Using betting systems is probably the most popular form of finding selections. Also, amongst horse racing fans, the actual building of the systems is very popular.
The only problem is that most betting systems fail to make the profits that they’ve promised to deliver.
And the primary reason for this is… backfitting.
Well, that’s the name that most people use. If we were going to be completely technically perfect every betting system is backfitted by definition.
The reason for systems failing is overfitting.
So let’s start by determining exactly what overfitting is.
The Wikipedia definition is:
In statistics and machine learning, overfitting occurs when a statistical model describes random error or noise instead of the underlying relationship. Overfitting generally occurs when a model is excessively complex, such as having too many parameters relative to the number of observations.
I would say that’s a pretty good definition, but let’s change it in relation to betting:
In betting, overfitting occurs when a betting system only finds profitable selections based on the sample of data used to build the system. Overfitting generally occurs when the betting system has rules created which are specific to the data set being used and not generic enough when used on unseen data.
In normal English, we are overfitting when we have rules in our betting systems that only work on the data we are building the system on. And this most often occurs when we create rules that make no logical sense regarding the conditions of the races and the runners in them or by creating too many rules.
You see less rules means that you are less likely to be overfitting.
The problem is that less rules also means you are less likely to be able to make a profit.
In order to make a profit without overfitting we need to find the balance between rule creation and logic.
And there is one way that we can do this when we build betting systems without much difficulty.
It will increase the amount of time it takes to build the betting systems, but it also gives your systems a far greater chance of being successful when you start placing your money on the selections.
Which is what we want.
The process that I’m about to describe is a simplified version of bootstrapping.
This is a statistical process which ultimately refers to taking random samples of data throughout the development of a statistical model.
And that’s exactly what we want to do when we build betting systems.
Most betting system builders have been designed in such a way that you choose a date range and then you build your system on it.
And that’s the problem.
To be confident that your betting systems aren’t being backfitted, here’s what you want to do…
- Get all the data that meets your race criteria (i.e. all the data available to build your betting system on)
- Take 60% of this data to build your system on and keep the other 40% aside for testing
- From the 60% you have taken to build the system, take a random 60%
- Make your first system rule
- Put the 60% you took in step three back into all the data you took out in step two to build your system on
- Take a new random 60% of this data
- Make your second system rule
- Repeat steps five, six and seven until you have built all your system rules
- Test your system on the 40% of the data you set aside in step two for testing
- If you’re happy with the test from step nine, start paper trading your system before moving to live betting
This is the correct way to build a betting system that’s not going to be overfitted and has the best chance of continuing to make profits for a long time into the future.
But when you start to use this you’re going to notice something… it’s a lot harder to build a profitable betting system.
Rather than thinking this approach is so much harder to build a profitable betting system, you want to think about why it is so much harder.
Most bettors want to build betting systems quickly and get betting. Commercial system builders allow you to build systems that make potential profits very quickly and the figures look great.
Until you start betting them.
And then the bettor thinks that something has changed in racing which is why the system no longer works. After all, they can see it worked historically.
So they go back to the system builder and build another one quickly and the same thing happens.
Of course, occasionally there’s a good run of a few weeks before the system fails. But this is more due to luck than anything.
The priority of building a betting system and placing bets as quickly as possible is a mistake.
If you want to make long term profits from betting then where you must spend your time is in the research. Placing bets is quick and simple, anybody can do that.
Spending the required time on the research to build a profitable betting system, using the correct approach, takes time and patience. If it didn’t then everybody would be building profitable betting systems.
Understand that the best place to spend your time is on the building of your betting systems using the correct approach, even if it takes longer, and you will reap the rewards when you are ready to take your betting system live.