There are two vital questions that come into play when using tipsters to uncover positive expectation, one of which asks whether the tipster is skilled or simply lucky, and the other whether the track record is genuine.
It is important to look at the means in which you can access the credibility of a tipster’s record, and this can be done through evaluating their ability as well as studying closing prices and their overall history.
In order to get started, it is suggested that you conduct what is known as a t-test, which can help look for evidence of any forecasting skill that may be present. This is done by investigating the likelihood of a profit from multiple wagers could have simply happened by chance.
The smaller that the probability appears to be, the greater the chance that something such as skill would have caused it. That said, when a tipster’s betting record looks too good to be true, it is probably because it is and you should consider the fact that the record could have been manipulated.
Study Closing Prices
Prices change as bettors use money to express their opinions, which reflects the news on teams or players, with odds shortening as a team or player’s interest and attention increases.
Closing line odds that are offered just before a game begins should essentially be the most proficient point in the market and thus the truest representation of basic probability. Considered to be quite sharp, those that continuously beat the closing price bring information to the market that is then reflected in how they shorten the odds.
Constantly beating the closing price above the margin displays a sign of positive expectation and ultimately aids in distinguishing winning players from losing players.
The Wald-Wolfowitz Runs Test for Randomness
Another way to test the credibility of a tipster’s online sports betting NZ record is by conducting the Wald-Wolfowitz runs test for randomness, which determines if a binary data sequence can arise from a completely random process.
A tipster’s skill aside, there should still be sequences of losses and wins reflecting the underlying random noise that lies in the history, with each bet independent of the last. Tipsters advising even-money propositions that lack forecasting skill would essentially replicate a sample of coin tosses. A 74% strike rate is represented as 74:26 in favour of heads over tails, which means we will see three times as many heads as we will tails but there will still be randomness in the sequence distribution.
The Importance of Randomness
If the history of tips is not random then it has most certainly been manipulated, with an excessive number of short winning runs indicating that the tipster could have inserted a losing result too often to separate longer winning sequences.
This is done because humans actually suffer a cognitive bias that is referred to as the clustering illusion and pushes us to wrongfully consider clusters arising in random distributions to be more significant than they are in reality.
Thus, when asked to create binary sequences most people will switch between winning and losing if they think it appears to often. Tipster’s that have long winning runs may look unnatural but they could very well be random and true.