I’ve been running on the spot of the first two months of 2017. I had 28 bets and broke even, turning over €4,425. Nothing major to report within those bets, I was on average 22% ahead of SP but with a small sample of 28 bets it’s not a huge surprise. Before I go into more detail about cash-flow, probability and staking policy (if you are seeking horse racing chat, there is very little below) I want to touch on that last blog I wrote.
The reaction was very positive, lots of empathy and encouragement which is always appreciated. But there was one private message I received which wasn’t empathetic but impacted me more than the rest, it started –
“Read your blog, in the nicest possible way, you cannot win staking like that and you’ll basically be back to €0 again even if you get back up to €10,000.” He then went on to explain a little more, before apologising if he was being condescending and wished me well. We exchanged a few messages and he advised I look into Monte Carlo simulations to see how often I would go broke backing even money shots at 6/4 due to variance.
I duly went and developed a basic understanding how Monte Carlos sims work. After downloading some pre-built excel sheets and doing a tutorial I was able to see what kind of distribution you can expect across different numbers of bets at various average prices, learning how often you can go broke due to variance. For example, if you back 10 genuine 4/1 shots in a row (regardless of what price you took), 10.7% of the time they will all lose. Not surprising or rocket science but it does slap you in that face when you’re starring at it on a screen.
As you may know, I decided to get back to basics at the start of 2017 (what worked in the past), and I am currently using a 1-8 point system with €75 per point. However, I know well that I could easily go broke if I’ve a rotten run of luck. So, why not reduce my stakes now? The truth is that this has been consistently my most profitable time of year and I feel it’s a chance worth taking with money I can afford to lose.
However, the first 7 bets I had this year all lost, 7 of the next 9 won. If you read my last post, you would know I’ve had to fund my betting bank for 2017, so starting with 7 losers in a row wasn’t ideal. But it’s only really around Cheltenham that you realise what bank you need. You have a map of all the bets you are likely to have so you know what the maximum damage could be if it was annus horribilis and every horse lost.
So, I looked back at the messages I had exchanged with the pro punted mentioned above. I realised the key difference in our attitudes… he’s a professional and I’m an amateur. There are various comparisons you can draw from that. It’s his main source of income, it’s certainly not mine. He knows exactly what kind of losses he can sustain due to “bad luck”, I do not. He has a long-term attitude towards the game, I might think I do, but I don’t. However, he is full time punter and I have a full-time job. Considering that last point, how deep do I want to delve into this? Would I be better spending my time doing something else instead of developing my knowledge of variance?
I’m still working out the answer to those questions. I want to learn more and be able to build much more complex “what if” simulations. We all talk about variance, but have you studied it? You hear anecdotes such as “if you back 2/1 shots at 5/2, you will win in the long run”, but what is the long run? What about the short run? I want to be able to know things like this –
If the average price I take is 4.25 and the average SP is 3.65 with an average stake of €134, how often can I expect to lose more than €1,000 during periods where I have consecutive losing bets?
I’m quite sure I don’t want to use or develop a variable staking system, I like the unit stake being constant and I’m not going to even try turn professional so I’ve no need to. All I really want to know is, if I’ve a bank of (for example) €5,000, what unit stakes expose me to what risks? For me, it’s about finding the right level of risk without being too risk adverse to considerably reduce profitability. I’m definitely open to the idea of reducing stakes in the future, if your stake size effects your ego you should tell your ego to jog on. I do feel like a bit of a fraud, talking up how analytical I want to be when it comes to staking and bankroll management yet I’m having a shot next week at Cheltenham, but I’m comfortable with that decision.
Finally looking forward to next week, I’m heading over for all 4 days and while I am a little nervous, I’m in a decent position with some antepost dockets. Although it’s easily the best festival to bet on value-wise, never take winning for granted – in the last few years the results have been very punter friendly and anyone thinks they have cracked it is making a big mistake – enjoy the week and make sure to say hello if you bump into me.