Wednesday, 25 September 2013

Results - Looking at the bigger picture - EXPECTATION - let's discuss

So finally I have some time to write up the post I wanted to do last week.

So I'm not going to do the end of month break down just yet, purely because it isn't the end of the month. Rather I wanted to talk about 'looking at the bigger picture' and expectation. What can one expect to achieve, what can one expect to lose?

First of all, let's talk about the bigger picture. At the moment it seems as if my picks are profitable overall so far, realistically it's not about 'months' of results but really the AMOUNT of results that is important. You can have 12 months worth of results but if you only placed 100 bets over that period it really doesn't tell you much. This is one reason why one shouldn't dwell on if a month is profitable or not, we need to look at the bigger picture, are the bet's profitable over a number of bets rather then time period.

So far, over 277 bets my average profit is £7.71. This means on average each £100 bet that is placed, I am getting a £7.71 profit on each £100 invested. My ROI currently stands at 7.71%

For the beginning of this month I hit a loss of just over -£1400. Based on my average profit made per bet at that time also, one could say I was running horribly below what my expected value should of been for those bets. Let's say I had 50 bets, on average - and we will base if off the £7.71, I 'should of been' £385.50 in profit. However, betting doesn't work like that and smooth curves don't happen over a short period of bets. The bigger the number of bets placed, the smoother that curve should become.

As the number of bets get's bigger, I will have a better idea of where my 'true' overall ROI lies.

People need to remember, that they shouldn't look at 'big profits' or even 'big losses'. But should look at the ROI figure and then realize that they will make £x amount based on £x stake on average.

One of the most important things is to not think about the amount lost or one, but everytime a bet is placed that you are making £x amount overall. X being a number.

Hopefully once I hit the 1000 bet's mark I will have a ROI of 6% or above. That is my goal, if it's anything bigger then that, then all the better, anything lower then 5% isn't really acceptable for me (it's still acceptable but in my opinion there is a big enough edge/value to be found in bet's that it should be higher then this).

Once I have implemented the other column into my database I talked about in previous posts, I hope this will allow me to push up that ROI further in the future. Of course it will take, but this game is all about being patient.

Now let's take a quick look at the strike-rate. My strike-rate is currently 35.74%

You can use this site, that talk's about strike-rate and allocating what % of your bank to use based on that.

As you can see, at a 35% S/R my longest concurrent losing run should be 16 losing bets in a row.

It's very important to understand the psychological aspect of losing runs, more so it is important to understand so you can stake appropriately. When I come to use a real bank in 2014, I will have one that can at the very least cover 2x the maximum concurrent losing run in accordance to my strike-rate within my staking.

It really is THAT important to record results for both betting and trading. Only then can you start to understand and analyze your results effectively. You will also be able to work out based on your strike-rate what your maximum number of concurrent losses should be in a row. Just remember you could effectively go 16 losses in a row, 2 winners, then another 16 losses with a 35% strike-rate for example.

Which is the reason I talked about expectation and ROI in the start of the post. Do not think about the losing aspect! If you have a profitable method trading or betting, think about that every time you place £x amount stake, you are making £x every time! Only result-logging will be able to tell you these things.

This is a very simple method to stop you from getting emotionally pissed off when you go on a losing run due to variance.

Understanding variance and losing runs is a key aspect to trading and betting as well as understanding the psychological impact it can have.

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