Examining variance - Straight betting vs Parlaying
I hope you are all having a great holiday season!
We see a lot of confusion regarding parlays.
Is Allsopp mad for laying the juice on a -500 favorite straight?
Is it not better to put the pick in a parlay?
No, parlays are way to risky, with a lot of variance! etc. etc.
To me, the answer is that it comes down to personal preferences. It happens that I straight bet a -350 favorite. But it also happens that I ad a +400 dog to a parlay. Why do I do what I do? It depends.
But my point with this topic is not to talk about my personal strategies.
It bugs me when I see someone who does not understand the fact that parlaying a certain selection does absolutely NOTHING for the value of that pick. Value can not magically appear through adding two picks together, nor can it disappear by doing so. The value, be it positive or negative, is constant and to be successful at what we do, we must pick more bets containing positive value than negative value over "the long run" and stake these bets in a way that makes us money.
I hope we are in agreement so far?
I have a lot of odds in my databases. The odds I used for this example are the closing odds from 5Dimes. I decided to "place a bet" on every favorite competing in the UFC, from mid 2007 through late 2014 (I can make an updated version until 2016 if anyone really wants it).
I placed these bets in three different ways.
2. Parlaying two fighters together
3. Parlaying three fighters together
I only parlayed in chronological order, so fighter 1&2, 3&4, 5&6, or 1&2&3, 4&5&6 and so on...
I stake each bet with 100 monies
I was happy to see that I got the results I expected, but even though I felt I knew the answer, I am amazed about how little the variance changes. Take a look at the graph and see if you understand the effects of the different betting strategies. In one of the strategies we end up with a bit more money, but this could have gone either way and is due to variance.
So, please never try to create value by adding that big favorite in a parlay, or tell Allsopp he´s crazy for laying high juice and that he´s better off parlaying the picks instead.
But more importantly, keep picking bets with a lot of positive value, and bet them however you feel like betting them and get that money!!! Bring 2016 on :yahoo:
Hey Nordic. I got something for you that I want you to take a look at. Because to be honest I'm at odds on how to look at things properly.
I full understand how parlaying doesn't add value. Thats easily proven with math.
However, I'm starting to think parlaying can in some cases based on your strategy mitigate risk. Let me explain. (remember I'm still not sure on this theory).
Two Straight bets at odds of -300 or 1.33
Fighter X -300 Risking 3 units
Fighter Y -300 Risking 3 units
Lets Assume both bets lose. That would yield - 6 units.
Lets Assume 1 bet loses 1 bet wins. That would wield - 2 units
Lets Assume both bets win. That would yield +2 units
However if I parlayed the same bets this would be the results.
2 fighter parlay at odds of -300 each = (-128)
Fighter X parlayed with Fighter Y Risking 3 units to make 2.34
Lets Assume both bets lose. That would yield - 3 units
Lets assume 1 wins and 1 loses. That would yield - 3 units
Lets assume both legs win. That would yield +2.34 units
So my conclusion is that I would minimize bigger losses if I parlayed in certain situations. But there's gotta be something I'm missing here. There's gotta0 be a separate variable that in the long run parlays will be more detrimental. But I am usually a guy who always picks favorites for the most part so I'll definitely be experimenting with some techniques in 2016 for sure.
Check out my record in cappertek. I picked 72% correctly (all straight bets. Zero parlays) out of 100 wagers placed. But it only yielded 40+ units. So I'm not sure what to think at this point.
Let me know your thoughts
I think your mistake is comparing the potential outcomes as if they are equally likely to happen. You need to incorporate their likelihood of occurring into your calculations. This is the downside of the parlay.
For example, the chance of the worst case scenario happening for for the parlay (- 3 units) is a lot higher than the chance of the worst case scenario for the independent bets (-6 units). The lower the % of occurrence, the lower the investment required.
So in a way, yes you can avoid large losses by parlaying, but the side effect is that you will be avoiding a lot of winning scenarios as well. Your capping/luck needs to be perfect to win the parlay, but only has to be above average to win the independent bets.
Consider how many times you miss that awesome parlay by 1 or 2 selections. I have about 4 of those in the past 2 days. If I had bet singles in those scenarios, I would be way better off (assuming I have the capital to invest). Most of the time you make a group of bets, you are going to win some and lose some. That will always be a losing parlay, but will only be losing independent bets ~half the time.
Mathematically, it rarely makes sense to parlay (this coming from someone who does a lot of parlays). It is always preferential to make the single bet and just re-invest your winnings manually into the second bet. This way you can account for new information/changes in opinion/cold feet and you aren't "locked" into your selections. The only time a parlay really makes sense in a strictly mathematical sense is when two games occur simultaneously and you want to reinvest the winnings from one into the other. The other reason to parlay is more practical: if you can't sit around the computer making bets all day...
I think the strategy you should choose should be based on your personal preference and feeling towards what you do. As we realise, the value won´t change a tall, so you won´t go too wrong if the choice is between playing small parlays or straight betting.
Looking at the extreme; if you would choose to play really big parlays, the long run might become way to long. But even if you were to put 100 picks per parlay, you would get the same value (but probably you would not live long enough for things to even out).
Judging from this Garrettz;
"Consider how many times you miss that awesome parlay by 1 or 2 selections.",
I assume you are thinking mostly about parlays with many legs? I will try to find data with much more than 2000 bets and keep doing larger multiples and see what happens. But in the tests I did now, I stayed with 2 and 3 X parlays because I wanted to show how close to straight betting the results will be.
I agree with a lot of what you wrote @GarrettZ.
But not this:
"It is always preferential to make the single bet and just re-invest your winnings manually into the second bet."
Always is not a word I like in betting 😉 If the events occur in close proximity to each other, like UFC bouts on the same card, then waiting for the first bout to finish before reinvesting will lead to significantly worse odds, more often than not (assuming we are winning players with some sense of how the lines will move)
The variance goes up the more legs we choose to parlay, but as you can see from the graph, if you parlay only two legs, the development is very similar to betting each leg straight.
I play some long shoot parlays, because I like. I see these bets as +ev lottery tickets and I am ok with the variance being so big that it may never "even out". But more often I parlay two or three big favourites into bets that are closer to 2.0/+100. I just don´t like to loose 500 when I try to win 100. I know the value is the same of course, but the feeling is better and I am ok with loosing a few more bets, rather than losing fewer big ones. I think it´s a form of tilt control as well for me. I also mostly play a lot of different smaller parlays (with the same selections), rather than just one or two big ones. I am not saying my strategy is superior (it´s not), but I am very happy with my results and it´s close to perfect for me.
I will have a look at your record later today MMA_Dog, I am on my way out.
Thank you both for your input and have a great end of 2015!
I wasn't the Parlay King for nothing :
1 evening out of 4, my parlay would hit, myltiplying my wager X 4-10. Rest of the time : Total Loss.
Workng with a modfied strategy these days.
To clarify :
I lost too many times, one favourite losing, usually, busting up my bet, so I went home empty-handed.
That is the reason I have no bankroll, although my pick % is around 70%.
Losing in those conditions is ridiculous and unacceptable.
So I am forced to change strategies.
I'm gunna build a chart later on so we can all examine it.
But for a quick example check this out.
Lets say albert tumenov(-254) and Brian ortega(-190) are both bets that i like.
Parlaying the 2 of them would be a losing strategy in the long term.
Albert Tumenov lets say I rank that bet as 4 stars.
Brian Ortega I rank this bet as 1.5 stars.
That is why it is a losing strategy
So for this event I have one speculative parlay for 2 units
Ortega/Holtzman +146 2 units.
Both fighters I think should win, however, both fighters can lose in several different ways. whether it be lack of experience, matchup style etc...
I rank both of these legs as 1.5 stars. and I have parlayed them at 2 units. Instead of 2 units straight each with a maximum total exposure of 4 units.
I hope that makes sense. I'll def keep you guys updated with my results.
I WHOLEHEARTEDLY AGREE about - when parlaying - combining picks with the same confidence level.
Yeah, I guess my post was mostly concerning larger parlays. I don't usually parlay two-three bets together. I do mostly low stakes longshot parlay and I've had pretty good luck with them. I've won 4 $1,000+ parlays with a <$50 starting bet in the last two months or so. I think my luck has dried up lately though. Just the other day I lost a $25 into $4,000 parlay by one goal in soccer/football. And if Kevin Lee would have won, that woulda been another ~$4k in parlays. argh.
For some reason, I just have a hard time using small parlays for odds like +100. Just because it requires large stakes to matter. Its certainly an irrational bias, though. I also hate betting on singles with less than -200 odds. If the value is there, i should make the bet, I know. But the upside is so minor that I take losses on those bets really hard.
Good point Nordic, lines changing in a detrimental direction is another reason to play parlays as opposed to singles (or open parlays for that matter). Hadn't thought of that. That is probably a level of skill that I don't posses yet, not only picking correctly but accurately judging line movement (except where its obvious the line maker missed the mark).
Do you agree that, regardless of the parlay size (i.e, number of sides parlayed together), the singles player and the parlay player (betting on exactly the same sides), should eventually have the same result? I mean with a sample size large enough to eliminate the effects of variance. This seems logical to me, and I think that's what you mean by the value won't change, but I may be missing something.
IMO Small Longshot Parlays are a completely different Tactic than Large 2-3 pick parlays that combine for about even odds. I believe even a 3-pick large parlay is too risky now, and try to stick with 2 maximum.
My Worst Parlays Ever were 4-pickers, and my 3-pickers have lost about half the time, when I otherwise would have come out ahead.
I try not to include Underdogs in my ("large") Parlays, as I feel like an idiot when the Dog wins, but one of my added favourites ruins it.
My next area of math to de-bug is Bet Sizing. Since I don't have a lot of money, I tend to get impatient about multiplying my money as quickly as possible, so I often go All-In and Double-or-Nothing, and ultimately end up walking home in my sock feet again. But that's another sub-topic.
[quote quote=24000]he only time a parlay really makes sense in a strictly mathematical sense is when two games occur simultaneously and you want to reinvest the winnings from one into the other[/quote]
Thats what an If bet is for
@GarrettZ That is exactly what I mean.
Judging from the graphs, the 2x parlays follow the straight bets very closely and end up almost at the same result over 2000-ish bets/fights. The 3x parlays end up a bit further from the straight bets, but given enough time i.e. bets, I expect this to even out as well.
It´s obviously very tricky to know what way the lines will move, but sometimes we can make an educated guess.
@MMA_Dog I have not really thought about the confidence level, but somehow it makes sense to me. Personally, I play quite a few different parlays each event and I include my most confident picks in the most parlays. This is an art and no science for me, but I have been happy with most of what I have been doing this year.
"Lets say albert tumenov(-254) and Brian ortega(-190) are both bets that i like.
Parlaying the 2 of them would be a losing strategy in the long term."
If you are going to bet the same amount on both guys straight, you are not loosing value (or money) over the long run by parlaying them together. But if there is more value on Einstein, I guess you would make more by straight betting them and placing more money on him than you can trust T-city with. Makes sense?
I am not an expert at all, I am just curious and I like graphs and big data etc. I will see if I can get my hands on even bigger data sets and do other experiments. Would be amazing if we could get big data sets with different confidence levels, but I have no clue where we could get that from..
I will for sure do 4x and 5x as well and we can see how they turn out. I won´t have time right now, but fairly soon as I am interested in this.
Yeah, you graph is pretty clear for small parlays. I'm just curious whether that will hold when you get to 10+ parlays. I can't see any reason why the rule would change (although I would expect a larger data set would be required to overcome variance for a 10 parlay than for a 3 parlay), but I'm not certain.
guys wouldn't it be easy to use acca on betfair when playng parlay, that way have less chance to lose your money :good:
Hello yaiyen, I am not on betfair (I use matchbook for my exchange needs), so I am not sure what acca is?
GarrettZ, I feel pretty certain it would even out even with 10x parlays, but possibly way after my lifetime 😉