Thursday, 6 November 2014

Is The Fibonacci Betting System Profitable?

Progressive betting systems aren’t the most glamorous form of betting, but some people claim they can make big profits. We investigated the Fibonacci betting system to see whether the returns were worth the risks.

The essence of the Fibonacci Strategy for soccer betting – published in 2007 by Fragiskos Archontakis and Evan Osborne - is simple: bet on a draw, and if you lose, bet on another one. Repeat this process until you win. There are only two additional – and vital – rules to follow:
  1. Only bet on draws when the probability is above 2.618
  2. Increase your betting stake in a way that follows the Fibonacci sequence: 1, 1, 2, 3, 5, 8, 13, 21 etc.
The idea is based upon a theory from 1989 that the draw is the most difficult for bookmakers to predict, and therefore can be exploited. The idea is that as long as you continually increase your stake, any win will overcome your previous losses.

The Fibonacci Strategy in practice
Looking at data from the 2011/12 Premier League, there were 93 draws in 380 games – therefore 24.5% of all games ended in a tie. Interestingly, the odds for a potential draw in all 380 ties were above the 2.618 threshold suggested as the lower limit by Archontakis and Osborne.

This means there should be – on average – a payout every four games. This means the winning stake would be the fourth Fibonacci number: 3, with a total bet each time £7 (the winning stake added to the failing three stakes before it: 1, 1, and 2). Considering the average odds for a draw over the season were 4.203, this means that the average winnings would be £12.61 (£3 stake multiplied by the odds), with a profit of £5.61 when the stakes have been subtracted.

Over 380 games, this equates to a theoretical profit of £1786.7 – all from an initial stake of just £1.

Fibonacci Strategy Drawbacks
There are numerous practical limitations that prevent the Fibonacci sequence from printing money. For a start, many games are played concurrently, meaning there’s no option to increase your stake to the next Fibonacci number if a draw doesn’t occur, as the games will finish at the same time. Instead, bettors might consider applying a Fibonacci betting sequence to individual teams.

However, this method means that long streaks without draws could cause huge holes in bettors’ bank balances. Looking at the longest Premier League streak without a draw (Manchester United in 2008/09), the Red Devils went 20 games without drawing, before finally succumbing to a 0-0 tie with Arsenal.

Because the Fibonacci sequence increases exponentially, bettors would have to have bet £10,946 on that final game to follow the sequence. Including that bet, anyone following the betting system would had to have staked £28,656 – a huge amount for a system that usually provides winnings of just £21.02. Interestingly, the odds for a draw on that game were 4.10 however, which would have provided winnings of £44,878.60, or a profit of £16.222.60. With Fibonacci, the increased stakes also provide impressive returns.

The Fibonacci Sequence explained
The Fibonacci sequence is one of the most widely known numeric sequences in mathematics, characterised by its simple formula:
N3 = N1 + N2

This indicates that (after the two starting numbers), each additional number in the sequence is the sum of the two preceding numbers. For example, the Fibonacci sequence begins 1, 1, 2, 3, 5, 8, 13, and 21. Looking at the start of the sequence:
  • N1 = 1, N2 = 1, and therefore N3 = 2
  • N1 = 1, N2 = 2, and therefore N3 = 3
  • N1 = 2, N2 = 3, and therefore N3 = 5
  • N1 = 3, N2 = 5, and therefore N3 = 8
Conclusion – so does Fibonacci work?
Like the Fibonacci sequence itself, the Fibonacci betting strategy is best appreciated as a mathematical concept. As with all progressive betting systems, the ideas work perfectly when provided with an unlimited bankroll and unlimited limits. When real-world constraints are considered, however, Fibonacci succumbs to the same fate as all real-world betting – the unknown.

Using the Man Utd example above, a bettor would have to have risked a total of £28,656 over 21 occasions to earn a profit of £16,222. Anyone without the final £10,946 required to place the final, winning bet, would be £20k out of pocket and with no return in sight.

Because everyone will reach a limit at some point – whether that is due to their bankroll running short or one imposed by a bookmaker – the Fibonacci sequence cannot continue forever, and therefore is most likely not a profitable long-term solution.



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