This strategy was devised by Jerome – a Tennis Trading League member. Thank you Jerome!!
The whole strategy is based on reversion to the mean.
Since we know that the long term expected return is 5% per week, we can consider this as the mean (plotted above in red). Of course the cumulative return will fluctuate above and below the mean. What the reversion to the mean theory tells us is that, over-time, the returns will go back to the mean (since this is the expected return). Differences from the mean are only short-term fluctuations. This means two things:
• When the returns are above the mean, they will fall back to it soon enough, ie, we will experience losses
• When the returns are below the mean, they will shoot-up to it soon enough, ie, we will experience winnings
Using these principles we can increase profits when the odds are greater in our favour. The profits will be increased by increasing the
stakes during those favourable times. I have devised two strategies based on these principles. Each strategy is “reset” every month: the mean is redrawn from the end of month cumulative returns.
We increase the stakes as soon as we get below the mean (in red). We return to normal stakes when we reach the mean. By default, the increased stake is double the normal stake, but it can be triple or more, only the risks associated increase as well as the profits.
Here we use another statistical tool, the standard deviation. This one is a representation of the fluctuations or disparity of the returns. The lower it is, the closer to the mean the returns are (and it’s true for the opposite). Statistics tell us something else: the returns will be within -1 standard deviation and +1 standard deviation from the mean. We use this principle to do the following: we increase the stakes when we get below -1 standard deviation from the mean, we then go back to normal stakes when we reach the mean. With this strategy, the profits can be even better and the impact of the volatility even smaller. BUT the high stakes opportunities are fewer, so patience is required.
It is even clearer here than for Strategy 1 that all the high stakes periods are profitable ones. High stakes area (when the returns are in the arrowed area)
Jerome has set up a website to help members use the strategy – http://ttl.richmouse.info/ – if any members have any questions, please send them to me and I will forward your query to Jerome…
Added note from Jerome: “Following this staking plan, the drawdowns can be bigger than with flat betting, but, as it can be seen on the website I built (http://ttl.richmouse.info/), both strategies reach a new high faster than plain level staking. I want to add that this type of staking is not for everybody (not the faint hearted) and true trust in the tips is mandatory (well, I for myself have no problem with that, even more after a under-dog bet landed at odds of 3.1!)”.
Andrew’s Staking Plan is an alternative plan to Jerome’s:
The Staking Plan is very straightforward:
1) Use 10% stakes on odds up to 1.5
2) Use 5% stakes on odds 1.51 to 1.9
3) Use 2.5% stakes on underdogs, which can usually be defined as 1.91 or above, though this can depend on your chosen bookie.
The 5% Flat Staking Plan Results can be found at : http://1drv.ms/145mhCG
Jerome records the stats on his own plans and kindly does stats on Andrews Staking Plan – you can access the stats by visiting http://ttl.richmouse.info/
If any members have other plans they wish to share with the community, please feel free to do so by contacting me any time. Good luck guys!