Understanding the Odds in Horseracing Systems
One of the nice features in using betting systems is that it allows you to track the performance of the system on paper before you make real bets. By analyzing your paper bets, you can calculate your expected profit percentage, your win percentage as well as your expected losing streaks.
In my opinion, the key factor in determining the horse players success or failure in using a handicapping system with real bets will be determined by his ability to deal with losing streaks. So, it is critical to your success to be able to predict the size and severity of the losing streaks that you will certainly come up against.
The first step to predicting your losing streaks is to calculate your win percentage. This is very easy to do. Let's say that you have tested a system on paper showing 71 winners in sample of 500 bets.
Here is the equation for calculating your win percentage:
100 * ( number of winners ) / ( total number of bets ) = Win %
Now, substituting the results of our paper bets gives us a win percentage of 14.2%:
100 * ( 71 ) / ( 500 ) = 14.2 %
To estimate the expected losing streaks, we locate the closest figure to our win percentage in the "%W" columnin which is the second column of the average losing streak chart up above. We see the closest value is 14.3%. Looking along this line and we see that our winners would have to average 6-to 1 odds just to break even and that the expected largest losing streak in a series of 1000 bets would be 34 losers in a row.
Psychologically, I have found it is most difficult for the average horse player to endure a losing streak of 10 or more losers in a row. So let's confine our attention to these large losing streaks. Again, looking at the chart we see that in every 1000 bets there would be an average of 27 losing streaks of 10 or more losers in a row.
So even if our average winner was paying over 8-to-1 odds and we were making a good profit, we would still be playing through a losing streak of 10 or more losers in a row over 37% of the time. This is the Achilles' heel of most long shot horseracing betting systems.
How Indicator Handicapping Reduces Losing Streaks
Indicator handicapping selections have fewer losing streaks because they have a higher win percentage than most betting systems. The powerful indicators identify horses who have the ability to control the pace of the race and to come out on top a large percentage of the time.
In using the Overlay Indicator to spot profitable situations, you will only be playing the horses that have the highest indicator rating or who are within three indicator points of the highest indicator rating. This will keep your win percentage in the 20% to 30% range. As you can see form the chart up above, with 20% to 30% winners you will have fewer losing streaks and have more fun playing the horses.