Value betting and the bad runs

Early season mate. **** happens and its a marathon not a sprint etc. Might be down a bit so far but ave price taken is 28.81% better than SP so don't think I'll be far away for too long. Anyway as i said with the prices I take can be long periods without winners. Remember on year there was a 57 loser run and another year with one winner in 73 but never had a losing year and profits on EPS over 20% over that period and 17% overall to stake over that period.

If I had some runners this year the prices taken would be over 30% better than SP! Anyway would still like to get in the black soon.

i think reducing stakes is what you need as u are uncomfortable with the idea of losing a significant portion of ur bank

I think reducing your stakes is the only way to go - seriously.

Thoughts like this can have some horrible effects on your mental state regarding gambling so, you need a more manageable amount.

RG- Have you not tried to puzzle out why you are on a "bad start" to jumps season betting?

Of course it is getting far more competitive in NH racing in Britain. More and more Irish trainers attacking races.....and also with more trainers, who are considered flat/Aw trainers,  having NH runners, making it harder to assess races etc.

The above factor just makes solving the puzzle more "interesting".....though harder!

Of course bad runs of results will happen with such a complicated sport. As long as your "edge/s" hold up, then hopefully you will turn it around as you have done in the past. GL

lowering stakes or liabilities is not the way to go .

Managing that money

May 3rd, 2011 - Posted by Andrew in Betting Theory
BettingExpert Blog editor. Always taking the alternative route to finding the value.


What's the best way to manage you betting bankroll? How much should you bet on any one bet? Is there a way to optimize value in the betting markets? Andrew takes us through a few of the options and tell us how he determines how much money to put down.

There are two essential characteristics to being a successful long term sports gambler. The first is the ability to recognise value in a given market, and the second is how to manage your investment bankroll. In other words, how to optimise that value and manage risk.

Many gamblers have the ability to recognise value in a particular sports gambling market, whether that be by 'gut' and 'feel' or some statistical model to asses the probability of an outcome. But once value has been identified, how much do you invest in that wager to make the most of that value while protecting your bankroll?

There are many and varied investment strategies that can and have been applied to sports gambling, a number borrowed from the world of finance. Any Google search however will surely confuse the uninitiated, as a carnival of mutant theories and strategies parade down the page. Regardless, by the end of this article it's hoped even the most inexperienced of sports gamblers will be familiar with the most popular money management strategies, will have a better understanding of the fundamentals behind money management and how to increase their chances of joining the small percentage of sports gamblers who make a long-term profit.

A slice of the pie
One strategy is to maintain a constant percentage of your bankroll with each bet. Its assumed that this method will protect any gambler from losing their entire bankroll as the amount to be bet diminishes as your bankroll diminishes. It's a little like Zeno's paradox. The arrow will never reach its target as it halves the distance at each interval. However, while unlikely, even betting 5% of a $1000 bankroll will leave you with a bankroll of less than $200 after 33 consecutive losses.

But more to the point, it assumes equal value for each bet and additionally it expects equal odds being offered for each bet. Would you really want to bet the same percentage on a $1.70 favourite as a $3.50 outsider without any recognition of their respective value? The answer should clearly be no. Further, even if you only bet on $1.70 favourites, is the probability of each $1.70 favourite winning identical in each instance? In other words, does each $1.70 favourite offer the same value? It could be the case, but its unlikely.

The Slice of the Pie strategy while offering a manner of managing your bankroll, fails to recognise value as a key part of a successful management strategy. Essentially, in the end, it will only manage the way you lose your money.

Inside out
This method is similar to the Slice of the Pie, except that it takes the further step of taking into account the odds being offered for a particular bet. So for example, you bet %5 of a $1000 bankroll as a standard unit, $50. If betting on $2 odds, the unit remains $50, but when betting on say a $11 outsider, that unit becomes $5. It can be calculated like this:

eg. ($1000 * 0.05) / (11 -1) = 5

This works fine when betting on outsiders but what if we wish to bet on short priced favourites? If betting 5% of any bankroll, betting on a $1.05 favourite would mean betting your entire bankroll. Now I would never recommend betting on anything remotely close to a $1.05 favourite let alone your entire bankroll, (unless the odds were on the sun rising tomorrow, but even then I would probably spend a nervous night watching the darkened night sky). Regardless, the limitations of the Inside Out strategy should be clear as it still doesn't take into account the recognised value of a particular betting proposition.

K is for Kelly
While it still has its critics, the Kelly Method has stood the test of time since its creation in the mid 1950's. Essentially this method takes into account both the probability of a given team or player winning and the value of the odds offered in relation to that probability - the overlay. This means that it suggests you bet more depending upon how great the overlay, but it also means you have to assess the probability of a given outcome with consistency. (Assessing probability is something we will discuss in future Blog posts).

The overlay is calculated simply as:

Overlay = (probability * odds) - 1

There have been many amendments to the Kelly method over the years, and although the fundamentals remain the same, each edition of the method offers its own insights.

The Full Kelly - While a proven method, the Full Kelly can make a wild ride of your betting experience and can suggest risky amounts be bet. It can easily recommend a bet of even %50 of your bankroll, which can reduce your bankroll to merely nothing in short time. On the other hand, a winning streak can send your banroll into orbit

It is calculated as:

Percentage of bankroll to bet = overlay / (odds - 1)

e.g With an overlay of 0.20 and odds of $2.40 and a bankroll of $1000, the Full Kelly would recommend a bet of $143, or 14.3% of the bankroll.

The Fractional Kelly - This is a simple and conservative amendment to the Full Kelly method whereby the gambler only bets a certain fraction of the recommended bet. It could be %50, known as the Half Kelly, 25% the Quarter Kelly or any percentage you feel comfortable with. Further, while the intuition may be that this will reduce your winnings according to the percentage you choose, it can be shown that a fractional Kelly method can return better results longterm than the Full Kelly method.

The Constant Kelly - The same as the Full Kelly method, but rather than recommending a percentage of a varying amount, it recommends a percentage of a constant. So for example, instead of suggesting 15% of a diminishing or improving bankroll, it recommends 15% of a constant amount.

Busy busy busy
One of the drawbacks of any Kelly method is the issue of wanting to bet on multiple events at the one time. Lets say there are 4 games you want to bet on, being played at the same time. And what if the recommended percentage of bankroll for Bet A is 25%, Bet B is 35% and Bet C 35% and Bet D 40%? This amounts to betting 135% of your bankroll, which is obviously impossible. One solution to this problem is to adjust the percentages proportionally so that 100% of the bankroll can be bet. i.e Bet A would proportionally become 19% and so on, 25% being 19% of the 135% recommended. The issue with this is that firstly, you're still betting %100 of your bankroll on 4 events which could all easily lose, and secondly, it means you're not giving the same value to say a 25% bet on a busy day (where in this example it becomes %19) as you would on a day when it might be your only bet.

One way to solve this is to use a fractional method so that no matter how many events you want to bet on in a single day, the total recommended is unlikely to eclipse %100 of your bank. This could well work, but as I know myself, it is easily possible to be betting on up to and over 20 events in a single day, meaning the %100 could still be eclipsed.

So what do you suggest?
Personally, I use a 10% fractional Kelly method. This allows me to protect my overall bankroll while I diversify and place many bets on sporting events being played daily.

So if my bankroll is $5000, and I am betting on a $2.60 team with an assessed winning probability of %50, the recommended bet amount would be calculated as:

(bankroll * chosen fraction) * (overlay/(odds - 1))

i.e ($5000 * 0.10) * (0.30 / 1.60) = $93.75

Try it out for yourself
While many bankroll management strategies are available to apply, I believe that the fractional Kelly method is best, as it takes into consideration the odds on offer, the probability assessed of a team or players winning and the resulting value identified in order to recommend a bet amount that will optimise that value without risking your bankroll and an early end to your career as a sports gambler.

Why is whether he hits a winner relevant to lowering stakes?

if you hit 50+ losers regularly - stake 1/500th of bank on each selection .

I would find betting on selections that throw up runs of 50+
and so would most other people. I bet only on prices between
1/3 and 3/1, as I would rather be looking at a minimum of 25%
strike rate than that of a 2% strike rate.

I think I'm still calm about it all and as bet sizes are determined by modified Kelly of current bank thats not a concern.

The irish horses are a royal pain in the backside especially as they are just way better handicapped than our lot. I get concerned as historically October is a great month for me and typically I need to be way in front for I have a bad spell through February before March/April being very good again.

More concern to me at this stage are the overnight vultures who are ruining the prices in the morning.

Racingguru, I don't think you have anything to worry about, sounds like you know exactly what you're doing and what to expect. I've dropped 50% of the bank before too, but all the time knew that I was still getting value, but it is always stressful to drop so much - human nature.

Back then I reduced stakes but of course that just made the recovery longer, so now I keep level stakes no matter what. That said, there has to be a point where reducing stakes would be prudent I still believe, so I increased my bank so that hopefully I'll never suffer a 50% drop again, but some would rightly see that as not utilising capital I know. GL with the recovery :)

Cheers racingguru.

Trevh, I don't get it. Sounds to me like what you were doing before makes more sense. Why not use some form of fractional Kelly adjusted for Betting exchange specifics.

If you go on a crazy losing run and lose 50% of bank, of course you have to reduce stakes. If you think you can still bet to the same level staking after dropping 50%, it just means you were massively under staking before the loss.

If a person is backing heads in a coin toss at 5/4 and endures a heavy losing run it's pretty easy to absorb a losing run using a reasonable
staking strategy (kelly being the optimum one). In the long run you are bound to win as your getting factual value.
Value in betting on Horse racing is subjective though and the punter has to work out during a losing run whether he's encountering
bad probability variance or his judgement has become poor. It's not that easy to tell the difference as the mind can play tricks.
The orginal poster states that he is "massively beating the odds on everything I bet" (assume this means taking a price better than
SP). This doesn't automatically mean that value is being obtained as the SP isn't a set bench mark as to the horses true price.
A person constantly backing horses at a significant price bigger than SP is showing good skill at spotting trading opportunities
but there is no guarantee that he's good at spotting win odds value and he may well lose in the long run.

quick update - few winners and a nice fc so back in the black but nowhere near the % profit I get normally in Oct. These overnight vultures marking bookies cards are a real pain but such is life. Just having to adapt to the changing climate on Early price betting.