how do you decide which system to follow? theoretical

[AlexisMartin]

So I'm a bit confused at the moment, and I guess its because I have not decided what I want as yet so I was wondering if others have found a way to deal with the following situation.

Two systems a backing system and laying system running in the same markets producing reasonable results; I'm not posting the drawdowns, upswings, average winners, average losers, no of trades, expectancy etc since the chart below summarises the situation.

How do you decided which system to follow over time, is it dependent on your risk appetite? profit objective? mood on the day? your reading of how the day will pan out?

At the moment I chop and change daily which is sub-optimal

The orange line is the backing method, more volatile
the blue line the laying method more stable
the grey line is running both systems at the same time only a margin increase in performance
The vertical axis is the points profit and horizontal axis is the no of events(trades)

sys chart.png

[LinusP]

Can you give some info on market type / when you are placing the bets?

You have a good sample here (assuming x axis is market/bet count)

[rik]

if both are profitable why not run both?

[marketraisen]

How do you decided which system to follow over time, is it dependent on your risk appetite? profit objective? mood on the day? your reading of how the day will pan out?

Certainly wouldnt make any decisions based on a profit objective or mood, would certainly make decisions based of risk appetite and a loss objective, which are just other ways of saying staking plans.

'reading of how the day will pan out' possibly, the sharp spikes up and down on the backing strategy, if theres some fundamental and reasonably obvious reason it performed differently on those days (could be anything from other markets soaking up liquidity changing prices, the weather, the combination of tracks/events being played out, whatever else that only you would be able to find out) then account for them when you see those conditions returning.

If youre confident that a strategy is profitable long term then volatility isnt a problem, its an issue that can be solved with staking sensibly, obviously on your numbers so far it would be reasonable to risk more laying than backing even if overall it would appear to have returned less overall.
Everyones risk aversion will be different, there may even be a mathematical sweet spot youll be able to find but for me, on your data so far, I'd be risking a quarter of whatever youre laying on the backing side.

[firlandsfarm]

Hi Alexis, as the guys here are saying it depends on what you want … if max profit then do both as both are profitable but then comes the question of stake. The stake for each could be set such that the max loss so far and within your test stats remains within your risk acceptance. But there is also volatility acceptance, if low then the lay system, if high enough then the back system. One observation I would make though is over 4,000 bets for a lay profit of c.10 points and a back profit of c.18 points looks fragile … that's an expected points return of less than 0.0025 for lay bets and less than 0.0045 for back bets. That would be too fine a margin for me, one measure I have is who is making the most profit from a system, me or Betfair … I guess in your case it's Betfair! :0

[Euler]

Some of it will depend upon how scalable you think the strategy is.

I run a number of strategies in horseracing markets but they all have their own limits. The most effective doesn't yield much per race, but winds quite frequently. However it's always struggled with scale, so I have adopted the strategy of winning small amounts but frequently and gradually raising stakes to the limit of the market.

In my experience, most markets have quite well-defined limits in terms of how much you can stake before you influence the outcome. But perhaps, run both strategies but on separate accounts and then you can see the divergence between each of them.