Losing runs
Analysis of losing runs based on our track record
The each-way value bets EWEdge finds average 14.6 in decimal odds. Allowing for bookmaker margin, we assume a win rate just under 7%, so long runs without a winner are common. EWEdge targets bets where the place value covers the expected loss on the win part. These tend to be longer-priced horses, which increases variance.
Expected profit and variance
The table assumes £1 each-way, a 10% edge and our recorded betting mix. We use 10% rather than the record's 13.1% return, as explained in how much to bet.
| Bets | Expected | 68% confidence interval | 95% confidence interval | % chance of loss |
|---|---|---|---|---|
| 50 | £10 | −£30 to £50 | −£69 to £89 | 45% |
| 200 | £40 | −£39 to £119 | −£118 to £198 | 32% |
| 500 | £100 | −£25 to £225 | −£150 to £350 | 21% |
| 1,000 | £200 | £23 to £377 | −£154 to £554 | 13% |
After 1,000 bets there is still a 13% chance of losing.
How are the confidence intervals calculated?
The confidence intervals use the 68-95-99.7 rule. For a normal distribution, about 68% of results fall within one standard deviation of expectation, 95% within two and 99.7% within three. Standard deviation measures how widely results vary around the expected profit.
The model uses independent bets, a 6.9% win rate and a 10% overall edge. Standard deviation is calculated from the win, place-only and unplaced payouts and their probabilities, with a normal approximation for total profit.
Drawdown
A drawdown is a fall from a previous profit peak. You can finish in profit after a large drawdown.
These are the largest peak-to-trough losses within each sample, from 10,000 simulated sequences at £1 each-way.
| Bets | Median maximum drawdown | 95th percentile |
|---|---|---|
| 50 | £29 | £54 |
| 200 | £61 | £119 |
| 500 | £92 | £180 |
| 1,000 | £122 | £233 |
Conclusion
Whilst each-way value betting is profitable in the long-term, runs of losses should be expected along the way. The figures above show that drawdowns of £50 or £100 are not unusual at £1 each-way. Pick a stake that allows you to weather that variance. Find out how to calculate your optimal stake in how much to bet and compare the approaches in flat betting vs backing to win.
Further reading
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