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'ZEN and the art of backtesting'

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pieces coming together for backtesting...

first thing about the system is there are too many numbers to play. Let me share some insights on my system design process...

To "win" at backtesting there are actually several components involved (some at the system design level)...

A). For the backtest period, amount won MUST be greater than amount played (even if only by $1)
B). Cyclic repeatability must fall within an interval of draws not to exceed the prize payout for the standard bet. (huh? o.k. for the PA lottery pick 3... $1 straight bet returns a fixed prze of $500, for a one-number system, this means it MUST not have any string of misses greater than 498 draws ((499 is break-even and 500 loses the original dollar)). In a nutshell, the system must be able to pick 1 straight winner EVERY 498 games (or less) to be declared a winner... This is a new thing for me, the missing criteria! )
C). There can be no "gray areas", it must be a system that can hold to a set of pre-defined rules that are NOT open to user interpretation in any way (e.g. the 111 system is a breeze to backtest, whereas v-tracs require far too much study (that cannot be duplicated easily if at all within excel) ) a perfect example that relates is the most frequent number... there ARE ties, a tie-breaker must be in place... for example, the MODE($A$2:$A9850) returns a single value even if ties exist... you need to be able to let excel handle the tie-breaker mechanism and take the results at face value. Mode can be autofilled down, and when there is valid data available, give a non-biased return, where a simple count() can produce ties.
D). Know your own understanding of the game at hand. This is important because you need to know what you want to begin with before you can expect excel to do it for you.

How I will be applying the above...

A) The first test period will be the entire history, other intervals will then be tested, such as a year, a quarter and a month.
B) Goal is 1 straight hit every 498 draws or less over the entire history. When I ran all the variations of 111, I found gaps of up to 5 years with no wins. Right now, exact vtrac mirrors are a winner for 2005 eve in pa (1 win), I have yet to test back to 1977 which is where most systems fail...
C) Using the unbiased output of MODE() and LARGE() will help keep from coloring the data with personal observation.
D.) This is not the "right way" to look at it, but here is how I get pick 3
---1) 3 sequential games of 1 in 10, no position has a bearing on the other
---2) IN a perfect world, past draws have no influence on future draws... What I am after is BIAS. Coincidence never hurts, but Bias is the ticket to repeatable results, and why a shorter interval than all of the history may be better.
---3) I just can't buy into travelling numbers, it's all coincidence.

On with the backtest (A bit hesitant because they ALL fail here, 3 powerball systems, 2 or 3 pick 3 systems... of my own design, not to mention TONS of other posted systems like 111 that were tested with no good result in the long run)

I have high hopes for precursor/announcer results in ALL games, if this works I might try to apply something similar to PA Cash5.

Also in the works, a multi-dimensional V-trac style experiment on powerball white ball data.

 

Entry #90

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