Betting System Drawdowns Explained

I have been looking into a number of ideas recently to help find the best ways of making money consistently from your betting systems.

This includes the best ways to find out just what sort of stakes you should be using, given the statistics for the results that you already have.

For me, there is no better staking plan thatn the percentage staking plan, where your bets are determined by the size of your current betting bank.

Once you have deceide on the best percenatge of the bank to stake each time, then you just continue to bet that percentage each time and these will then increase as the bank grows and decrease as the bank reduces after losing bets.

Of course, no staking plan will safely work unless your betting system is making a profit to level stakes and this is the place to start when looking at your betting systems.

However, a system that makes money at level stakes, will improve your profits if you use the percentage staking plan and this is why I am a big fan of this staking plan.

I have written a couple of blog posts recently regarding longest losing runs and how to calculate the edge that you should have, taking your actual longest losing run against the expected losing run, given the number of bets and strike rate so far.

This is certainly one way that can help you decide on what stakes are best for you by calculating the percentage of your bank that you want to place on each bet.

Lately I have been looking at the highest drawdown amount that your system has been through so far. That is the largest amount of money that the bank has dropped from a peak point.

Drawdowns

It is all very well taking the results of a betting system that you are creating or testing and saying that at the end, or to date, your system has made X amount of profit. But that doesn't tell the whole story of how the balance fared over time and how bad things may have got at any one time.

If you are using our Inform Racing system builder, you can test out your system ideas using up to 10 years of past results and data.

So supposing that you decide to check your system rules over the past four or five years of results and see that they end up showing a nice, healthy profit.

Well that is all well and good, but what about if you told your friend about this system two years into using it, just when results start to dive somewhat, as he starts betting on the selections?

It is perhaps okay for you because you have built up your bank over the two years previously and whilst any 'drawdowns' or loss of profits that have occurred, will still affect your bank, it will immediately hit your friend and his bank balance as his bank immediately drops.

How knowing this can help you make - or not lose - money.

Knowing what the highest drawdown amount has been, will give you a good idea of the biggest losses, rather than number of losing bets in succession, given the current statistics and past results of your betting system.

You may have started with a £500 bank that over time increased to £1,500 before dropping again to £850, before recovering again to whatever your current total balance is now, say £2,500.

If you run your results through the system builder, all you will see without delving too deeply is that you started with £500 and now you have £2,500. Sweet!

But what about your friend who started betting the day after the bank hit the £1,500 mark?

And whose to say that sort of drop won't happen again, starting today?

Therefore it is best to know what has been the highest drawdown amount so far given your system rules so that you can be prepared for such eventualities. 

How to work out the highest drawdown.

Unfortunately, working out the biggest drawdown amount is not a simple as doing a quick calculation and getting a figure.

You need to download your system results into a spreadsheet and then run a set of formulas against each bet, to give you the biggest drawdown figure you have had so far.

I have created a Drawdown Calculator in Google Docs. which you can download and use a set of results that are produced as we have them on our system builder, so that you can just copy and paste these into the calculator.

From here you can work out the best stakes to use for your systems, going by the previous highest drawdown figure. Plus work out the percentage of the bank that you want to place on each bet when using the Inform Racing systm builder.

For this I have set up another calculator on the same Google Docs, spreadsheet that will work all of this out for you.

Take a look at the video now.

Download a copy of the Drawdown Calculator

This calculator is free to all Inform Racing subscribers. Just login and follow the links on the Noticeboard.

To subscribe to Inform Racing and use the profitable system that I shared in the video as well as get your copy of the calculator, plus much more, hit the link below now.