Applying The Pareto Principle To Improve Your Betting
The Pareto Principle And Betting
In betting (and in life), we lead ourselves to believe that all our efforts are equally worthwhile. That all of your efforts will all contribute towards a positive outcome. However, what if I was to tell you that most of your betting success will actually come from only 20% of your actions?
The Pareto principle is a little more complicated than that, but in a nutshell, this is the idea that it encapsulates. The Italian economist, Vilfredo Pareto, first mentioned it when he noticed that 80% of the land in Italy was owned by 20% of the people. In lots of other areas of life, we notice that roughly 20% of the causes lead to 80% of the effects. The theory has been widely adopted in the business world and referenced in a wide range of literature.
Examples of the Pareto Principle from the real world
80% of the world’s income is centred in 20% of the world’s countries
80% of a business’s sales come from 20% of their products
80% of an athlete’s impact comes from 20% of the exercises and habits
80% of your phone calls will be to 20% of the people in your contact list
80% of what you will take away from this article will come from only 20% of the words
The Pareto Principle in the betting world
Ok, that’s all very interesting but how does it relate to your own betting?
1) Finding Winners
Applying this to horse racing, the theory suggests that 80% of all race winners will come from a selection of 20% of the top horses and jockeys. Of course, just knowing this isn’t enough to make consistent profit but it’s a great starting point to filter down your selections further.
Additionally, 80% of winners will come from the Top 5 in the betting.
You could apply this to other sports too. On a given day, you may be narrowing down 80% of the fixtures to 20% that are strong contenders for value bets or trades.
Long term, we can also assume that 80% of league champions will come from a pool of 20% of football clubs. Take the example of the Premier League. Leicester didn’t get the message but realistically the favourites each year will be a band of the top 5 clubs: Liverpool, Man City, Chelsea, Man United and one other. What you’ll find is that almost all years, the winner will come from the top 5 in the betting markets at the start of the season.
2) Staking plans and bankroll management
Going back to the previous article on place betting, if we know that the odds are higher for a selection to win than to place, then placing an each way bet with equal stakes may not always be the best option. Using the 80/20 rule, we can weight our staking with 80% of our investment on the likelier place outcome and 20% on the riskier win option. This can help increase our strike rate and keep our wins more consistent. The added bonus is that a winner will still record a nice extra profit but our place selections will slowly build up over time. This could be a useful strategy for you if you prefer a higher strike rate and lower variance above occasional big winners.
In fact, this approach is exactly the one that we take when it comes to our “Safe Bets” service.
It is a 100% UK horse racing focused and splits it's stakes between both the win and place markets, and between backing and laying.
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Learn more about Safe Bets here, while also joining the priority waiting list.
3) Finding an edge and specialising
In your own betting, think about the processes you are using at the moment. The Pareto principle would suggest that most of your success is coming from a small part of your endeavours. That’s not to say that all your effort isn’t important but your time is limited. Especially if you are not a professional, you will have work commitments that make this a challenge.
How much time are you spending researching selections? You may not want to pay for subscriptions to services but ask yourself whether the time they save you in research are worth more than the cost per hour you have to spend doing this yourself. Immediately you can streamline some of your effort to focus on the aspects of your research that will lead to more profit.
Consider Predictology's array of football betting tools including free predictions, free betting systems, AI match analysis and a comprehensive system builder. Once you have developed a strategy, Predictology can do all the work for you, and all you need to do is check your email and place your next bet.
Pick out your strategies that are most profitable and instead of speeding yourself thin, stick to what you are best at and improve it even further. You will find that specialising in a narrower (20%) band of particular markets will lead to greater success than betting on a wider range.
For example, you might bet on horse racing, greyhounds, tennis, football and cricket. You might find that you make far more on one of those sports than all the others, so ask yourself how much are you really missing out on by not betting on the others. If you want to take your betting seriously then you need to be ruthless with your portfolio. Most professional traders and sports bettors have a very narrow focus and will concentrate on one sport. In many cases, they will focus on one particular market, which will be the focus of 80% of their bets.
In conclusion
The Pareto principle might not apply to everything in your life but you’ll be surprised how often it does. Of course it isn’t an exact science and doesn’t always translate to a literal 80/20 split, but you’d be impressed at just how often it comes remarkably close this amount.
In your own betting, think about how you can save yourself valuable time. Some of that comes from experience and you will get quicker at some things over time. Others will be a case of trial, error and experimentation. Once you can hone in your strong points and cut down on your time inefficiencies, you’ll be able to make real changes that will have a positive effect on your bankroll in the long term.
And really think about where you place your bets. It's remarkable how many people come to me for advice on a new system when they already have a profitable model but feel they need something extra, rather than looking to focus and scale what works best for them already.
Enjoying this topic? Why not check out:
> How To Scalp The Betfair Markets
> What Causes Betting Odds To Move?
> Reading Betfair Graphs Like A Pro Trader
Neel is a full time sports bettor and trader with a background and interest in betting psychology. He was a teacher in his former life and is also a freelance writer. You can reach him via twitter- @mybettorlife or visit his blog mybettorlife.com for his latest articles.