WHY RISK IS MINIMAL?

How can a sport outcome be priced?

An outcome price must reflect its real probability to happen as much as possible, therefore it is determined by calculating its probabilities according to historical statistics.

For ex., looking at football matches we have three possible outcomes, home win, draw and away win, historically they are about 50%, 25% and 25% respectively. Actually every single match can have quite different outcomes probs, however let's assume the bookmaker has calculated 50-25-25 for a game they should consequently offer at :

HOME WIN 1 / 0.50 = 2.00

DRAW 1 / 0.25 = 4.00

AWAY WIN 1 / 0.25 = 4.00

If probs calculations are right we have an home win out of two for every match like this one, 1$ pay-out for each dollar staked is the “true” price.

home win 1$ * 2.00 = 2$ (- 1$ staked = 1$ pay-out)

home win, bookmaker -1$, punter +1$

draw or away win, bookmaker +1$, punter -1$.

In the long run there are neither gain nor loss for both the bookmaker and the punter. That's why we will never find an event priced like that, bookmakers apply a “profit margin” which allows them to stay in the business, its average is around 10% and price for our example outcomes are likely to be as follow:

HOME WIN 1 / (0.50 + 10%) = 1 / 0.55 = 1.82

DRAW 1 / (0.25 + 10%) = 1 / 0.275 = 3.64

AWAY WIN 1 / (0.25 + 10%) = 1 / 0.275 = 3.64

home win 1$ * 1.82 = 1.82$ (- 1$ staked = 0.82$ pay-out)

home win, bookmaker -1$, punter +0.82$

draw or away win, bookmaker +1$, punter -1$.

Bookmaker will profit in the long run, while the punter has a disadvantage, but look also to the other face of the medal, staking blindly onehundred times 1$ at odds 1.82 we cannot lose much more than 18$, the longest the run the more close to 18% of total staked will be the loss.

Of course we are willing to profit and never we will bet blindly, knowledge and informations being our main means, also we can gain some advantage from online bookmakers competition by purchasing the higher available odds.

But we have to do more, you could rightly argue that having a 10$ bank and betting at level stakes of 1$ a 28 wins / 33 losses run (for ex and always at odds 1.82) our 10$ bank will disappear.

10$ + (28$ * 0.82) = 10$ + 22.96$ = 32.96$

-1$ * 33 = -33$

32.96$ - 33$ = -0.04$

Well, 28 wins out of 61 bets or 46% hitting rate is a very bad run choosing 50% prob. outcomes, especially coming from pros.

However every serious investor should consider a “worst case scenario” as possible, in this case an appropriate staking plan to follow strictly will limit if not eliminate such a risk.

It consists in staking at level percentage of current bank for ex. 10%, stakes decrease while losing minimizing losses and increase while winning maximazing gains.

For ex., losing a 1000$ initial bank will take 10 losses in a row by staking 100$ each time, but 44 by betting 10% of current bank (100$, 90$, 81$....click here to see the table) to reach a 1$ bank which is the minimum stake accepted by many bookmakers.

SIS staking plan has been developed from the “level percentage system” to enhance still further its qualities, SIS staking plan has both better defensive and yielding capabilities, unfortunatly we cannot reveal how does it works since we don't have noticed it elsewhere yet, but you might verify its effectiveness applying our selections to a spreadsheet and using our last average stake percentage as level staking percentage.

We hope why “risk is minimal” issue is understandable, in case something is not clear yet please feel free to mail to sportrade@mail.lycos.it