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Hi Duritz,

I'm glad you've raised this type of question as it's something that has bothered me for the last couple of months. In my mind, the first thing you need to do is determine the expected lengths of losing streaks. For this, I've been using a program I found a while ago online called Risk of Ruin. It's pretty simple. You enter your strike rate, length of trials to run it over, and the minimum and maximum number of length of outs to test for, and it estimates for you the probability of the specified number of outs. After looking over the results, you decide on what the best guestimate is for the longest number of outs is.

For instance, in a test over 10,000 trials System A, with a strike rate of 22%, has a 45% probability of having a maximum losing streak of 33 outs. In a test over 10,000 trials System B, with a strike rate of 6%, has a 40% probability of having a maximum losing streak of 114 outs.

To make things difficult though, there's nothing saying that you could have a run of 114 outs, have a small win, followed by another run of say 96 outs! With these lengthy runs of outs possible, it would obviously be foolish to be betting say 5% of the bank as the standard bet size.

As far as staking goes, you obviously need to devise a plan that can sustain these lengthy losing streaks. I like the idea of betting a % of the bank, for instance 1%, so if starting with a bank of $1,000, then you would bet $10 on each qualifying selection. I stick with that $10 bet size for the week (I only bet Saturdays anyway), and revise the bet size based on where my bank stands at the start of the new week. Theoretically, this should help preserve the bank for quite a while in the case of an extended losing streak. For instance, if one had a bank of $1,000, had a 1% bet size, had an average of 10 bets a week and lost 10% of their bank every week during an extended losing streak, here's how the weekly tallies would go:

Starting bank = $1,000
Week 1 = $900 / Week 2 = $810 / Week 3 = $729 / Week 4 = $656 / Week 5 = $590.49 / Week 6 = $535.44 / Week 7 = $478.30 / Week 8 = $430.37 / Week 9 = $387.42 / Week 10 = $348.68 / Week 11 = $313.81 / Week 12 = $282.43 / Week 13 = $254.19 / etc. By this time, the bank has likely endured the longest probable run of outs.

So theoretically, this 1% bet size (amount revised weekly), could sustain System B's initial maximum # of outs, it's just a matter what happens after that. Is it followed by another long run of outs?

Honestly Duritz, as Crash suggests neither System A nor System B seem very strong. System A has a decent stike rate, but it's average return is quite low. Maybe it could be improved by shopping around for better prices, but I suspect it would still be too low. And System B's strike rate is just too low, I would doubt many punters would have the guts to continue betting into a losing streak of over 100 outs. I'm glad you mentioned these systems were just theoretical.

Hopefully, I've been of some help to you. I think you're on the right track in using % of bank to determine betting size. You just need to find a system that has System A's strike rate combined with System B's average dividend (easier said than done).

In case it's of any benefit to you (and honestly to brag a little too), here's how I bet my system:

Strike rate = 23.5%, Average Div. = $7.81
With this strike rate, I can expect my longest losing streak to be roughly 32 in a test over 10,000 races. Decided on a 2% bet size.
My starting bank was $1,000.
Week 1 = Bet size $20, 11 bets for 2 wins returning $37.96 = $539.20 profit, so closing bank = $1,539.20
Week 2 = Bet size $31, 7 bets for 2 wins returning $11.32 = $133.92 profit, so closing bank = $1,673.12
Week 3 = Bet size $33, 17 bets for 5 wins returning $32.93 = $525.69 profit, so closing bank = $2,198.81
Week 4 = Bet size $44, 15 bets for 5 wins returning $48.58 = $1,477.52 profit, so closing bank+ $3,676.33
Week 5 = Bet size $74, 6 bets for 0 wins returning $0.00 = $444 loss, so closing bank = $3,232.33
Week 6 = Bet size $65, 10 bets for 2 wins returning $9.08 = $59.80 loss, so closing bank = $3,172.53
Week 7 = Bet size $63, 13 bets for 5 wins returning $31.20 = $1,146.60 profit, so closing bank = $4,319.13
Week 8 = Bet size $86, 10 bets for 3 wins returning $19.34 = $803.24 profit, so closing bank = $5,122.37
Week 9 = Bet size $102, 12 bets for 2 wins returning $11.91 = $9.18 loss, so closing bank = $5,113.19
Week 10 = Bet size $102, 10 bets for 2 wins returning $26.76 = $1,709.52 profit, so closing bank = $6,822.71
Week 11 = Bet size $136, 16 bets for 3 wins returning $19.78 = $514.08 profit, so closing bank = $7,336.79
Week 12 = Bet size $147, 22 bets for 4 wins returning $24.54 = $373.38 profit, so closing bank = $7,710.17

So after 12 weeks, using a 2% staking plan, my system has experienced an average weekly increase of roughly 18%. The winning horses paid between $4 and $32 for the win. My longest run of outs spread over numerous weeks was 15. I also had 1 run of 10 outs and 2 runs of 8 outs. So far though, these losing streaks haven't seemed to have damaged my bank too much. Fingers crossed my luck continues.

Best of luck to ya Duritz. Hope you find a winner or two.