of the last trip (from 1400 to 1200m today)

c) Ridden by same, similar or better jockey (From Asbar to Suraj Narredu)

Satisfies All 3 conditions.

A WIN bet.

Einstein (6-1)

a) Running at the same level (Class I)

b) Running within + or -200m of the last trip (from 1200 to 1400m today)

c) Ridden by same, similar or better jockey (From JH Christopher to KPG Appu)

Satisfies All 3 conditions.

A WIN bet.

Classic Charge (7-5)

a) Running at the same or similar level (Fluently won in Terms, maiden, 3y race to earn a rating of 53, hence running in commensurate class III)

b) Running within + or -200m of the last trip (from 1100 to 1200m today)

c) Ridden by same, similar or better jockey (From Suraj Narredu to Malesh)

Satisfies All 3 conditions.

A WIN bet.

Testarosa (8-4) (late Sheza Star)

a) Running at the same, similar or lower level (from Class IV to Class IV, 4y)

b) Running within + or -200m of the last trip (from 1100 to 1200m today)

c) Ridden by same,similar or better jockey (Suraj Narredu)

Satisfies All 3 conditions.

A WIN bet.

Good luck.

The Mathematics of LUCK

This exchange of messages, which you will read below, took place between me and one Mr Aswin Patel (USA) two days ago on Mr Rajgopal Nair’s blog. Mr Patel had earlier written that a bookmaker once offered to pay him Rs 5 lakh for Rs 10,000 if he could nominate 10 half-money horses IN_A-ROW (win or place did not matter), or Rs 1 crore for Rs 10,000 if he could nominate 10 even-money horses, again, IN-A-ROW.

When Mr Aswin Patel visited my blog on Saturday and saw that there were 11 successful place bets IN-A-ROW, he wrote to me:
Mr Gosavi,
I noticed that you were successful in giving 11 winners in place, in a stretch, I do not know if they were strictly place bets or e/w bets and do not know if the Payouts were more than 1/2 money or Rs 15 for place which is one factor necessary to be correct.
If they were place bets KUDOS to you.
Aswin Patel

My reply was:
Dear Mr Ashwin Patel,
My all 19 bets over the last 13 race days were tipped as WIN bets, but since this is a public trial, I am also keeping track of the PLACE dividends.
Since you have asked this question, just for academic interest, if one had put a Rs10,000 roll on the last 11 successful PLACE bets, as per the BTC dividends, he would have got a profit of Rs 4,84,160 which is very close to the Rs 5 lakh figure that you talked about to begin with. And as you know, having consecutive successes has much more to do with luck than to any handicapping skill. Just plain lucky is how I feel when I look at those 11 consecutive successes.
Prakash Gosavi

As I went to bed that night, I wondered if I was really ‘lucky’ as I wrote to Mr Patel, or whether 10 successful place bets IN-A-ROW should be considered ‘normal’ for the FINOO (Follow-In-Next-Outing-Only) method.

Suddenly, I remembered my old research notebooks. These are four 200-page, ledger-size notebooks which I used between 1990 & 1998 when I was in brilliant (pardon the self-praise) mathematical form, and invented formulas (I was then known by my pen name Speculus) for predicting the ‘Number of strides’, developed mathematical framework for ‘stride angle and its connection with form’, the effect of turn on speed of horses, and also the formula for accurate timing up to 1/100th of a second which, incidentally, is now used the world over by hundreds of pace handicappers as a useful tool. During the same period (with nothing better to do in spare time except getting frustrated at the fact that all this wonderful research was only turning out to be academic and was not exactly adding to my bottom line), I had also toyed with devising a formula to predict the biggest winning streak or losing run for a horse race player who knew his average strike rate over the long run. Was it still there in those pages? I would check first thing the next morning, I thought and went to sleep.

That formula was a personal milestone for me in my research about money management, a subject I first learnt from one of the finest souls--Dick Mitchell.

Late Dick Mitchell, noted American handicapper/writer who introduced me to the subject of money management, had suggested using the random number function (now easily available on even scientific calculators) to simulate a series of wins and losses to predict the longest losing streak for a gambler. The random number function generates a random number between 0 & 1 (say .38 or .07 or .86) every time you hit the key.

Dick’s concept was quite scientific, but extremely tedious.

He proposed that if you were, say, a 35% handicapper (that means your long term historic record shows that, on the average, you win 35 of the 100 races you bet), then there is a way to manage your money so that your worst losing run does not take you beyond your comfort zone. All you have to do is generate a series of 100 (or 500 or 1000, whatever you think as number of bets you would make over the long term—it may be six months or a year or 3 years, or whatever) random numbers by using the random number function (denoted generally as Ran# on most calculators), and catalogue all the results. Then treat any figure that is .35 or less as your WIN situation and all others (greater than .35) as your LOSS situations, and re-write the whole matrix with W or L replacing the figures. Now, count the maximum number of L’s that are in sequence, that’s your longest losing run in that sample. Then repeat the whole process for another series and again record the maximum number of consecutive L’s. After doing this process a number of times, you can arrive at a reasonable ‘average’ value of L (your possible maximum number of losses IN-A-ROW). Once you arrived at this number, then the rest of the process was fairly simple.

If you define your comfort zone as NOT losing more than two-thirds (66%) of your betting capital, and for your 35% strike rate if you got the figure of L=11 (meaning you expected to lose maximum 11 bets in a row in worst-case scenario), then just divide 66% by 11 and the answer, 6%, tells you that you should NEVER bet more than 6% of your capital on ANY bet if you wish to always stay within your comfort zone.

Dick’s logic was superb, his method scientific, but it was extremely tedious and boring. How nice it would be if you could just put your winning (or losing) percentage in a formula, and it would give you your longest losing run (or longest winning streak), I thought.

Fortunately, I came across a website on probability by Peter Webb, a self-proclaimed speculator/investor himself. He had listed an approximate, but excellent, formula for the longest winning/losing run on the site. However, a check revealed that the formula broke down for higher strike rate and lower number of trials (bets), giving absurd answers like 14 straight wins from 10 bets (for the strike rate of 85%), so I had to start thinking afresh.

By the grace of God, I was soon able to introduce a correction to Peter Webb’s formula (to strive for the accurate formula was beyond my math training as well as intellectual ability, I must admit) that would give a near-accurate answer to the desired question of the longest winning streak or losing run.

Was that formula still sitting somewhere in my old notebooks? I wondered.

The first thing I did on Sunday morning was to take out the notebooks and scan them. And sure enough, there it was, this useful little mathematical tool staring at me from one of the pages. To make understanding simpler, just put this formula in an excel sheet and let it work out the answer for you:

T = ROUND(EXP((N*(-LN(P)))),0)+(N-1)

Where T is the number of trials (or in our case, BETS to be made),
N = longest winning streak or losing run
P = percentage (win or loss) expressed as a probability between 0 & 1
while ROUND and EXP are MicroSoft Excel functions.

You can try it yourself by inputting excel cell addresses in place of T, N & P values to generate answer to your queries about what can be your longest winning streak or losing run at the current level of handicapping skill, and base your decisions, especially related to management of betting capital, on it.

Now, let me come back to the problem I started with. Was it really a matter of luck (as I wrote to Aswin Patel) to have 11 successes in a row? Or should it be considered “normal” for a system that was expected to give 80+% results for place?

Here is the table generated by the formula that lists, for various success %, the number of bets to be made to have 11 straight successes in a row. Have a look at it:

The table tells you at a glance that for a method with 80% strike rate one needs only 22 bets to have a winning run of 11 successes in a row. So when the current percentage is even better than 80%, it is no surprise FINOO has had 11 successes in a row in just 19 bets. It is not a matter of luck at all, it is a simple matter of the law of probability.

Do make a note of the 50% strike rate case (which, in racing, is considered quite a decent %) which says that 11 straight successes will come only ONCE in 2,058 bets!

Don’t believe it? Get a friend for company and start flipping a coin (probability of heads or tails is both 50%) and record how many times you get either 11 straight heads or tails in 2,058 tosses. I am sure you will get convinced.

Another interesting thing. Look at the .35 figure in the table which is generally the public’s win percentage. For the public choices or favourites to win 11 races in a row you need over a hundred thousand races to be run. It means that if you see that happening more often than the laws of probability demand, be sure the races are heavily rigged in favour of the fancied horses, or most of the horses in most of the races are simply non-jobbers, thus tilting the balance in favour of fancied horses whose strike rate is defying the mathematical probability.

When you see straight 21 races at Ooty racecourse being won by the first favourites (I did, in 2003), you know a highly improbable event has become reality because of some extraneous forces and their machinations.

The point I want to make is in horse racing exceptional success or exceptional failure must always be viewed in terms of the strike rate and strike rate alone. FINOO’s stupendous success in PLACE is in keeping with its present strike rate, as is clear by the formula given above.

Post script: Mr Rajgopal Nair, famous on the web with his pen name Destiny Calling, on whose blog I exchanged messages with Mr Aswin Patel, has announced on his blog that he would try to tip 10 successful bets in both the WIN and PLACE categories BEFORE the end of this Bangalore summer season 2009!

How probable is that?

Let us run the formula and generate a table for 10 straight successes like we did for 11. Here is how it looks:

Assuming Mr Nair tips 2 to 3 bets a day for the remaining 18 days of the season, that’s about 40 to 50 bets until the end of season before which he must accomplish the task. The table shows that he can expect to do it in 44 bets provided he strikes a success rate close to 70%.

He will need to hit exceptional form to have that kind of rate especially for the WIN category. But it’s not impossible. Let’s hope and pray he does it. The whole secret and winning strategy required for his success is given by the formula as displayed by the figures in the highlighted row: He must strike, maintain and sustain a success rate of 70%, and he must tip at least 44 bets to realistically hope to achieve the target of 10-in-a-row. If he can do it, then it will not be a matter of luck at all—it will be purely a matter probability (and of course his handicapping skill which is reflected in the figure of 70%).

But suppose he accomplishes 10 straight winning bets with only 50% strike rate and only 30 bets (this means 15 successes, 10 of which must be in a row) then, although the feat in itself will be an extraordinary case of brilliant handicapping skill, having 10 of the 15 winners IN A ROW will have to be treated as a matter of exceptional luck.

After all, luck also has its own mathematics, and not much different from the laws of probability, as the formula above explains.

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This has reference to Prasad's query (in the comments section) about my money management reserach. I have always believed stock market speculators can learn a thing or two from shrewd horse race gamblers. And money management is one area I think we understand far better than the so-called white or blue collar investors from the world of finance--MBA's included! Prasad, a banker, has asked something to which I am not just replying in hollow words, but actually putting up a demo of the power of how a sound money management fromula, based on what I have learnt from horse race betting and its pitfalls, can give most rewarding results even in a market that crashed like a plane hit by missile.

Look at the shares, sheets, prices and buy/sell calls suggested by the formula, and just see how my formula delivers incredibly better results than the best money managers have perofrmed (?) during the three most stormy years between 2006 & 2008 (34 months between January 2006 & November 2008).

Dear Prasad (or anyone else from the stock market who reads this blog), please do not hesitate to contact me in case you have any queries, but remember my advice will come with a price tag, as I have absolutely no sympathy for stock market speculators who look upon us, horse racing gamblers, most superciliously with the least of reason.

Do focus on how the formula always manages to buy cheaper and sell higher to accumulate profits without letting the human ignorance, need, greed or fear come in the way of decision making. You don't even have to "think" if you should buy or sell at a particular price, the formula itself will tell you if you should buy or sell or hold (wait).

Sample these demo results.

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