TheSnapper

Here is a post of that great run of 18/19 winning lay bets. A statistical freak, to be sure! I claim absolutely no credit for any skill in picking the horses. It is just something that will occur from time to time. I will dig out my calculator tomorrow and give you the exact numbers on such an event happening...and when it will happen again!

UPDATE! According to my calculator, this 18/19 winning streak is something which will occur randomly about every 327 days or so, assuming I am laying at 2,79 odds and place 19 bets a day, as in this series. This also assumes that I have no edge, just making random bets at 2,79 odds.(With any edge, it wwould be less than 327 days, of course.)So, basically , it is my once-a-year big winning streak!

Current Bank: $438,17
Start Bank: $198.00

A great weekend for the bank, a profit of $111,67 on a stake of $127,51. 18 out of 19 lays won.
I am pleased to be $15 ahead of schedule for buying my dream Florida home on or before Dec. 6, 2011.

Mr. Kelly is right pissed off that I didn't make any Kelly bets in our competition yesterday...I left my spread sheet on another computer. If all the lays yesterday had been Kelly bets, he would have doubled his bank from $20 to over $50 ON THE FIRST DAY! (it shows you the kind of competition I am up against!)

Anyway...consider it a warm-up. The spread-sheet is here and ready to go. We are all set to begin the big race between myself and John Kelly to Florida!

GENTLEMEN! START YOUR ENGINES! The race to Florida begins today!

TheSnapper: $438,17             John Kelly: $20,00



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TheSnapper:                                 John Kelly:

-is a cautious gambler                       - the perfect gambler
-wants a home in Florida                     - already has a rather permanent home. No plans to move.
-loves fishing                               - has many guns and enjoys flying airplanes under bridges
-knows nothing about horseracing             - knows nothing about horseracing
-knows a bit about math                      - wrote the book on math
-is afraid of Texans and guns                - is a Texan with guns
-worries about large stakes                  - doesn't give a rat's-ass about large stakes
-has blown a few betting banks               - has never blown a betting bank
-starting bank $198                          - starting bank $20


So, it would seem that Mr. Kelly would be the heavy favourite on paper, despite starting with a bank only 1/10th of mine!

After placing around 800 bets, I have collected a decent sample of my strategy (although I don't think it is enough to be statistically confident in it, but there you go!), it is time to start a second, small bank which will use the Kelly Criterion only.

My two banks will race each other and I will see which bank accumulates enough money to buy a home in Florida first --- my main 1% staking bank or Mr.Kelly!

I think it will be interesting to show how much faster a Kelly Staking bank can compound a very small bank into a large bank. The key elements are: the edge, the bank and the strike rate.

The edges in my lay bets range from 21% to 11%, so as a compromise I will just use 10% to be on the safe side in my Kelly calculations. (In Kelly staking it is always better to be betting below, rather than above the optimum).

Because the staking for Kelly Bets will have to be re-calculated after each bet, there will not be many per day, and they will be recorded separately from the main bank.

The Kelly bank will start out at 10% of the original bank size, so $20 or so should do it. The Kelly Staking liabilities for a starting $20 bank can become hair-raising indeed for high priced horses!:

Bank    2.0-2.2    2.2-2.5    2.5-2.8    2.8-3.0    3.0-3.5    3.5-4.0
$20,00    $4,00    $4,40    $4,80    $5,40    $6,20    $6,80

So, as an example, when laying a 3.0 runner, Mr Kelly will be wagering $6,20 of his $20.00 bank.

Mr. Kelly has graciously agreed to give me a big headstart in bank size in our race to Florida. (my bank was $198, Mr.Kelly will start with $20.00)

I'll post the results starting tomorrow. Who will you bet on arriving in Florida first? TheSnapper or Mr. Kelly? (Before you answer, please remember that Mr. Kelly has never been defeated!)

Current bank: $364,23
Start bank: $198,00

The bank shrank again  yesterday, despite a record-breaking stake of $178,32, the bank lost -$20,90.

The overall edge stands at 6,55%. This is what I thought it should be, although I will need to get it up to 10% for my model to stay on track. A few changes will be needed in my strategy, I can see.

So, because I am in a downswing, perhaps this is a good time to discuss downswings in betting and what I am doing now as a result.
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Downswings

1.The first thing to do is adjust your stakes. Kelly staking does this for you, because you have to adjust your stakes after each bet according to your bank size. If you don't use Kelly staking, then drop your staking back to 1 or 2% of your bank. If you have a small edge, that will ususally keep you within the Kelly ranges.

(I am using 1% stakes and only reducing my stakes after a 20% decrease in the bank. This is a good plan, because it prevents you from losing your whole bank due to a sustained downswing. My recent downswing has reduced my bank by 25%. It's time to downsize to protect the bank. If you keep the same stakes as your bank gets smaller and smaller you will exceed the Kelly limits and risk wiping out your bank.)

2. The second thing to do is get out your spread sheet and start looking at your results statistically. Where are the profits and where are the losses? (I found that my lays are generating almost all of my profits, so I will have to make some changes in my overall strategy). Your statistics will point you in the right direction and show you where the holes to be plugged are. Then go and plug the holes.

3. Remember that one day should matter little in your big plan. If you find yourself getting upset or losing your cool after a string of bad losses...it's time to drop your stakes and look at your stats. Downswings are natural and to be expected. If you don't plan for them or can't handle them, then you are in the wrong game!

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Current Bank: $$385,13
Start Bank: $198,00

Well, yesterday was just one of those days...a total loss of -$63,23 on a stake of $118,50. A second low day in a row. That's just the way it goes. That was actually a loss of 13,33 points, which is to be expected after 34 betting days.

The edge has dropped to 7,93%. The total profit is at $187,13.

So, we carry on and keep grinding away. There will be ups and downs, and this was just one of those downs. There will be more, and worse, in the future, for sure. Hopefully, not today![;)]

But, on the good side, I am still $1 ahead of schedule! The model has me at $384, and I am at $385, so I am still right on track, even after the setbacks of the past few days.

Current Bank: $448,36
Start Bank: $198,00

Took a loss of -$19,86 yesterday on 15 bets and a stake of $71,10. This was the biggest loss to date. The previous low was on 11.01 (-$15,46). The interesting thing is that was previous low was 23 betting days ago. It will be interesting to see when the next low day appears.

Current Bank: $468,22
Start Bank: $198,00

Due to the ongoing Betfair site upgrade, I only could play 1 market, so it was a day off. Still, the first month is over and the results are right on schedule. According to the plan I should be done on Oct.11. 2011

The plan predicts that I should now have $362, so I am a solid $106 ahead of that, or 22,36 points at the current stake ($4,74).

When I look back over the past month, I see that the total bank profit is $270,22 which is 135,11 points profit. Not many "systems" out there can bring you 135 points profit per month!
This will increase to astronomical proportions very soon with the effect of compounding. Should be interesting in the spring!

Current Bank $$433,74
Start Bank: $198,00

Solid profit of $25,09 yesterday on a stake of $99,70 across 25 bets.
The edge is currently at 12,13% after 658 bets and a total profit of $235,74

There have been some questions about my edge. So, I will write a few words on the subject today.
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The Edge

It's natural when you see or read of someone gambling successfully that you ask, 'Hey, how does he do it?'. There are only two types of successful gamblers that you will ever come across. One type is the gambler who is in profit due to luck...he put some money down and his horse came in, or the roulette ball landed on red, or the lottery picked his number... The second gambler is also in profit from using a mathematical advantage. The only way to determine who is just lucky, and who actually has an edge is by seeing who is still standing after many bets. The first gambler will be long gone and only the second will still be around. Why? Because he has an edge, which grows clearer over time.

Now, there is a view that an edge is a deep secretive mystery that, once discovered, should never be revealed because the resulting crowd of betters trying to exploit the edge will effectively eliminate it. You will read things like, 2-year old maidens running at Lingfield on Sundays show a 6% profit over the past 5 years. Gosh! Don't let anyone hear about it!

The trouble with this kind of 'edge' is that you cannot be sure that this is an edge or just a random event. The next 5 years could well result in a 10% loss for the very same horses. And this is the trouble with interpreting past statistics; it is very difficult to tell if they are just random results or not.

SO, what is my edge? Well, let me say this...it is only mathematical. I know nothing of horses, races, trainers or jockeys. Never seen a form book. I've only seen one horserace in my life. But I do know a bit about bookmaking and math. I place bets only in the horeracing place markets. Why? There are several reasons, but mathematically it allows you to place many back and lay bets  at lower prices than in the win markets. Before the race, the prices can drop too much (lay value) or increase too much (back value). I then place bets when the market has moved too far in either direction.

This 'edge' is permanent. It will always be there. Go ahead and use it. It's not a secret. Is it the only edge in sports betting? Certainly not! YOu will find the market over-reacting at various times in all sports! But you can be sure that this edge is real and permanent and you can start building your bank on it, as I am doing in this blog as a demonstration.

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Hmmm...with $400 I have been looking around at what I could RENT in Florida.  Seems I could spend a month at the Blue Marlin Cove resort for $350. Seems like a sunny place with a pool...


...maybe the kitchen is a bit crowded, though...


...but there is a dock and a place to clean the fish...(I love the guy in the background!)


....hmmm...it's about all I can afford at the moment! I guess I will have to keep looking!

Current Bank: $408,65
Start Bank: $198,00

Made a profit of $16,65 yesterday on another record-breaking stake of $161,99 over
41 bets in the horseracing place markets.

The edge now stands at 11,42% after 633 bets, total staked: $1 844,46, total profit: $210,65 after 29 betting days.

Projected date for buying Florida dream home is now Oct. 25, 2011
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John Kelly understood compounding perfectly

On June 7, 1955, American television debuted a new quiz show called The $64,000 Question. The show was a sensation. It captured as much as 85 percent of the viewing audience and led to dozens of copycat shows. Kelly heard about a peculiar scam in the news. Some viewers of The $64,000 Question were placing bets on which contestants would win. The show was produced in New York and aired live on the East Coast. It was delayed three hours on the West Coast. According to the news story, one West Coast gambler learned the winners by phone and placed his bets before the West Coast airing.
Thinking about this convinced Kelly that a gambler with "inside information" could use some of Shannon's equations to achieve the highest possible return on his capital. Shannon was intrigued by this application and urged Kelly to publish his finding. Kelly's article appeared (under the opaque title "A New Interpretation of Information Rate") in a 1956 issue of the Bell System Technical Journal.
Kelly wryly presented his idea as a system for betting on fixed horse races. A "gambler with a private wire" gets advance word of the races' outcomes. The natural impulse is to bet everything you've got on the horse that's supposed to win. But when the gambler adopts this policy, he is sure to lose everything on the first bum tip. Alternatively, the gambler could play it safe and bet a minimal amount on each tip. This squanders the considerable advantage the inside tips supply.

In Kelly's analysis, the smart gambler should be interested in "compound return" on capital. He showed that the same math Shannon used in his theory of noisy communications channels applies to the gambler. The gambler's optimal policy is to maximize the expected logarithm of wealth. Though an aggressive policy, this offers important downside protection. Since log(0) is negative infinity, the ideal Kelly gambler never accepts even a small risk of losing everything.

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