I have done some work on the relationship between Profit on Turnover (POT) and Strike Rate (SR).

I asked myself the following question: are you better off with a selection strategy that has a Strike Rate of 35% and a POT of 20%, or a selection strategy that has a Strike Rate of 20% and a POT of 20%. At first glance you might think that they both should perform equally but this does not take into account the bank size required to support both methods.

If we assume that you have a $1000 bank to start with, base your longest expected run of outs for 1000 bets and want to cover the longest run of outs 5 times.

Selection Method 1
SR 35, POT 20
Starting Bank = 1000
Maximum Outs Expected per 1000 bets = 16.035
Times maximim outs covered = 5
Betting Units Required (16.035 * 5) = 80.175
Flat Stakes Bet per selection (1000/80.175) = 12.47
Profit for 200 bet year (200 * 12.47*.2) = $498.91

Selection Method 2
SR 20, POT 20
Starting Bank = 1000
Maximum Outs Expected per 1000 bets = 30.955
Times maximim outs covered = 5
Betting Units Required (30.955 * 5) = 154.775
Flat Stakes Bet per selection (1000/154.775) = 6.46
Profit for 200 bet year (200 * 6.46*.2) = $258.44

The results speak for themselves - you are far better off with Selection Method 1 even though the POT are exactly the same for each.

I conclude that the longer price your winners (and the lower your SR) then you must compensate for this extra risk by increasing your POT. In the above example Selection Method 2 would required a POT of 38.5% to achieve the same profit with the same amount of risk. Quite a difficult task don’t you think.

Appreciate hearing what others think.