Thursday, 2 June 2011

Introduction to System 31

I'm in a position now to share the first cut of results from the new rating algorithm. I have taken the very early decision to just ignore Premiership Aways going forward for this set of ratings. Anyone who reads the blog will know how difficult it has been to make money backing Premiership Aways over the past few seasons and quite simply, it is much more difficult for away teams to win away from home than it is at home in the Premiership.

You'll get a team away from home who is playing much better than the team at home they face and the bookies will price up the home team at 5/4 and the away team at 2/1 and no matter what way you look at it, the away team will represent value on nearly every set of ratings you can formulate. I paid close attention to Fink Tank in the second half of the season last season and they'd usually agree with my ratings and have the away team as value but ultimately, it is very difficult to get the away team to win.

Although these new ratings are looking at maximising the returns from Draw No Bet, I isolated the Premiership Aways for DNB using these new ratings and it was a similar trend to my other ratings. The very high value bets will break even if you are lucky but the weak value bets thrown up week in, week out are heavy loss makers. Teams like Stoke, Blackburn and newly promoted sides will always be taken on with my ratings as they are so bad away from home and usually get outplayed at home too by classier teams but at the end of the day, this is a results business and these teams somehow manage to win games at home! Keeps it simple if I just exclude these games from the outset.

You can see it simply by looking at the Premier League table last season and teams like Birmingham, Blackburn, Stoke, Bolton, Newcastle, West Brom, Fulham, Everton all lost 5 games or less at home. When you consider they have to play the top 6 at home, then you can see that they didn't lose too many to other teams of the same calibre as them. Away from home, they lost 10,12,13,12,9,10,7,7 respectively. Simply, if given the choice between two equal ability sides in the Premiership, even though the odds are 5/4 for the home team and 2/1 for the away team, you don't want to be backing the away side!

Over time, this trend may change and the odds for away sides may drift as people look to lay them and then it will look foolish to filter the bets this way.

Just so everyone is clear, for these ratings, value is defined where the odds I calculate for DNB is greater than the odds being offered for DNB. Seems like it's simple and very obvious but it's not! I first started doing it by looking at the odds for a win or draw against the odds I calculated for a win or draw but of course, that would be defining value for Double Chance and not DNB! Hence, it took a wee bit of time to get my head around defining value in the case of DNB and even now, it's still not crystal clear as it depends on the home/away probability and the draw probability but the home/away probability carries much more weight than the draw probability.

Common sense really as the stake you place on the draw is much smaller than the stake you place on the team to win with DNB! Hence, my first two sets of ratings can look at a game and define there is no value to back either team but my new ratings tell me that there is value in backing the home or away team and the draw! Simply, the win price may not be value on its own but by bringing in the draw, this creates additional value to turn it into a value bet for DNB.

Anyway, leave me to worry about trying to interpret my ratings. Blows my head thinking about it and it's me who's building them!

Below is the first set of results from the ratings.

A few observations before we move on:

1). Don't place too much emphasis on season 09/10 as 50% of the results from this season are included in the backfitting process
2). Seasons 06/07,07/08,08/09 and 10/11 give the best indication of the likely profitability of the ratings going forward
3). Season 10/11 has a higher number of draws than I would like to see in any season and therefore, 10/11 isn't the best indicator of future performance of this system either I suspect
4). Therefore, the first 3 seasons actually represent the likely profitability of these ratings
5). In summary, expected returns may be circa. 15% for traditional H/A betting and 9% for DNB betting

Overall, I'm slightly disappointed with the results during backtesting but then again, it isn't too surprising. Unlike my previous systems, the ratings here have been fitted on DNB and not traditional H/A betting in the earlier seasons and therefore, the 15% for traditional H/A betting was never the aim! The 9% is the aim.

How good is 9% for the ratings for DNB? Well, if you compare it to my systems last season, these systems had an ROI of around 9% for DNB (and traditional H/A betting!). However, last season was an exceptionally good season for DNB and therefore, the 9% last season was probably above expectations. The 9% I'm looking at here is looking at the 3 worst seasons for DNB.

The key thing to remember though is that 9% is only from backing all the teams that appear as value. The next stage of the project is to look at the bets and how much value is apparent within each bet. Clearly, the higher the value, the higher the return and therefore, filtering the bets by value should enable us to increase the returns.

All the value bets will appear on a system called system 31. What I'm going to do is develop systems 32 and 33 now and then spend time getting the results into the same format as my other systems. These results will always be kept separate though so as people don't forget these are untested in a live environment and don't mix them up with my other systems which have now have one season of results.

Once I have the new set of systems 31-33, we can then look at whether we can do something really cool and look at teams that appear on the 3 rating algorithms! We could also mix up the other systems with the systems 31-33 but all of this is for later this summer. Lots more work to do before we get to that stage!

I'll be back next time with an update of system 32 hopefully.

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