t-selections
The "t-selections" Wagering Strategy
... Wagering strategy based on the Kelly criterion...How to determine the optimal size of a series of bets....?
If Warren Buffett and Bill Gross use it - Why not you and I?
My suggested wagering strategy is based on the Kelly Criterion. It was described by J. L. Kelly, Jr. in 1956 and has proven to do better than any essentially different strategy in the long run.
The Kelly wagering strategy has become a part of mainstream investment theory and the claim has been made that well-known successful investors including Warren Buffett and Bill Gross use the Kelly methods. It has mostly been applied to the stock market but I feel has a rightful place in horse betting as well. There are two assumptions that need to be made to be successful. The first is based on the percentage probability that a particular horse will win the race (Calculated by my system for every horse) AND second, we know the potential benefit of a win (Easily calculated for horse racing since we know what the expected payouts will be...
Here is a graph depicting the Kelly wagering strategy compared to flat betting over 1,000 bets:
In the above example, one thousand bets were made. It is very clear that the using the Kelly criterion compared to flat betting is superior. In the short term, the advantage will be minimal, but, with time and with each subsequent bet, the bettors using the Kelly criterion will amass a much larger bankroll much faster. Also, in the initial phases, the Kelly strategy will be slightly more volatile, but, well worth the potential gain.
To decrease this volatility, I advocate using a fractional Kelly strategy, that is, betting a set fraction of the Kelly suggested bet size AND NEVER betting more than a set percentage of the total bankroll. At times, the Kelly strategy will point to betting over 30% of the total bankroll, but, I strongly disagree one should risk that much of the total bankroll, no matter how certain the horse is to win.....
The t-selections "Optimal Wagering Calculator"