Advice

5 STEPS: Step-by-Step Guide To Knowing When A Losing Streak A Broken Betting System

And When Is It Just A Losing Streak!

(Last Updated On: March 3, 2020)

Trying to determine whether your betting system is broken or just in a losing streak is the stuff of a bettors nightmare.

Questions start spinning around you mind.

Should the losing streak be this long?

I’ve lost most of my profit, should I stop now?

Has the system stopped working?

What I hear most frequently is that bettors lose all their profit while deciding this. Then they lose a bit more.

And then they stop betting.

These pattern makes no logical sense, because…

  • If the betting system has stopped working, then we should stop betting before we’ve lost our profit made using it
  • If it’s just a losing streak, then we should continue betting because our bankroll (assuming you’re using a properly sized one) should be more than capable of outlasting the losing sequence

Either way, waiting until you’ve lost your profit, and some of your original bankroll, before stopping, is definitely not going to work.

But most bettors do this because they don’t have a methodical approach to deciding whether the losing sequence is expected or if the betting system may have broken.

Luckily statistics can come to our rescue.

Or at least, the basic statistics that give us enough information to make an informed decision.

In order to make the decision about whether our losing streak is expected or the betting system is broken we’re going to use…

Standard Deviation

The definition of standard deviation (SD) is:

In probability theory and statistics, standard deviation is a measure of the variability or dispersion of a population, a data set, or a probability distribution.

Don’t panic, it sounds complex. But that’s just to put us off. It’s actually pretty simple, and even if you hate maths, in the next few minutes you’ll be able to use it and understand the huge positive impact it can have on your betting.

Standard Deviation simply tells. us the volatility of an investment in the past.

The investment in this case are our betting system selections.

Our only purpose in calculating this is so we can predict the volatility of our betting system selections in the future.

Knowing how volatile our betting system selections are will allow us to:

  1. Make sure we have the correct sized bankroll
  2. Determine whether we’re in a losing streak or if our betting system may have stopped working

In order to calculate the standard deviation we need to take an average length of our losing streaks.

You can also do this on profits instead of losing streaks. Take the average of every reduction in your bankroll before it reaches a new high. For example, if you had a bankroll of £1000 and it dropped to £850 at its lowest before going to £1050, then that would be a drop of £150. Find the lowest point in every drop before it reaches a new high and take the average of them.

For this example we’ll assume an average losing streak of 10 across all our betting system selections.

Step #1

To calculate the standard deviation we perform a very simple sum:

  1. We subtract the average losing streak from every losing streak we’ve encountered.

This tells us how much each losing streak in our betting system differs from the average.

Here’s an example of twenty different losing streaks:

12, 1, 2, 3, 1, 20, 18, 19, 19, 2, 4, 12, 20, 2, 6, 16, 14, 13, 4, 8

The average of these losing streaks is 9.8.

So we subtract the average of 9.8 from each of the numbers to give us:

12 – 9.80 = 2.20

1 – 9.80 = -8.80

2 – 9.80 = -7.80

3 – 9.80 = -6.80

1 – 9.80 = -8.80

20 – 9.80 = 10.20

18 – 9.80 = 8.20

19 – 9.80 = 9.20

19 – 9.80 = 9.20

2 – 9.80 = -7.80

4 – 9.80 = -5.80

12 – 9.80 = 2.20

20 – 9.80 = 10.20

2 – 9.80 = -7.80

6 – 9.80 = -3.80

16 – 9.80 = 6.20

12 – 9.80 = 4.20

12 – 9.80 = 3.20

4 – 9.80 = -5.80

6 – 9.80 = -1.80


Step #2

Once we’ve done that, our second step is to square the result of each result from step #1.

12 – 9.80 = 2.20² = 4.84

1 – 9.80 = -8.80² = 77.44

2 – 9.80 = -7.80² = 60.84

3 – 9.80 = -6.80² = 46.24

1 – 9.80 = -8.80² = 77.44

20 – 9.80 = 10.20² = 104.04

18 – 9.80 = 8.20² = 67.24

19 – 9.80 = 9.20² = 84.64

19 – 9.80 = 9.20² = 84.64

2 – 9.80 = -7.80² = 60.84

4 – 9.80 = -5.80² = 33.64

12 – 9.80 = 2.20² = 4.84

20 – 9.80 = 10.20² = 104.04

2 – 9.80 = -7.80² = 60.84

6 – 9.80 = -3.80² = 14.44

16 – 9.80 = 6.20² = 38.44

12 – 9.80 = 4.20² = 17.64

12 – 9.80 = 3.20² = 10.24

4 – 9.80 = -5.80² = 33.64

6 – 9.80 = -1.80² = 3.24


Step #3

In step three we add all these squared numbers (from step #2) together:

4.84 + 77.44 + 60.84 + 46.24 + 77.44 + 104.04 + 67.24 + 84.64 + 84.64 + 60.84 + 33.64 + 4.84 + 104.04 + 60.84 + 14.44 + 38.44 + 17.64 + 10.24 + 33.64 + 3.24

= 989.20


Step #4

Take the result of step #3 and divide it by the amount of numbers that went in to make it.

We have twenty losing streaks, which means we divide 989.20 by 20.

989.20 divided by 20 = 49.46

And then subtract one from this number:

49.46 – 1 = 48.46


Step #5 (The Final Step)

To get the standard deviation, we now take the result of step #4 and find the square root of it.

We do all this on a calculator (or a spreadsheet).

The square root of 48.46 is 6.96.

I would then round this number up to the nearest whole number, which in this case is 7.


How Do We Use This In Our Betting Systems?

Once you have your average losing sequence and the standard deviation, they’re very easy to use in your betting systems.

Remember our average losing sequence is 9.80. Now we’re using this in our betting systems I’m going to round this up to 10 (always round up).

We can now determine the longest expected losing sequence, based on the real results from our betting systems.

If you’d like to know what the longest losing streak should be for your betting system with a 95% confidence, you’d need to take your average and add 1.97 standard deviations from it.

If you’d rather know what the longest losing streak should be for your betting system with a 99% confidence level, you’d need to take your average and add 2.33 standard deviations from it.

This means:

95% Confidence Level Losing Streak

A losing streak average of 10.

A standard deviation of 7.

1.97 standard deviations = 13.79 rounded up to 14

10 + 14 = 24

You could expect a losing streak of 24 and be 95% confident it wouldn’t be longer than that.

99% Confidence Level Losing Streak

A losing streak average of 10.

A standard deviation of 7.

2.33 standard deviations = 16.31 rounded up to 17

10 + 17 = 27

You could expect a losing streak of 27 and be 99% confident it wouldn’t be longer than that.


Why This Is So Powerful For Your Betting Systems…

This information is incredibly powerful because it takes the guesswork out of whether your betting system is in an expected losing streak or may have stopped working.

If you had an average losing streak of 10, with a longest of twenty, you may be getting worried if you got 21, 22 or 23 losing bets in a row.

It’s at this point most bettors may stop betting.

But working out your standard deviation, you know that you can expect a losing sequence of 27.

You now have a specific point that you stop betting at.

Usually I would round this up to the nearest five or ten units. After all statistics is just a best guess, it could potentially go a bit longer.

Rounding the 27 up to 30, we then know that if our betting system has more than 30 losers in a row we are going to stop using it and investigate whether it’s stopped working, or put it on pause until we see it come back to a normal level.

Once you remove the guesswork, when you know before you begin losing your betting system at what point you will stop betting on it, you can choose the right bankroll size and stakes, and you no longer have any worry about not knowing what you’re going to do if you don’t get a winner.

Michael Wilding

Michael started the Race Advisor in 2009 to help bettors become long-term profitable. After writing hundreds of articles I started to build software that contained my personal ratings. The Race Advisor has more factors for UK horse racing than any other site, and we pride ourselves on creating tools and strategies that are unique, and allow you to make a long-term profit without the need for tipsters. You can also check out my personal blog or my personal Instagram account.

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