Advance Question About The Long Term Expectation

Patrik Mellqvist

Let's say I have one Set & Forget method that on average produces 331 placed bets during the regular season and around 180 during the summer season, so an estimated 410 placed bets each year.

I assume that the pendulum effect with variance evens out after around 1000 placed bets and then we know during this time for sure the positive expectation will come true and show, the edge. Sometime early in the middle or at the end, as losses can chop and cluster in groups and create a downswing during any segment of our betting journey during one year.

So I tested 7 summer seasons where some summers produced below 80% strike ratio, but the overall strike ratio for the whole sample was above 83% and based on the last figure the break-even odds for that were 1.19 for SHG.
In real life and simulated the odds are 1.24 and above, yesterday one game had 1,29 so one raw estimation is that the average odds may be around 1,27/1.28 taking the high peaks and minimum at 1.24+.

Now to the point ...

So using several trading strategies and set-and-forget strategies, some of them will produce an overall profit during one year and some of them will be levelled or maybe some of them will have a downswing (( but we know in the long term that those with a downswing will make a comeback as we have an EDGE)).

So taking profit from those who produce well quarterly and for those with variance to Seattle with some strategies or maybe some are levelled or have a downswing we just continue with them as usual and maybe make a withdrawal after half or whole year passes when the pendulum effect with variance has settled with long term positive effect.

Is this how real life is trading is with expectation?

So is important to know that some will be up and some will have to settle for longer periods and the diversification of having a diverse portfolio is important.

Is that a real real-life expectation as an economically independent trader?

The following are reflections and questionable assumptions.

Cheers Patrik

Patrik Mellqvist

@Martin said in Advance Question About The Long Term Expectation:

@Patrik-Mellqvist yes 100% and be prepared that a strategy that does well can start to decline.

Some strategies have more variance than others too.

@Martin then we have faith in the simulation and statistical playing models before executing those strategies and if a sudden swing we can lay back with the knowledge that our work shows otherwise and continue knowing that we have positive expectations.

And with our experience doing homework we also know sudden drops in values and know how they can occur so that should not be a surprise when it happens and also have some degree of understanding of what kind of swings to expect based upon that knowledge.

Here is a small example with summer leagues, I know the majority will perform well and some summers will be less effective but the overall strike ratio will be 83,77%

2022/2023 94,44%
2021/2022 85,71%
2020/2021 71,43%
2019/2020 75%
2018/2019 93,33%
2017/2018 88,24%
2016/20217 78,26%

83,77% och tie odds 1,194

So with that estimated 1200 placed bets and another 2380 placed bets for regular season we can calculate the EDGE and expectation for several years or the long-term EDGE with 3500 placed trades.

That is what I will do before using my trading strategy and Set & Forget

Cheers

Martin

@Patrik-Mellqvist yes 100% and be prepared that a strategy that does well can start to decline.

Some strategies have more variance than others too.