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-   -   STOP, before you comment. (http://www.paceadvantage.com/forum/showthread.php?t=33518)

speculus 01-03-2007 07:02 AM

STOP, before you comment.
 
Can there exist a money management formula/method that can convert a negative edge to a positive roi? Something like a flat bet loss of 16% to a positive ROI of 20%?

Before you jump at my throat for asking the stupidest question, I urge you to please STOP before posting your comment, and go through my earlier posts at this forum to check how seriously I take my pursuit of handicapping and money management, and I hope you will at least agree I am not one to raise such questions without serious reason.

I value my time, and yours too.

What happened was this. After comparing my results against the backdrop of a money management formula that I was using, and Dave Shwartz's Horse Market Investing (HMI), I decided to switch to the logic of the HMI for this year's betting action (2007).

However, one thing I could not get comfortable about was the system's SUPERSENSITIVITY to the WIN-LOSS sequence. If the win-loss matrix changed, the numbers would change. I had always beleived a sound money management method, in principle, must imply that the end result (the figure of profit after the last bet in the sample is made) MUST STAY THE SAME whichever sequence the wins and losses took place. As you know, FLAT BETTING, the most reliable (although not the most lucrative) money management method, is practiced by many winners precisely because of this reason.

HMI, otherwise an excellent tool in many respects, does not satisfy this condition. That's when I dug out my old research (some 400 pages of unorganised hard work) and started looking at it. After spending more than a day with the material, what is staring me in the face right now is an ILLOGICAL (illogical, as per the general accepted wisdom on the subject at present) claim that says you can NEVER convert a negative edge into a positive ROI no matter what you do. It is impossible both theoretically and practically.

Now my question is: Do we believe it becuse we FEEL it is SELF EVIDENT? or has anyone ACTUALLY given a mathematical proof of the alleged truth? I learnt my early money management from Dick Mitchell, so I am still not able to believe the possibility although, as I said, it is staring me in the face (at present, in the form of too small a sample to be convinced, but who knows it might be possible to have huge samples reflecting the same ILLOGICAL truth?

formula_2002 01-03-2007 08:06 AM

Quote:

Originally Posted by speculus
Can there exist a money management formula/method that can convert a negative edge to a positive roi? Something like a flat bet loss of 16% to a positive ROI of 20%?

Of course we are talking about horse racing results here.
My answer to you is, stay with the math.
Statistical analysis of past performance will show you a more meaningful insight to what you can attain in the future.
Too many here preach about what amounts to catching that falling dagger and offer no worth while statistical results to back up their ability.

It is easier to show a positive result in fewer plays than it is in more plays.

To me it’s all about incremental odds analysis, z score, standard deviations and large amount of data tested in an increment way with out any back fitting.

I know you spent all night looking at your results, but I have spent years of computer
analysis at this stuff and marvel at how many guys can win. ;)

Turntime 01-03-2007 08:26 AM

Numerous systems have been created that would hope to turn a negative expectation into a positive one, most famously the 'Martingale' system where one doubles his bet after each loss. If you were to play a negative expectation even money bet, such as red or black on the roulette table, with unlimited funds and no house limit on each bet, you could expect to always show a profit over the course of a lifetime using Martingale. This does not fly in the face of the mathematical model, which is based on infinity.

Of course in the real world there are house limits and limited size parimutuel pools, which insure your demise if you attempt to practice a 'money management' system which hopes to turn a negative expectation into a positive one. I don't need a mathematical proof to prove this point.

As a side note,there is a book called 'Beat The Casino' by Frank Barstow which is a compilation of betting systems designed to overcome the house advantage. He has some interesting (wrongheaded IMO) opinions, not the least of which is the 'law of diminishing probabilities'. Read it at your own peril.

speculus 01-03-2007 09:00 AM

Quote:

Originally Posted by PriceNProbability
My answer to you is, stay with the math.

Thank you PnP. I will surely not "discard" it in a hurry.

Quote:

Originally Posted by Turntime
Numerous systems have been created that would hope to turn a negative expectation into a positive one, most famously the 'Martingale' system where one doubles his bet after each loss. If you were to play a negative expectation even money bet, such as red or black on the roulette table, with unlimited funds and no house limit on each bet, you could expect to always show a profit over the course of a lifetime using Martingale. This does not fly in the face of the mathematical model, which is based on infinity.

Of course in the real world there are house limits and limited size parimutuel pools, which insure your demise if you attempt to practice a 'money management' system which hopes to turn a negative expectation into a positive one. I don't need a mathematical proof to prove this point.

As a side note,there is a book called 'Beat The Casino' by Frank Barstow which is a compilation of betting systems designed to overcome the house advantage. He has some interesting (wrongheaded IMO) opinions, not the least of which is the 'law of diminishing probabilities'. Read it at your own peril.

(highlight by speculus)

Thank you, TT.

No, it's NOT Martingale, if at all, it's anti-Martingale.

hmmmm... the last thing I wanted to hear, but I know you mean well.

NO. It does not give an edge where the expectation is "negative" AND the odds are "fixed" (like the casino) unlike horse racing where the odds are "variable".

Robert Fischer 01-03-2007 09:10 AM

Possible but not recommended.

speculus 01-03-2007 09:27 AM

Pray
 
Quote:

Originally Posted by Robert Fischer
Possible but not recommended.

WHY NOT?

Robert Fischer 01-03-2007 09:44 AM

not recommended
 
Quote:

Originally Posted by speculus
WHY NOT?

The method that I am thinking of is high level, and relatively low-profit. It is profitable(mathematically) only within a certain range of plays x a certain range of hit percentage x greater than a certain odds. The skill required to reap any significant profit would best be used towards a spot play that returns a flat-bet +roi. It is a sophisticated cousin of the martingale and should therefore carry all of the (fair?) negative bias associated with the martingale system.

Do I use it personally ? - No. Just a puzzle. One day it may be a small supplementary addition to the whole machine.

ryesteve 01-03-2007 10:04 AM

Quote:

Originally Posted by speculus
Can there exist a money management formula/method that can convert a negative edge to a positive roi? Something like a flat bet loss of 16% to a positive ROI of 20%?

Now my question is: Do we believe it becuse we FEEL it is SELF EVIDENT? or has anyone ACTUALLY given a mathematical proof of the alleged truth?

I don't have a mathematical proof, but I have a logical proof: let's say that due to the takeout, every bettor at the race track is opreating at a 16% loss. If there really was such a money management system that would allow this 16% loss to transform into a 20% profit, what would happen if every bettor adopted it? It's impossible for them all to now be operating at +20%, because there's no place where that extra money could be coming from. So, this money management system isn't working.

aaron 01-03-2007 10:08 AM

The only way you could show a profit with a negative roi based on a flat amount would be to have larger bets on your higher price horses and lower bets on the short priced horses.If you are an good enough handicapper to accomplish this,then you would probably show a positive roi anyway.

formula_2002 01-03-2007 10:18 AM

Quote:

Originally Posted by ryesteve
I don't have a mathematical proof, but I have a logical proof: let's say that due to the takeout, every bettor at the race track is opreating at a 16% loss. If there really was such a money management system that would allow this 16% loss to transform into a 20% profit, what would happen if every bettor adopted it? It's impossible for them all to now be operating at +20%, because there's no place where that extra money could be coming from. So, this money management system isn't working.

Actually because of modern day technology the "proof" should be available to more of us just by using excel.

speculus 01-03-2007 10:22 AM

Quote:

Originally Posted by Robert Fischer
The method that I am thinking of is high level, and relatively low-profit.

At least at first glance, that's not the case. It's an automatic (as opposed to high level meaning "complex") and perhaps high profit.

Quote:

Originally Posted by Robert Fischer
It is profitable(mathematically) only within a certain range of plays x a certain range of hit percentage x greater than a certain odds.

What type of plays are these "certain range, certain hit% and level of odds? Pl explain. Or better still, pl send some link that will be educative so I know what you mean and verify it.

Quote:

Originally Posted by Robert Fischer
The skill required to reap any significant profit would best be used towards a spot play that returns a flat-bet +roi. It is a sophisticated cousin of the martingale and should therefore carry all of the (fair?) negative bias associated with the martingale system.

Again, if possible pl give a link to what you are talking about so that I can verify.

By the way, this is a general appeal. If any of you have real life data of bets that shows a small negative flat bet loss or very insignificant flat bet profit (something like 4 to 6 %), I would be obliged if you send me the data. What I need is win/loss status and odds (on winners and losers both.)

speculus 01-03-2007 10:52 AM

Quote:

Originally Posted by ryesteve
I don't have a mathematical proof, but I have a logical proof: let's say that due to the takeout, every bettor at the race track is opreating at a 16% loss. If there really was such a money management system that would allow this 16% loss to transform into a 20% profit, what would happen if every bettor adopted it? It's impossible for them all to now be operating at +20%, because there's no place where that extra money could be coming from. So, this money management system isn't working.

A very good point, Ryesteve.

Not every bettor operates with 16% loss, some operate with 100%.;)

But everyone surely STARTS with a UNIVERSAL 16% disadvantage!

And for the sake of argument, even if such system were there and everyone was using it, that would not have made winners out of all as you claim. It would have only ensured more deflatd odds in such a way so that only the best would survive and the bottom layer would sink anyway. I hope you agree to my logic.

I fully agree that converting -16% to +20% may be a singular case due to some peculiarity of that particular data, and may not hold over a larger sample or all samples. But anything that can be so promising, even for a VERY SMALL sample, is worth investigating further.

speculus 01-03-2007 10:55 AM

Quote:

Originally Posted by aaron
The only way you could show a profit with a negative roi based on a flat amount would be to have larger bets on your higher price horses and lower bets on the short priced horses.If you are an good enough handicapper to accomplish this,then you would probably show a positive roi anyway.

That's precisely what I think it's doing! That's why I am requsting samples with odds even of the losing bets.

ryesteve 01-03-2007 11:12 AM

Quote:

Originally Posted by speculus
A very good point, Ryesteve.

Not every bettor operates with 16% loss, some operate with 100%.;)

But everyone surely STARTS with a UNIVERSAL 16% disadvantage!

And for the sake of argument, even if such system were there and everyone was using it, that would not have made winners out of all as you claim. It would have only ensured more deflatd odds in such a way so that only the best would survive and the bottom layer would sink anyway. I hope you agree to my logic.

Yes, I see where you're coming from, but my initial premise in this example was that all these bettors were placing their bets randomly, so that the -16% performance level was solely attributable to the takeout, and was constant for all, over the long run. In other words, there would be no bottom layer... all would be at the same level.

DaveP 01-03-2007 12:24 PM

speculus, the Retirement Staking Plan can work for ages and produce a profit of around 15% over break even. But as many of the people on here have pointed out you will eventually get caught out by a long losing run.

So in answer to your question, I would say 'Yes' you can turn a negative ROI into a positive one but not for ever.


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