I have done some work on the relationship between Profit on Turnover (POT) and Strike Rate (SR).

I asked myself the following question: are you better off with a selection strategy that has a Strike Rate of 35% and a POT of 20%, or a selection strategy that has a Strike Rate of 20% and a POT of 20%. At first glance you might think that they both should perform equally but this does not take into account the bank size required to support both methods.

If we assume that you have a $1000 bank to start with, base your longest expected run of outs for 1000 bets and want to cover the longest run of outs 5 times.

Selection Method 1
SR 35, POT 20
Starting Bank = 1000
Maximum Outs Expected per 1000 bets = 16.035
Times maximim outs covered = 5
Betting Units Required (16.035 * 5) = 80.175
Flat Stakes Bet per selection (1000/80.175) = 12.47
Profit for 200 bet year (200 * 12.47*.2) = $498.91

Selection Method 2
SR 20, POT 20
Starting Bank = 1000
Maximum Outs Expected per 1000 bets = 30.955
Times maximim outs covered = 5
Betting Units Required (30.955 * 5) = 154.775
Flat Stakes Bet per selection (1000/154.775) = 6.46
Profit for 200 bet year (200 * 6.46*.2) = $258.44

The results speak for themselves - you are far better off with Selection Method 1 even though the POT are exactly the same for each.

I conclude that the longer price your winners (and the lower your SR) then you must compensate for this extra risk by increasing your POT. In the above example Selection Method 2 would required a POT of 38.5% to achieve the same profit with the same amount of risk. Quite a difficult task don’t you think.

Appreciate hearing what others think.

obviously its a personal thing,
but I reckon anyone who doesnt have nerves of steel should look for place betting and a high strike rate.

from what one picks up in this forum a POT of around 30-40% long term is very good and this is not impossible to achieve with trots or races placegetters.
In most cases you would be looking at about 3 or 4 selections per week to achieve this goal.
By the way, it is generally true that the more selections you have the less likely you are to retain a high SR.

Be selective, keeping in mind you only need the 3 or 4 picks for the week and you should be able to get a high SR and POT.

best of luck,
Every Topic

GETTINGITRIGHT

This is from an earlier post by me.

"I believe that only three things are important in betting.

1/ A solid selection method.

2/ An even more solid staking system.

3/ The ability to combine 1 and 2 into a profitable combination.

The rest will fall into place."

POT is a result of the above and without the three of them POT will be very low or more than likely in the red.
There are many of us who can sort out a winner, but struggle to maximise the profit from it.
How many times have you scored a winner, bagged the tri, exacta, quinella and an each way bet only to realise after that a single win bet would have increased the POT by 100% or more and decreased the risk of the bet.

SOLID SELECTION METHOD. This is the method that you use to select winners. It doesn't matter whether you select 1 winner in 10 or 10/10. As long as you know what your strike rate is then you can stake from there.

SOLID STAKING SYSTEM. This is how you bet. You have to decide what sort of better you are. Are you an e/w, win, place, quinella, trifecta etc person. You must know prior to the race what you are looking to do. If you are a quinella or trifecta person then you need other selections and don't want to be scrambling at the last minute looking for the combo's.

COMBINING THE TWO. This is the hardest stage and is the amount you bet. You must know prior to the bet how much you are willing to outlay (what you are comfortable with) What sort of return are you looking for. You're strike rate determines this, as there is no point in backing favourites if you can only hit 1 winner in 10.

YOU'RE POT IS A RESULT OF THIS. Sure you can predict what POT you want or need but you're actual POT is determined by strike rate combined with staking.

GeneralGym,

I don't disagree with you. It's the "Combining th Two" i.e. the amount bet that I am talking about.

With expected flat stakes POT being equal a higher strike rate lets you safely bet more using the same bank than a lower expected strike rate. With safety being the chance of not losing your bank.

The POT I am refering to was the flat stakes POT you expect to acheive (which is useful for analysis). You are right, the ultimate thing that matters is the actual POT acheived using selection method and staking plan of choice.

Every Topic - I agree, the more bets you have the harder it will be to outperform the betting market. There have been a number of good posts showing this - our biggest advantage as punters is selectivity.

GETTINGITRIGHT
Quote
With expected flat stakes POT being equal a higher strike rate lets you safely bet more using the same bank than a lower expected strike rate. With safety being the chance of not losing your bank.
Unquote

First off remove the word "safety" from your vocabulary. There is no such thing as a safe bet. Even thinking that way can distract the way you bet by taking the "safer choice" option. eg: the horse paying the least of your selections, the one with the better form.

Secondly there is no difference between having a strike rate of 5 from 10 at an average dividend of $2 compared to a strike rate of 1/10 at $10. The POT is the same.

Once you have an established strike rate from your selection method and a betting method then appling the two together gives you your POT. Its a matter of not accepting odds below a certain level that will establish your POT in the black.

example. Your s/r is 1/10 then you need $10 winners to break even at level stakes.

You could increase the stakes on lesser dividends but you then increase the RISK FACTOR. You may win but you would more than likely be playing catchup all the time.

G.I.R.,

last year someone put up a post asking for suggestions for a Forum betting system and one reply was "bet on Sunline".

And he was right...if you had only bet Sunline for the place for a couple of years you would have probably had a 100% SR and a great POT.

I have a trot system which puts up about 50 place selections per month. If I bet every one of them I get about an 80%SR and a POT of 20+%.
If I then put in a price filter and make it a bet only if its paying over $1.40 then the SR goes up and the POT goes up to 50% and I get about 4 bets per week.

If I then got fussier and only bet on the best horse in my system on a regular basis I would get a 95% SR and a wonderful POT but would average only 1 bet every week and a half.

And that wouldnt be any fun :smile:
(However, there are probably a dozen animals in the three racing disciplines that if followed exclusively would give a very high SR and POT.)

Many people disagree with me but I think the SR is critical because the higher you can get it the further away you are from disaster.
If your SR is 10% you are always on the brink of disaster and you could be wiped out by a nose.
If your SR is 90% you can only ever lose a very small percentage of your bank at worst.

I would also advocate that a beginner only spend 2 or 3% of their bank at most on bets regardless of what their SR is or is planned to be.
Start slowly with a high SR, this should mean you are playing with the TAB's money after the first few bets, and then kkep using their money whilst you build up the bank.
Making a small amount of profit may seem pointless to some, but it doesnt take long ( only a few months) before your bank escalates in size.

Let me finally conclude by saying that anyone starting out in this endeavour should try to get the highest SR possible.
Then, as they accumulate money and look and learn and become more familiar they can look to higher paying results with lower SR's- if they feel a need to.
But I dont think anyone should start out with a method that gives only a 20%SR - you are too close to disaster.

see ya
Every Topic

We will have to agree to disagree. There is a difference. The difference being the volatility in your results for a discrete period of time. Over many thousands of bets the differences will even out but that doesn't help you if your broke.

GettingItRight,

You have missed one very important thing from your analysis - how many bets does each system have a week/day/month. You are quite right that if POT is the same then the system with the higher strike rate will give better dollar returns per X number of bets (assuming you make the logical adjustment to your bet size as you have done). But if the high strike rate system only gives you 10 bets per year but the low strike rate system gives you 10 a day then your 200 bets will take you 20 years with the high strike rate system but only 20 days with the low strike rate (an extreme example).

In my experience if you have 2 systems with a similar POT then the high strike rate system will almost certainly have a lower number of bets than the low strike rate system. It's just one of those things - you can't have high SR, high POT and high number of bets (or if you do your a millionaire and you're not wasting your time reading this!) :smile:

Your dollar profit is always determined by the POT multiplied by the bet value per period. The bet value is itself determined by the size of the bet (which, as you pointed out, should be a related to your strike rate and size of bank) and the number of bets.

Personally I prefer a system with a moderate POT but a reasonable number of bets each week to one with a high POT but only 1 bet a week - but other people disagree which is fine. As ET said you can keep refining a system till you only have 1 bet a month that is almost guaranteed to win - but where's the fun in that? :smile:

As to whether strike rate matters - I don't really think so as long as your POT is reasonable and you have enough action to ensure a decent number of winners. For example if you have a strike rate of 75% but only 4 bets/week then you will expect 3 winners/week. If your strike rate is 10% but you have 100 bets/week then you will expect 10 winners/week. Your 100 bets will all be much smaller than the 4 bets in the other system but if the profit is the same, or better, does it matter?

_________________
"Computers can do that????" - Homer Simpson

[ This Message was edited by: becareful on 2003-02-04 12:27 ]

BECAREFUL
Thank You.

GETTINGITRIGHT
We agree to disagree.
Good Luck with your thinking.

BC,

Yes your point is valid. In the original analysis the number of bets per year was kept the same for both selection methods – 200 per year. If the selection method with the lower SR picks 386 runners per year then the two methods deliver exactly the same profit for the same amount of risk. A matter of personal taste as to which you would prefer.

By the way, I was in no way saying that the above analysis should be used as the only way to compare selection methods, rather I was just pointing out something of interest to consider.

Happy punting to all.