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A concept recently mentioned by Temujin here:
and of paramount importance whenever devising a trading/betting strategy; calculating an EV (Expected Value), weighing a (supposed to be) edge, etc.
You are using a positive leverage (your return is potentially bigger than the money at stake, aka risked) whenever you
BACK at odds > 2
or
LAY at odds < 2
You are using a negative leverage (your return will always be smaller than the money at stake, aka risked) whenever you
BACK at odds < 2
or
LAY at odds > 2
whenever backing or laying at odds = 2 you have no leverage either sides (leverage is zero).
So we can say that odds @ 2 are our pivot point for leverage
Although the above sounds quite simple and trivial it affects very much any betting strategy /money management.
But that's not all. Since you have to pay commissions on winners the above statements are not actually true as you should factor them in (what follows are rough but effective pivot points):
Normal commissions (5%)
Pivot points:
BACK: 2.05; LAY: 1.95
PC1 (20/23%)
BACK: 2.2/2.23; LAY: 1.8/1.77
PC2 (40/60%)
BACK: 2.4/2.6 ; LAY: 1.6/ 1.4
You now can understand why betting edges/systems that have proved profitable under one commissions rate may turn into losers under different ones.
Furthermore: the first leverage's point of impact in evaluating a possible EV / planning and backtesting a betting/trading strategy, at first glance, is that with positive leverage you can live with strike rates < 50% (less than 50% of winners), while with negative leverage the number of your winners needs to be larger than that of the losers.
For a deeper approach to the concept of leverage in Finance and Trading see:
and of paramount importance whenever devising a trading/betting strategy; calculating an EV (Expected Value), weighing a (supposed to be) edge, etc.
You are using a positive leverage (your return is potentially bigger than the money at stake, aka risked) whenever you
BACK at odds > 2
or
LAY at odds < 2
You are using a negative leverage (your return will always be smaller than the money at stake, aka risked) whenever you
BACK at odds < 2
or
LAY at odds > 2
whenever backing or laying at odds = 2 you have no leverage either sides (leverage is zero).
So we can say that odds @ 2 are our pivot point for leverage
Although the above sounds quite simple and trivial it affects very much any betting strategy /money management.
But that's not all. Since you have to pay commissions on winners the above statements are not actually true as you should factor them in (what follows are rough but effective pivot points):
Normal commissions (5%)
Pivot points:
BACK: 2.05; LAY: 1.95
PC1 (20/23%)
BACK: 2.2/2.23; LAY: 1.8/1.77
PC2 (40/60%)
BACK: 2.4/2.6 ; LAY: 1.6/ 1.4
You now can understand why betting edges/systems that have proved profitable under one commissions rate may turn into losers under different ones.
Furthermore: the first leverage's point of impact in evaluating a possible EV / planning and backtesting a betting/trading strategy, at first glance, is that with positive leverage you can live with strike rates < 50% (less than 50% of winners), while with negative leverage the number of your winners needs to be larger than that of the losers.
For a deeper approach to the concept of leverage in Finance and Trading see:
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