Following on from my post yesterday about Rays Lays, we had another winning bet: Cavalieri – unplaced SP 4/1 Betfair SP 5.3 taking it to twenty winning bets in a row now.
I thought you might be interested in a little note he included in yesterdays e-mail:
“As its now nineteen winning bets in succession, also hope you’ll allow me to indulge myself and say a few words about probability.
The reason is that I’ve had a few emails from subscribers who say something along the lines of – if they have a loser they increase their stake, because there have never been two losing bets in succession. So instead of risking say 10% they risk 15%, or worse, double up ie. risk 20%, similar to the dreaded Martingale.
This is a dangerous and erroneous way of thinking – if the last bet has been a losing one, the probability of the next bet being a losing one neither increases nor decreases. If my counting is correct, since the trial started in mid-January there have been 83 bets and 11 losers. Say we average one losing bet in seven, this means the chances are that one time in approximately fifty we’ll have two losing bets in succession. And, one time in roughly three hundred and fifty bets, we’ll have three losers in succession, and so on.
If you have trouble getting your head round this, I suggest reading a book like The Black Swan or Fooled By Randomness, both by Nassim Nicholas Taleb. They’re a good read anyway, and also help explain why exactly the banking crisis happened (the bankers were betting huge amounts against things they didn’t think could happen, because they’d never happened before, and their mathematical models were wrong).
So the message is – it’s really best not to increase your stake if you’ve had a losing bet.
Ok, end of sermon.”
You can find the full results and details here: