This was actually a service that I recommended as being one worth your consideration, and a very good comment was left by David asking me about the downswings this service had encountered.
And it is that comment which has spurred me to write today’s post.
Downswings are an inevitable part of betting. You will often hear people saying that’s fine as long as the upswings outweigh them. In fact I’ve said that myself in the past.
But the truth is that statement can be a bit misleading because the upswings will never outweigh the downswings.
The fact is that you will ALWAYS have more and longer downswings than upswings.
There’s no way around this. It’s something that we need to accept as bettors, without accepting it you will never win.
Before the layers amongst you say, what about laying… you’re right that does work slightly differently. I’m focusing on bets that require the horse to win or get a place finish position.
Taking the average strike rate of selections across every tipster we’ve ever proofed on the Race Advisor, it sits at 30%.
That’s actually higher than I was expecting.
30% can be consider a very good strike rate. However that still means…
…we’re losing 70% of our bets.
Read that again, it’s very important.
We are LOSING 70% of our bets even when we have what would be considered to be a very strong strike rate.
That in itself explains why you will have more and longer downswings than upswings. Quite simply because we lose more than double the amount we win.
So rather than saying our upswings should outweigh our downswings, we should say that our upswings need to generate more profit than our downswings generate in losses.
That is something totally different.
Now that we know we’re going to lose far more bets than we can win, it’s time to get into what we can expect from a downswing.
Generally punters like to see profitable returns within a week or a few weeks.
Of course that will happen, occasionally, when we’re on a good upswing and making our profits. But the majority of time we’re going to be losing.
The cycle goes something like this:
- Make a big profit quickly, for example +100 units.
- Pay back 50% of this profit over the next couple of months, for example -50 units.
- Make a small profit quickly, for example +20 units.
- Pay back this profit and more over the next few weeks, for example -30 units.
- Make a small profit quickly, for example +10 units.
- Pay back this profit and more over the next few weeks, for example -15 units.
- Make a big profit quickly, for example +75 units.
Let’s say this cycle took six months, at the end of this cycle you’d be in profit by +110 units.
To the average betting shop punter this looks pretty bad. After all, at the end of the first period we were up 100 units and then it took nearly six months to make another 10 units. During that six month periods we were in what would be considered a downswing.
If this was a tipping service and you’d joined the service on the first Pay Back cycle then you’d not be in profit until the end of six months and then you’d only be in profit by 10 units.
But this doesn’t mean the tipster is bad or that we shouldn’t trust their selections. This is just normal variance. You can see this in any type of betting whether it’s horse racing, poker, forex or stocks and shares. The timeframe differs of course, poker can be a lot faster if you play a lot of games and stocks and shares will be hugely slower. But the principle is true across all forms of betting.
This all sounds pretty doom and gloom.
But it’s not.
In fact this principle works in our benefit because 99% of bettors will never be able to get their heads around understanding that a downswing can last three months or longer.
That’s the reason I always say you should never join a tipping service for less than three months and ideally you should join for six, because the variance means that if you join at the beginning of a downswing you may not see profit for three to six months. If you’ve done your research well then you can budget for that and set your expectations to make enough at the end of that six month period.
But the key is to understanding that it is normal for selections to have downswings of three to six months, in fact it’s rare for them not to.
Of course, when you start betting on selections will determine how long it will take you to hit a downswing. Take these Racing Consultant monthly profits as an example:
- Sep 2014 +59
- Oct 2014 -29
- Nov 2014 +25
- Dec 2014 +10
- Jan 2015 -10
- Feb 2015 +11
- Mar 2015 -26
- Apr 2015 +44
- May 2015 +73
If you joined in September 2014 you’d think the service was great. If you joined in October 2014 you’d think they were awful, and if you joined in December you’d think they were pretty poor, after all the profit made in December and February would be gone and more by the end of March.
Assume you had only joined this service for one month to see how they did. The chances are you would have left. In fact if you’d joined this service for three months in December you would probably have left.
However if you’d done your research and understood variance and downswings but were confident these tipsters knew what they were doing and joined for six months in December, it would have taken until the fifth month for your payoff to come, but come it would and in a big way!
This concept can take a while to get your head around, after all the bookmakers purposefully try to make us focus on the short-term rather than the long-term. That means we expect profits quickly.
The punters that can’t get their head around this concept will forever be jumping for downswing to downswing, making it impossible for them to profit.
But if you understand how this works, understand that when you start using selections you MUST be in it for the long haul then you’ll reap the benefits.
Of course there is a way to help you assess whether your selections are still finding an edge even during a downswing. It can give you the confidence to keep betting even when things look bleak.
If you’d like me to share this technique with you then let me know by leaving a comment. And of course, if you have any questions then let me know.