Money management strategies help the punter to choose an optimal stake, and even thought Kelly is known to be the best strategy of them all, it is not necessarily true for all types of betting tips.
This article summarizes possible ways to improve Kelly's strategy for different types of betting tips.
First, let's emphasize Kelly's strengths and weaknesses:
According to Kelly's, the wager for each outcome is calculated in the following way: w * (p-(1-p)/(odds-1)), where w represents the wealth of the punter and p is the probability of a win. For example, if your wealth = 1000$, p = 50% and odds = 2.5, then the wager your have to place is equal to 1000$*(0.5 - 0.5/(2.5-1))=166$.
If the probability of a win (p) is estimated correctly, then the calculated wager will be optimal in a long run. If, however, it is wrongly estimated, then using Kelly's won't do the trick.
What are the possible ways to improve Kelly's strategy when the probability of a win is incorrect or unknown?
When one's betting tips include a probability of a win, it is necessary to determine how accurate this probability is for home/draw/away wins. It can be done by ratio of several successive tips to the total number of tips provided. This ratio can be used as a correction factor for a wager estimated according to Kelly's. To use this correction factor it is enough to multiply the wager by the corresponding ratio. For example, if the accuracy ratio of the betting tips for a home win is 0.55, then when one bets on a home win, he should multiply his wager by 0.55 to lower the risk.
If one's betting tips don't include a probability of a win, he should start with estimating this probability. One simple way to do that is by calculating the ratio of home wins, draws and away wins to the total number of games in the season. These proportions can be used as probabilities of a win and no other correction factor will be necessary. This method is less accurate then the previous one, since it uses average statistics to estimate the probability of a win.
The methods described above help punters to calculate their optimal wager. However, these methods won't help you choose the outcome to bet on. For example, when you distribute your wager between two of three possible outcomes, the long run profit will be maximal. The only way to calculate the optimal wager for each outcome is by using data-driven algorithms. In this case, the wager should be distributed between matches whose outcomes can be estimated automatically given historical data only. The output of this algorithm is the value of the wager for each outcome. The optimization criterion for those algorithms is, of course, a maximal profit when betting odds are known.
No comments:
Post a Comment