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Monday, 31 March 2014

How To Improve Your Betting: Why Your Staking Method Is More Important Than Who You Back

Whether betting on gut instinct or backed by data-logged spreadsheets, bettors’ primarily focus on who to back. According to one prominent mathematician, however, if they want better returns, they should be more concerned with what they bet. Read on to learn one way to improve your staking.

Professional blackjack player and author Ed Thorp was a successful card-counter. Too successful, many would argue, as his ability at the tables of Las Vegas’ biggest casinos lead to the implementation of multiple decks and the start of a war on card-counting.

Despite his expertise as a professional gambler – he published two books on the subject – he attributed the majority of his success to a staking formula created by mathematician John Kelly Jr. “Playing strategy is maybe a third to a quarter … of what you’re going to get out of it. Betting strategy may be two thirds or three quarters,” he explained.

Of course, it’s easy to say that a betting strategy is important. But what makes a useful strategy? With influence from Alex Bellos’ Alex’s Adventures in Numberland, we mapped the success of five betting strategies over a series of 500 bets:

The above graph shows the profits from 500 simulated bets for five betting systems, with the probability of winning at 55% on a Binary bet. The initial bet for each method was $100 (except for the all-in method, which initially bet $1000). Each system started with a $1000 bank, and the simulation continued for each method until the 500th bet (or until their bank was minimised).

As you can see, one betting system provides far greater returns than the others, while one drops you out pretty quickly.

The five systems are outlined below – which letter do you think each line corresponds to?

Strategy 1: Bet everything, every time
Bet your entire bankroll on each bet. The advantage is that you get big returns, fast. The downside? As soon as you lose, you’re out of money and out of the game.

Strategy 2: Fixed wager
Bet a fixed amount for each bet, and don’t vary no matter how much you win. In this example, it was $100. If your chance of winning 55% on a 2.000 bet, this method means you’ve dramatically reduced your chance of losing your entire stake. Unfortunately, it means your winnings are limited to increase in a “slow and steady” fashion.

Strategy 3: Martingale
Bet double your stake after any failed bet, to cover your losses with the next bet’s winnings. This gives a quicker increase than fixed wagers (as you’re doubling up to cover any losses). If you experience sequential losses, however, the required stakes continue to double, and you’ll very soon be betting large amounts to cover your losses.

Strategy 4: Fibonacci
Increase your stake in a Fibonacci sequence, to your losses with the next bet’s winnings – learn more about the Fibonacci sequence here. This method has similar drawbacks to Martingale, but it reduces how quickly the stake increases if you’re on a losing streak (and therefore also reduces the rate at which you win).

Strategy 5: Proportional betting
Bet a fraction of your bankroll in proportion to your edge. In this simulation, we used the Kelly equation for proportional betting. In Kelly, your bet should be your edge divided by the odds. In this example, as the edge is 10% and the odds are evens, 10 / 1 is 10.

Therefore 10% of the $1000 wallet should be bet: $100. Should that bet be successful, the next bet would increase to $110, 10% of the new $1100 wallet. This means winnings increase quicker than in the fixed-wager system, and losses slow down.

The correct answer is:

A. Bet everything

B. Martingale

C. Fixed wager

D. Proportional Betting

E. Fibonacci

As you can tell from the descriptions above, proportional betting appears to have a natural advantage over the others systems. Imagine you’re down to your last $100 – you’d be betting $10, (and decreasing), keeping you in the game for much longer than a fixed-bet system, where your last $100 would be your last bet.

Which strategy is which?
Bet everything brings in big gains after the first bet, earning as much in one risk than the others do in the first seven. The light that burns seven-times as bright burns a thousandth as long, however, the “bet everything” strategy is eliminated on just the second round.

The chance of making it through 1,000 rounds at 55% is infinitesimally small as to be practically impossible (although you would have earned $67 billion by round 27).

Fibonacci and Martingale – progressive betting systems – also start strongly, but any big sequence of losses ramp up the required stake.

In our simulation, at round 83 (R83), we lost 11 times in a row. These defeats totally wiped out both Fibonacci and Martingale’s stakes, and at the end 11-in-a-row streak the hypothetical Martingale bettor had to bet $403,000 dollars to recuperate his losses. That’s a huge amount, considering his maximum purse was just $6,300. For Fibonacci, the maximum bet was $33,500, with his purse reaching its zenith at $4,100 before the wipeout.

The only system other than proportional betting to avoid losses was fixed betting, which accrued slow but steady increments. By R83, fixed betting had increased its purse to $3,400, and afterwards it had only dropped to $2,300. It wasn’t out, but there was not a lot to show for 95 bets.

The 11-bet losing streak also hit proportional betting pretty hard, reducing its winnings from $7,359 to $2,286 – lower than that of fixed betting. This shows how well fixed betting protects your winnings. However, by bet 500, fixed betting had only brought in $6,400, while proportional betting had earned $18,275.

Bettors should note that this is based on a huge assumption that the edge is in your favour, without it the results for all staking strategies would change dramatically.

Backing your staking technique
The above simulation shows that different staking techniques have vastly different outcomes, even if the other variables stay the same. The difference between being wiped out and finishing with $18,275 after 500 bets was simply choosing a suitable staking system.

It’s important however, to remember that there is no “ideal” system. Although the Kelly system worked in the example above, there may be more developed systems for different types of bets. It’s important to discover which staking style is suitable to your betting, typically through research and simulation.

It’s also important to remember that the Kelly system only works if you know your edge, which you use to calculate your stake. If your calculation of your edge is incorrect, you’re still going to have difficulties whatever you do. Read through the rest of our archive to help sharpen yours.

Tuesday, 11 March 2014

The Key To Formula One Betting Success

This Formula One betting guide informs bettors what to consider before betting on F1. By researching key variables – driver value, grid position & track characteristics etc. – you can increase your chance of making an F1 betting profit.

Importance grid position varies from track to track
Driver position has varying importance depending on the track in question. For instance qualifying on pole at Monza has guaranteed a race win in 80% of races in the last decade, compared to the Canadian GP at Montreal where just 30% of drivers on pole went on to win.

For circuits where it’s difficult to overtake – Monaco – bettors should consider a drivers ability to qualify high on the grid – where starting on pole can be a huge advantage. In comparison circuits that are easier to overtake at – Montreal for instance – give the bettor more chance of finding value when not betting on pole sitters.

Understanding the value of track position is vital in Formula One betting, selecting a race winner before considering historical data should be avoided, instead, study the track history to gauge an understanding of what will likely happen.

There is definitely a relationship between qualifying and finishing position, however it is not, on its own, enough to generate an edge.

Understanding the affect of tyres is vital
Tyres are vitally important in Formula One. Understanding tyre characteristics, how they perform around specific tracks, and how the cars and drivers compliment the tyres is significant when selecting a race winner.

Formula One bettors should understand a teams’ strategy regarding tyres. Each driver is allowed a set number of tyres per race weekend. A team may save tyres for race day instead of using them during free practice and qualifying, which may make the difference between winning a race and not.

Driver style is also important. Knowing which drivers – Jenson Button – can conserve tyres while driving at a fast speed, and which – Lewis Hamilton – wear their tyres down with an aggressive style, should be considered.
Since returning to the sport as the tyre manufacturer two years ago, Pirelli have produced unpredictable tyres, which has created more excitement and overtaking opportunities, but ultimately made understanding tyre characteristics more vital for betting.

Last year the tyres came under heavy criticism for their lack of durability, however Pirelli motorsport director Paul Hembery stated in February ” Although the teams are still at a comparatively early point on the development curve with their new cars, testing data so far indicates that the 2014 tyres are more consistent and durable than their predecessors.”

Don’t underestimate Mother Nature (weather)
Formula One bettors should always check the weather forecast before and adjust their betting on qualifying and the race accordingly. When the conditions are fine and the track hot, weather has little impact. However, once the track temperatures drop and the rain arrives it can cause havoc with the result.

Researching weather history is important as most Grand Prix occur at a similar time in the schedule as previously. The Belgian GP for example is renowned for it’s variable weather conditions. Knowing the chance of rain before can help you select drivers who are known to perform well in the rain – Jenson Button and avoid drivers who are not – rookie drivers.

Recognize circuit characteristics
Understanding the circuit characteristics and matching them with driver and car capabilities is fundamental when betting on Formula One. Circuits with long straights and fewer turns suit cars with excellent top speed.
Each circuit is distinctive, and should be treated different as each offers new challenges. Take the Bahrain GP for instance; this Middle Eastern circuit has a number of key characteristics that will present a different challenge for the teams than at other circuits.

The track is made up of four long straights, all of which end in a high braking zone, offering clear overtaking opportunities. There are also a number of challenging medium-speed corners that require good car balance. Therefore the track suits a set-up that sees a compromise between straight-line speed and cornering grip.
With drivers at full throttle for just 50% of the lap during the race (and 57% in qualifying), the demands on the engine are less extensive than half of the courses on the calendar.

Although the throttle might not be an issue, high temperature and low humidity could provide major challenges for the engines, while the circuit’s stop-start nature places a premium on the brakes – managing brake-wear is key.
Once you understand the track characteristics bettors should check practice and qualifying times to see which drivers and teams have their car dialed-in, and who doesn’t. Once bettors have gauged the track diagnostics and understood who are best set-up to perform you can consider who to bet on.

Team Strategies
Team strategy is fundamental in F1 and bettors should be fully aware of who influences what happens on the track. Teams always look to gain an edge over their opposition through tyre tactics, car set-up or tactical pitstops. But they also implement team orders.

For instance if two drivers from the same team are close during a Grand Prix one can be ordered to allow their teammate to overtake – Felipe Massa was instructed to let Fernando Alonso pass at the 2010 German GP – or hold back and secure the position they are in rather than go for an overtake – Nico Rosberg was given team orders to not overtake Lewis Hamilton at the Malaysian GP last season despite being much quicker.

To prevent team orders affecting bettors they should play close attention to the standings for both the drivers’ and constructors’ championships. Understanding who are the number one drivers in each team will help you decide which number two drivers to avoid – knowing his teammate will be favoured.

Study the new Rule Changes
Keeping up-to-date and understanding the latest Formula One rules is paramount for successful betting. The FIA constantly make rule changes to keep the sport exciting. These rules can benefit or hurt specific teams and the same can be said for your betting, so bettors should keep track of the rule changes happening pre-season, and during the F1 calendar.

Remember knowledge is key to successful F1 betting
It is important to think of the bigger picture when betting on Formula One, a racing incident/ bad pitstop or technical failure may have undone your thorough research for that race, but it’s only one race. To be successful, F1 bettors must consider how they perform over five or more seasons.

With Formula One culpable to a number of outliers such as weather, track characteristics, race strategy, tyre degradation and racing incidents, bettors informed decision-making, rather than just picking a winner on gut feeling, should undoubtedly translate into a significantly higher winning percentage.