Has anyone ever tried using the 'law of averages' to turn a profit?

a.k.a martingale betting

"Let's say... watching live Roulette and waiting for a long streak of reds/blacks then bet on the opposite of that result?"

Rather than talking about "the law of averages" I suggest instead you read up on the "gambler's fallacy".

Hello there CrowsEye.

To actually answer your question, i vaguely recall reading on the forum that the Magician did something along these lines.

It was an EPL season and there had been an unusually low number of draws to that point in the season and he decided to back the draw on games for the remainder of the season. I think he did it for fun rather than a serious strategy but he made a profit.

That's about as much as i know, maybe he or somebody who knows a bit more could clarify or confirm if I have got this all completely wrong.

I do think things are cyclical in betting and I think if you can pinpoint when something is on the turn then there is money to be made.

Roulette was a bad example, I admit.

Thanks U.A., that's sort of what I was looking for.

Still martingale though - but, I suppose, getting 5/2-ish on the draw (as oppose to the evens shot on roulette) makes it more attractive. There was a thread (but can't remember the poster's name!) about following/backing the big four in the Premier League (couple of years back - Man U, Arsenal,L'pool, Chelsea) to draw. Did well as I remember. Again a bit martingale-ish but the odds for the draw involving those four (especially at home) were high. And surprising the amount og times they drew.

Level headed gambling doesn't make for a fun thread, especially in General Betting!

Level headed gambling doesn't make for a fun thread, especially in General Betting!

Fair point !

IVE USED THE LAW OF AVERAGES IN SYSTEMS AND THE LAW OF AVERAGES BREAKS THE LAWS WHEN I USE IT AND I LOOSE

DONT TALK TO ME ABOUT THE LAW OF AVERAGES AS ITS A LAW UNTO ITS SELF AND IT  ONLY AVERAGES WHEN IT WANTS TO ,AND NOT WHEN YOU WANT IT TO

The basic trouble with using the law of averages is that things don't revert to the mean in a straight line, nor necessarily in a short period of time.
Resultantly you get killed by the buy/sell spread and commission.
Also what historical set of results do you base your future betting on ?
You can always find a set of lead up data to support variances either side of the norm.
Which do you chose and why ?

I suspect Magician starting backing draws not because there had been few draws but because the few draws had resulted in the prices being pushed out too high, hence a little bit of value was on offer.

Let's say... watching live Roulette and waiting for a long streak of reds/blacks then bet on the opposite of that result? Let's say at the very least a streak of 8+ results.

That will result in losing money much more slowly, so not a bad idea, but still no chance of winning long term.

Good point as usual Trevh.
Btw I didn't respond to you on another thread on the climate change thing, as I know better than to go there with you.

Lol Frog :) I hate coming across as possibly obsessed on the subject but I'll have to live with that. My problem is I can't read opinions based on nonsense that doesn't make sense and not bother to comment.

Bit of a bummer Trevh having that sort of disease on here methinks.

Trevh Date Joined: 21 Jul 06
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I suspect Magician starting backing draws not because there had been few draws but because the few draws had resulted in the prices being pushed out too high, hence a little bit of value was on offer.

I would doubt very much if that was the case, prices being pushed out too high on back
of a series of results. IMO Magician just hit an unusual sequence by chance, if it was 
only that easy !

Magician, if i recall correctly, backed to level stakes on the draws.

Has anyone ever tried using the 'law of averages' to turn a profit?

well I am now !

Ive checked it through and yes it does work and no Im not going to talk about it anymore cos you all think Im daft.

http://community.betfair.com/general_betting/go/thread/view/94082/29164201/o...

Casinos may as well close their doors now.

if that remark is refering to me then my thang aint got nowt to do with fixed odds betting

if that remark was not for me than try my thang cos it works 

The op's opening question relates to what statisticians call "the gambler's fallacy". This is the idea that after a sequence of 10 heads on a coin toss a tails result becomes more likely because overall we expect to see an equal number of heads and tails. They have good reason to call it the Gambler's fallacy; gamblers love it and it's false. It's false because each coin toss is independent, previous tosses have no effect on future ones, so the length of a sequence has no impact on the probability of an individual result. So far so obvious.

Further down the thread someone else alludes to the idea of "mean reversion" although I think what he's really talking about is "regression to the mean," which is slightly different. Regression to the mean is the idea that if a variable has an extreme value then the next value in the sequence is likely to be less extreme. For example if a footballer scores 10 goals in one game, he's likely to score less than 10 in the next. Again, pretty obvious.

Unfortunately however confusion does occur between these two ideas because at first glance the phenomena of regression to the mean might be seen to confirm the Gambler's fallacy (which would make it the Gambler's truth). Take the coin toss example: A let's say that you toss a coin 100 times and come up with 95 heads, 5 tails, that's a fairly extreme result, so some would say that regression to the mean suggests that a less extreme result is likely to follow, and since overall we expect to average 50/50 heads and tails, it's more probable that next result will be tails- right? Wrong. You might be correct in saying that 95/100 heads is unusual, but regression to the mean doesn't suggest that the next individual result will be a tail, it just suggests that the next 100 results are likely to show a spread of heads and tails that's closer to the average (50/50) than the extreme result (95/5), which is much more boring, but true.

so what does 'mean reversion' mean then please ?

Mean reversion is a term used in finance to describe how returns are likely to be stable over a long period even though they fluctuate in the short term. It's a more dodgy and less well formed concept than regression to the mean (aka mean regression) which is a statistics term. The two are often interchanged incorrectly.

I'm inclined to think the magician was making good use of the fact that current prices were skewed due to the statistically unlikely run rather than basing a strategy around the results correcting themselves.

I agree. The former is sensible, the latter is not.

I said Roulette was a bad example.

Actually roulette is quite a good example because it's simple. It's always worth reducing a problem to it's simplest formation. With something more complex (football for example) there's always the temptation to come up with reasons why what you want to be true must be true, but when we reduce the outcome to one of true chance we can see the mechanism very clearly. In this case it's plain to see that the Gambler's Fallacy applies as readily to Football as it does to roulette.

Football isn't random in the true sense, but because on the whole the prices are a true indicator of the probabilities of the outcomes deviations in actual outcomes relative to expected outcomes are effectively random (in that they cannot be predicted) and a truly random model (like roulette) is a good way of understanding them.

Well no it's a bad example because you cannot win at Roulette long term.

'Mean regression' it is then - cheers Mr Robot

'Mean regression' it is then - cheers Mr Robot

stoopid site - I only clicked the reply button once.

YES BUT WHATS ALL THIS TO DO WITH THE LAW OF AVERAGES ,

I WAS ALWAYS BELOW AVERAGE AT SCHOOL ,AND NEVER WENT INTO THE ABOVE AVERAGE SECTOR

EVERY ONE TALKS ABOUT TOSSING COINS UP ON HERE WHEN THEY TALK ABOUT AVERAGES ,WHAT ABOUT IF YOUR POOR

WHEN I WAS A CHILD IF I STARTED TOSSING COINS UP IN THE AIR ,SOMEONE WOULD KNOCK ME OVER AND PINCH THEM

ALOT OF YOU DONT REALISE SOME CHILDREN ON COUNCIL ESTATES NEVER TOUCH REAL MONEY AT SCHOOL AS THEY ONLY HAVE VOUCHERS FOR FREE BUS FARES AND DINNERS

ALOT OF YOU DONT REALISE SOME CHILDREN ON COUNCIL ESTATES NEVER TOUCH REAL MONEY AT SCHOOL AS THEY ONLY HAVE VOUCHERS FOR FREE BUS FARES AND DINNERS

I WASNT ALLOWED TO TALK ABOUT AVERAGES IN MY HOUSE WITH MY EX MISSUS AS IF I STARTED TOSSING COINS UP WITH THEM TALKING ABOUT WINNING AND LOOSING MY EX WIFE WOULD HAVE BEAT ME UP TALKING ABOUT GAMBLING TO THEM AFTER TE LIFE IVE LED HER

I WASNT EVEN ALLOWED TO PLAY WITH THE CHILDRENS PLASTIC MONEY OUT OF THEIR TOY POST OFFICE ,AS SHE TOLD THEM TO WATCH ALL THEIR MONEY WHEN I WAS ABOUT

Are you talking to yourself again, Do wah?

ITS ALL RIGHT TALKING ABOUT TOSSING POUND COINS ON HERE ,BUT WHEN IT COMES TO REALITY IN SALFORD HOW DO YOU KNOW YOUR TOSSING A REAL POUND COIN WITH ALL THE FAKES ABOUT IN CIRCULATION

CHATLAME AS TOM JONES SAID MANY A TIME
ITS NOT UNUSUAL

ID RATHER TALK TO MY SELF THEN I ONLY FALL OUT WITH ME ,AND I SOON FORGET WHAT IVE FELL OUT ABOUT

You are talking to a good friend then, I hope.

ID RATHER TYPE TO MYSELF THAN TALK TO MYSELF AS I GET FED UP OF LISTENING TO ME ,NO IM NOT A GOOD FRIENS IM SELFISH AND GREEDY

Maybe we could start a club?

YES IF WE HAVE A CARYOKEE NIGHT  A COUPLE OF NIGHTS A WEEK

AND IF  YOUVE GOT PLENTY OF MONEY

IVE ALLREADY GOT A SIGN FROM MY LAST SHOP ,NO DOGS ALLOWED UNLESS  WITH A BLIND PERSON

IF THE CLUBS OPEN LATE AND YOU WANT ME TO WORK LATE ,I WILL NEED TO TAKE MONEY OUT OF YOUR PETTY CASH FOR A TAXI HOME AS THERES NO BUSES ON OUR COUNCIL ESTATE AFTER 7-30 BECAUSE THE HOODIES KEEP THROWING EGGS AT THE BUS DRIVERS

I want to start a club where we sit separately and talk to ourself.

I TOLD THE COUNCIL THE LATE SHOP HAD A GUN MAN THAT CAME IN AND SHOT SOME ONE DEAD AND THEIR STILL OPEN THE BUS DRIVERS SHOULD BE MADE TO WORK

CHATLAME DO YOU THINK IM GUNNS SIT AND LISTEN TO YOU ALL NIGHT ,WHEN I DONT EVEN LISTEN TO MYSELF ,WHO DO YOU THINK YOU ARE THAT SRINFELLOW PERSON WHO OWNS THEM NIGHTCLUBS

PETER SRINGFELLOW I THINK HIS NAME IS

HES GOT A BIG NOSE AND LONG SPAGGETEE HAIR THATS WRINKLED

I have talked with myselves and I have already started a club.

HES ALSO GOT A YAUGHT WITH YOUNG GIRLS ON IN BIKENIS ,I THINK WITH THE RECESSION THERE GIVEING BIKINI GIRLS AWAY WITH EACH YAUGHT

CHATLAME ,YOU KEEP TALKING TO YOURSELF AND IT WONT BE LONG BEFORE YOU CAN CALL PEOPLE BEHIND YOUR FRONT,INSTEAD OF CALLING THEM BEHIND THEIR BACK

IF YOU GET A DUMMY YOU CAN LEARN VENTRILOKISTM  AT THE SAME TIME AND NO ONE WILL EVEN KNOW,IF THEY SAY YOU KEEP REPEATING YOURSELF SAY YOUVE GOT A STAMMER

IVE GOT TO GO NOW ,ITS BEEN NICE TYPING TO MYSELF GOOD NIGHT ,

Excuse me, but I am busy talking to myself.

IVE NOTICED YOUR SAME AS ME WELL MANNERED GOOD NIGHT