General Betting
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You have to put your hand in (without looking) and pull out a ball. If it's black, you lose your stake. If it's white, you win your stake. you put the ball back after each pick, so there's always a 45/55 ratio.
Nirvana! You have a system that pays 10p in the £ and you're going to be rich. You know there will be losing runs when more black balls than white ones are picked, but being a smart gambler, you also know that a sensible staking plan will see you comfortably through the lean times.
The niggling question that arises, though, is how long might those 'lean times' be? It's easy to envisage a run of 20 picks with more blacks than whites. But how about 100 picks? Supposing you were restricted to one pick a day. Over 365 days in the year, what length of losing/breaking even run could you 'reasonably expect'?
It's purely intuitive, but the average of the guesses could be a useful yardstick to have if you ever find a magic bucket. I'll say 100 days.
Nirvana! You have a system that pays 10p in the £ and you're going to be rich. You know there will be losing runs when more black balls than white ones are picked, but being a smart gambler, you also know that a sensible staking plan will see you comfortably through the lean times.
The niggling question that arises, though, is how long might those 'lean times' be? It's easy to envisage a run of 20 picks with more blacks than whites. But how about 100 picks? Supposing you were restricted to one pick a day. Over 365 days in the year, what length of losing/breaking even run could you 'reasonably expect'?
It's purely intuitive, but the average of the guesses could be a useful yardstick to have if you ever find a magic bucket. I'll say 100 days.
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yea but, yea but, what about the five green betfair balls in the bucket
just guessing, can expect maybe a run of 10 blacks, so you would need to win that back with another 100 picks. Would say 100 would be too small and its higher at something like 150ish. Seems suite high for only 365 picks in total, but thats my guess
Over 100 picks you could reasonably expect a losing run of 6. In 365 it would be around 7.
India lost the toss in the current test match v Aus. This was the 10th consecutive test match coin toss loss for India. This has happened before despite there being fewer than 2000 test matches in the whole of cricket history.
You can work out the probability of being in the red after x amounts of picks but the statistics is quite tricky and I can't find a quick method yet, I'll think about it some more though
heres interesting paper on coin tosses and longest losing runs
http://gato-docs.its.txstate.edu/mathworks/DistributionOfLongestRun.pdf
http://gato-docs.its.txstate.edu/mathworks/DistributionOfLongestRun.pdf
Isn't the answer to do more with expected varaince from the norm rather than the number of consecutive losers.
Now I'm no statistician ( as other threads unfortunately prove) so the following could be very wrong.
The probability of winning is .55.
Expected variance over 1 year ( 365 picks at 1 a day) = .55*(1-.55) * 365= 90.34
Standard deviation= SQRT of variance = SQRT( 90.34) =9.50
Statistical significance kicks in at 2 standard deviations = 19
So assume you are really unlucky and you experience 4 standard
deviations.
Therefore , assume worst case in running could be around (.55*365) -38 wins = 162 wins, and 203 losses.
Therefore you would be losing virtually 115 units at this point after commission of 5%.
So I would say that if you are flat betting 1 unit, you would need a bank larger than 115 units to cover a very worst case scenario.
Feeding time for the statisticians. Over to you.
Now I'm no statistician ( as other threads unfortunately prove) so the following could be very wrong.
The probability of winning is .55.
Expected variance over 1 year ( 365 picks at 1 a day) = .55*(1-.55) * 365= 90.34
Standard deviation= SQRT of variance = SQRT( 90.34) =9.50
Statistical significance kicks in at 2 standard deviations = 19
So assume you are really unlucky and you experience 4 standard
deviations.
Therefore , assume worst case in running could be around (.55*365) -38 wins = 162 wins, and 203 losses.
Therefore you would be losing virtually 115 units at this point after commission of 5%.
So I would say that if you are flat betting 1 unit, you would need a bank larger than 115 units to cover a very worst case scenario.
Feeding time for the statisticians. Over to you.
Totally agree Investor, that's the point I was trying to make
brendan - that link's a great read thx
brendan - that link's a great read thx
Just when you think you've discovered the golden goose Betfair drop another 20 green balls into the mix 
Nowt to do with the question though is it ?
He's not martingaling after all.
Or at least I hope he's not.
He's not martingaling after all.
Or at least I hope he's not.
hope its related to question. The OP gave his answer in days, maybe I got wrong wnd of the stick.
what length of losing/breaking even run could you 'reasonably expect'?
If I am reading it correctly, the paper says longest losing run is likely to be between 6 and 12 blacks.
what length of losing/breaking even run could you 'reasonably expect'?
If I am reading it correctly, the paper says longest losing run is likely to be between 6 and 12 blacks.
You can have a bad losing run that doesn't involve extended consecutive losses.
In fact, it is more likel to happen that way.
So the point of consecutive losses is not the important one here.
Ity is only really important, in fact, if you are stupid enough to be chasing losses.
In fact, it is more likel to happen that way.
So the point of consecutive losses is not the important one here.
Ity is only really important, in fact, if you are stupid enough to be chasing losses.
Why use Kelly, when there is an exact odds calculation involved. The correct odds are 1.818 end of.
There is no pricing edge per se.
This guy is just sayong he can beat the correct odds by clever picking.
Not sure how that could ever happen.
So the whole exercise is pretty hypothetical imo.
There is no pricing edge per se.
This guy is just sayong he can beat the correct odds by clever picking.
Not sure how that could ever happen.
So the whole exercise is pretty hypothetical imo.
If he's making 10% he's not backing at correct odds is he?
(Clue, in the original post he says he's backing at evens)
And Kelly is for when there IS 'an exact odds calculation', indeed it requires it.
[As an aside...]
It always amazes me how many people think 'random' is somehow opposite to 'distributed', as if something can't have specific odds and still be random.
[As an aside...]
It always amazes me how many people think 'random' is somehow opposite to 'distributed', as if something can't have specific odds and still be random.
Lori
You're right I missed that point that he is getting evens ALWAYS on a 1.81 chance.
So it's all a bit hypothetical isn't it ?
You'll never surely get an edge like that consistenly without fail ?
You're right I missed that point that he is getting evens ALWAYS on a 1.81 chance.
So it's all a bit hypothetical isn't it ?
You'll never surely get an edge like that consistenly without fail ?
Plenty of ways to get reasonably close to that FAFH. 10% probably a bit high but 5% is certainly manageable
Lori,
You should only use Kelly if you have a starting bank that you cannot add to at a later stage.
If this opportunity occurred in real life, it would depend on circumstances.
Let's say someone has £5,000 in savings. This person has a disposable income of £2,000 per month.
Betting a fraction of £5,000 (ignoring future income) according to Kelly would be far too conservative, despite that fact that Kelly will adjust to the influx of capital.
You should only use Kelly if you have a starting bank that you cannot add to at a later stage.
If this opportunity occurred in real life, it would depend on circumstances.
Let's say someone has £5,000 in savings. This person has a disposable income of £2,000 per month.
Betting a fraction of £5,000 (ignoring future income) according to Kelly would be far too conservative, despite that fact that Kelly will adjust to the influx of capital.
That seems the first reasonable argument I've heard for overstaking Investor, makes sense.
http://en.wikipedia.org/wiki/Permanent_income_hypothesis
ffs, stupid forum.
...
http://en.wikipedia.org/wiki/Permanent_income_hypothesis
...
http://en.wikipedia.org/wiki/Permanent_income_hypothesis
And as for "banks"; shouldn't you technically use your total wealth, rather than an arbitrary amount you have set aside for gambling (which seems to be how most people on here operate)?
I appreciate there are sound reasons for not doing so, related to personal liquidity (i.e. staking 3% of your house is tricky), market liquidity and also risk aversion. Setting aside a specific gambling bank seems to be an exercise in risk-aversion and also in enforcing discipline.
I appreciate there are sound reasons for not doing so, related to personal liquidity (i.e. staking 3% of your house is tricky), market liquidity and also risk aversion. Setting aside a specific gambling bank seems to be an exercise in risk-aversion and also in enforcing discipline.
Interestingly, I bet a few number of people would go bust, even given such an advantage.
ALL-IN on WHITE!!! BLACK cannot possibly be drawn today!
Interesting thread to me as I do something very similar, only my return is nearer 47/53.
So a real life example for you... approx 1000 picks per month, ups and downs during the month but an average monthly gain of 4% after comm'. Longest run of consecutive losses over 12 months is 11 in a row. Longest run showing an overall loss is one month, but looking deeper into that month shows the loss was due to one awful week which showed a loss of an average months gain.
The hardest part about running such a method is handling all the consecutive losses as obviously there are many runs of 3, 4, 5, 6 in a row, and I know that sounds easy but it can get to you over time, i.e. 3 points forward, 4 points back, 2 points forward, 3 points back, and on and on and on, many days you make nothing for a days work. I've been driven to the brink of giving up a couple of times, but I stick my head back in the stats/results book which gives me inspiration to carry on. On the plus side such a method will never be subject to the premium charge. Ideally you need to have the mind of a bot to stick at it though!
So a real life example for you... approx 1000 picks per month, ups and downs during the month but an average monthly gain of 4% after comm'. Longest run of consecutive losses over 12 months is 11 in a row. Longest run showing an overall loss is one month, but looking deeper into that month shows the loss was due to one awful week which showed a loss of an average months gain.
The hardest part about running such a method is handling all the consecutive losses as obviously there are many runs of 3, 4, 5, 6 in a row, and I know that sounds easy but it can get to you over time, i.e. 3 points forward, 4 points back, 2 points forward, 3 points back, and on and on and on, many days you make nothing for a days work. I've been driven to the brink of giving up a couple of times, but I stick my head back in the stats/results book which gives me inspiration to carry on. On the plus side such a method will never be subject to the premium charge. Ideally you need to have the mind of a bot to stick at it though!
Yes, off the top of my head I think the longest winning run was about 11 or 12 or 13 in a row, and about 19 out of 20. The first 6 months didn't show a losing week amazingly! (some break even weeks but not losing).
Good on you Trevh for at least understanding the swings and roundabouts of your system, and not running at the first sign of a loss.
Essential to have that understanding and attitude, inorder to stand any chance of long term success.
Best of.
Essential to have that understanding and attitude, inorder to stand any chance of long term success.
Best of.
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