Pickstreak Stats Review: Part One
I've been working hard on my stats spreadsheets all weekend. It takes me a while, I do all my work on a burner phone that I ripped off from Kroger, but I think I made some real breakthroughs.
In Part One of our Pickstreak Stats Review, we'll look back at our April numbers:
*Note that we started with 40 units. Our Maximum Potential Peak, Actual Peak ROI, EOM Closed Equity and Drawdown numbers are all based on this intial investment figure.
In April, I went 8-3, good for a 72.73% winning percentage. The wA Wager Odds for all 11 bets ended up at (-165). The probability of winning a bet at (-165) odds is 62.45% -- in April, I picked winners around 10.3% better than the odds posted by the bookies. A 72.73% winning percentage would suggest my wA Risk to be (-265). That's a big swing. If you consider the VIG is around 2.5%, my picks beat the bookies odds by around 7.8%. I should have had a return of 7.8% or better.
I ended up with a 5.0% gain on the month. That meant to me that my risk management is underperforming. To diagnose the issue, I first compared my wagering system to a hypothetical system I call the Static Wager System. The Static Wager System bets one unit on every pick, racking all the winners, crumpling up the losers. It doesn't pyramid winners. It never bets more than one unit on any given pick. It never bets less than one unit on any given pick. The Pickstreak System I am developing aims to press winning bets, pyramid winnings to increase leverage, to ultimately improve overall risk to return ratios.
In April, the Pickstreak System both succeeded and it failed. Where it succeeded was in the leverage department. If you compare the Total Units Wagered and the AVG Bet Size of the Pickstreak System and the Static Wager System, the Pickstreak System put 55% more money in play while maintaining a Maximum Potential Drawdown that was 0.86% better than the Static Wager System. That's a legitimate increase in leverage without any additional risk.
Where we failed: we weren't aggressive enough with our bets. We managed our risk tightly and turned in a profit of only 5% -- it should have been at least 7%. The Static Wager System gained 2.81 units, outperforming the Pickstreak system by 2.03% in what you might consider the most important statistic: End of Month Closed Equity (Profit / Loss).
That is a failure of sorts. However, if you look at the Pickstreak System and the Maximum Potential Peak (Maximum Potential Account Balance) of 47.24 units, it is 7.68% higher than the Static Wager System's Maximum Potential Peak of 44.17 units. Even with our tight risk management, we created the potential for gains that could have outperformed significantly.
In April, the Pickstreak System increased upside potential by 7.68% and reduced downside risk by 0.83% -- that's our goal -- use leverage to increase upside potential while limiting any substantial increase in drawdowns.
But the real eye-opening numbers are the gains that could have been made had we used all of our leverage optimally.
Have a look at the graphic below:
We went 8-3 in April with our picks. From 04/22 to 04/29 we posted a winning streak of six games. If we had pressed our bets perfectly, maximizing our open profit and our leverage, the Pickstreak System would of posted an Actual Peak ROI of 75.9 units. That represents an 89.75% return on our initial investment in our first two weeks of making picks! Our Maximum Potential Peak was a whopping 91.85 units. Had we won a seventh game in a row, and pressed our bets according to the Optimal Bet chart, we would have posted a 129.63% return.
As you can see in the graphic, we lost that seventh game. It cost the Pickstreak System 5.24 units, a 13.1 percent hit on what would have been a 18.1 percent EOM Closed Equity return. It cost Optimal Bet 38.9 units. That's a big hypothetical bet that started as one unit. It is difficult to keep pressing the bets without taking down some profits. It's hard to stay on that Optimal Bet path.
The difficult part about pressing your bets optimally: you can never be certain that the next bet will be a winner. That uncertainty calls into question your appetite for risk. You may be playing with house money, but if you don't take some of it down, a string of losses will eventually eat into your bankroll and increase your monthly drawdown. As you can see, there are big potential returns if you can press your bets optimally, but it's a delicate balance. You have to play for the big wins but you have to mitigate future drawdowns by taking down some profits when you have them in hand.
Pickstreak finished up 2.0 units for a five percent return. All in all, not a bad month. We picked winners, the most difficult part of the game is picking the winners and beating the bookie's odds -- and we crushed it in that department.
We created some leverage. Our gain of 7.68% in potential returns doesn't come close to what was possible as reflected in the Optimal Bet graphic above -- but we are on the right track.
We limited drawdown. We actually reduced our maximum potential drawdown by 0.86% in comparison to the Static Wager System. Not bad, but we could have taken on that risk and added some significant leverage.
To close, you have to first pick the winners. If you can beat the bookies odds by 5 to 10 percent every month, you will make money betting baseball games. Our picks beat the bookie's odds by 10.3% in April.
You have to pick winners to even have a shot at the big money gains. I put in a lot of time every day studying the trends and the boxscores. I have a good understanding of the players and the teams and the game, but there is luck involved in gambling and you can't remove it. No matter how good you are, you can get cold and unlucky.
Luck can crush your numbers like an empty can of Leinenkugel's Summer Shandy. It is why risk management is so important. It is why you have to find a way to get the most out of your wins. It's why you have to keep your drawdown in check and utilize a strategy that removes any and all possibility of taking a big loss to your closed account equity. Finding a way to optimize it all, bringing together the picks with the most edge and the most optimal bankroll management strategies, that is what I aim to do here at the Pickstreak Blog.
We're off to a pretty good start this season. That's our April review. Stay tuned for Part Two of our Pickstreak Stats Review where we'll dig into our May results.