Possibly many have glazed over this rather important principle.

The more trials (bets) you have the more likely you will actually have the REAL performance point of your given method. Knowing what your real performance point is will enable you to trust your system/method to perform to that long term mark while riding out the deviation from such performance point.

The results of a system with a specific performance, as they appear one after the other is random, that is, the procession of results cannot be predicted. All that can be predicted is the over all performance (given you have a large enough sample to predict it accurately and don't change the method of application).

The volatility of individual (smaller group) of results is then the issue that most punters grapple with. To give example, long term our IR strike rate is 26.8% for the top pick based on 50,000+ races published and double that for our internal records, so something that I would consider to be a solid sample size. Yet, this strike rate has fluctuated on daily bases from 7% to 55%. On monthly bases this has recorded fluctuations from 24.5% to 29.7%. On Quarterly basis the fluctuation is less and yearly is less again.

Emotionally most people can handle the day when the strike rate reaches 55%, no problems there but as soon as we get a day like 7% the questions come out, whats wrong, whats broken, you shouldn't be having those horses on top, and those other horses should be ... and on it goes. To be honest, I am the first one to wonder! Yet, NOTHING is broken, what is happening is a random deviation which can and do last for days until a correction occurs.

I and those with understanding and confidence let these days/results wash over and move on, those that don't understand immediately start adjusting their methods, and moving their longterm performance point without even knowing what it is. Eventually this leads them to questioning every selection that looses and ends up in them giving up and moving on. Sadly, it is quite possible that many had the punting grail they still search for in their hands already and they threw it away.

I know the risks associated with my betting methods in terms of run of outs, bank draw-down both average and longest and volatility/performance in groups of bets samples because Axis has a module that performs these calculations and I wouldn't be without it; it has saved me thousands.

__________________
Michal - Ratings2Win Pty Ltd
R2W Axis - Axis is Australia's leading horse racing software and database;
with sophisticated form analysis tools and accurate horse performance ratings for TAB meetings.
http://www.ratings2win.com.au/