Idea

[Guest przeszczepan]

Not much time to write. The situation is very simple: As usual, a child of przeszczepan's sick brain waits for an abortion(or a miraculous cure). I have made over 100 bets following a certain group of tipsters. Now, let's say, I want to apply the Kelly staking plan for the future games. It's quite easy to count my edge from the past bets so I can simply put it into the equation for every game since, as proven by Joe, it doesn't make a big difference whether I have an exact( read: unattainable) edge for each bet or just an average one. Here is where the problem begins. Say, tipster A (edge=5%) advises to bet 5/10 units on evens in one game and 10/10 units on evens in another one. The question is: how on Earth am I supposed to persuade myself to treat these games in the same way and bet the same amount of money on both of them?! What if tipster B, whose edge=10%, bet 5/10 on evens? Should I really treat it in the same way as the first game of tipster A? According to the theory: yes! According to my common sense: uh! Now imagine A bet 1/10 on odds of 3 and B bet 10/10 on the same odds! Here goes the baby: When we have tipsters data such as: units invested, no. of bets, no. of correct bets, profit, we can count some further values like average stake=units invested/no. of bets, average odds(or rather average winning odds)=(profit average stake*no. of bets)/(average stake*no. of correct bets) and the yield=(money invested profit)/money invested. Now the weakest point of the idea. We count a "virtual bank" using Kelly equation: Bank=(average stake*(average odds-1))/edge. With this "virtual bank" we are able to estimate each tipsters edge for a particular stake on particular odds: edge=(stake*(odds-1))/virtual bank Now you only have to put the edge in the equation for a particular game. I called the "virtual bank" the weakest point because I know not every tipster is using Kelly. Is it the reason why I should abandon the idea? I wouldn't hesitate for a second if the "system" would provide some unrealistic edges. But I checked it on some examples and it's doing just fine: you get higher values for higher stakes on higher odds advised by better tipsters. I just want to know if there's any better way to complete the process ( read: give yourself a mathematical grounds to bet more on better tipsters and higher odds*stake). One more question: I got a bit confused with the terms "yield" and "edge"? Could anybody explain the difference to me, please? Can you simply write edge=yield-1? Lucas

[Guest madmick]

Re: Idea Lucas I believe you will suffer from the common problem of limited data. However, what you may want to consider is to plot the record of the tipsters versus their advised stake size. This should give you some indication of whether or not the tipsters actually can estimate the edge on a particular bet - e.g. a 10 unit bet should be more likely to win than a 5 unit bet. Kelly staking advises varying stake size based on two factors - edge on that bet and odds available for that bet. What you are working on here is the first one of those two, and I think you may well get some profit (no pun intended!) out of it. Yield is the total profit/loss divided by the total amount staked. Edge is the excess of the ratio of the fair odds to the offered odds. For example, if a bookie offers 2.25 about something that should be 2.00 then the ratio is 1.125 = 112.5% which is an edge of 12.5%.