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Maths · the arithmetic behind a price

Maths

How long a losing run is normal

At a 55 per cent strike rate, six consecutive losses happen roughly once in every eighty sequences of six. A season containing several hundred bets contains many overlapping sequences, so a run of six is close to guaranteed.

Independent events cluster more than intuition allows. The eye expects alternation and the mathematics produces streaks, which is why a genuinely random sequence always looks suspiciously lumpy to whoever is living through it.

What a good season contains Three hundred bets at 55 per cent: expect several runs of five or more losses, at least one of six or seven, and a drawdown of twenty units or more somewhere in the middle. The final figure hides every one of them.

The reverse is equally true and less remarked on. Winning runs of the same length occur just as readily, and reading those as evidence of a hot process is the same error wearing better clothes.

Here is the catch. The moment a normal run is misread as a broken process is the moment stakes change, and the change costs more than the run did.

What to do with it. Decide in advance what length of losing run would genuinely be evidence of a problem, using the arithmetic rather than the feeling, and do nothing until it happens.

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