The Best Way To identify value in your bets? That is the big question. My friend, Alex Napier who operates the top Bet Soccer website, has asked me to write this article to explain how bookmakers' percentages are calculated and just how they give a guide to assessment of value within the odds on offer. He has asked me to look-at soccer betting, where, due to the few possible outcomes (three choices - win, lose or draw) the odds offered are short in almost any event.
A perfectly "balanced book" where the odds offered exactly reflect the opportunity of each team winning or perhaps the draw would produce an overall of 100.00%. Theoretically the bookmaker will profit through the total percentage on the match less 100.00%. In the above table bookmaker 1 should profit by 11.89% of turnover on the match and bookmaker 2 by 11.23%. At first sight there will not seem to be much between them but when we compare the theoretical profit of each the margin on the bookmaker 1 odds (i.e. 111.89 - 100.00 = 11.89%) is 5.84% higher than the 11.23% margin on the bookmaker 2 odds! Where the odds on offer produce a theoretical profit for the bookmaker the book is said to be "over round". The bookmaker 1 book is over round by 11.89% and also the bookmaker 2 book by 11.23%.
Where the odds on offer total less than 100.00%, which never actually occurs with the odds provided by any person bookmaker as they'd in theory be sure to lose on the event, safe gambling they can be "under round" . The losing percentage would be 100.00% less the total odds percentage. Not surprisingly this does not happen. Individual bookmakers don't offer odds on the possible outcomes that will provide them with a loss. What does happen, although very infrequently, is that the odds provided by a selection of bookmakers will vary to the extent that you can locate a combination where those for the 3 possible outcomes are under round. Therefore you can bet on all three possibilities - win, lose and draw - and provided you allocate your total stake in the correct proportion you shall get a profit of the percentage by that you just can bet at under round odds.
Identifying value
From the above mentioned data it's pretty obvious that the 4 - 1 provided by bookmaker 1 in respect of the home team winning is the best price, there is no difference in the odds offered for the draw but bookmaker 2 offers the most effective odds for the away win. The question then arises, which is the greatest value? Obviously the 20.00% provided by bookmaker 1 on the home win will be the lowest percentage so may be the most effective value, but this is too simplistic. There has to be a yardstick to measure the odds against. That is your own assessment or your advised assessment of the chance of each outcome. If you give each possibility your own percentage rating you can compare this with the bookmaker odds percentage to establish where the value lies. The way you assess the probability of each outcome just isn't for this article. It deserves more detailed treatment than may be given here where we have been dealing with bookmakers' margins and value bets.
Assuming that the true reflection of the chances on the aforementioned match were home win 20% (bookmaker 1 had that about right and bookmaker 2 was under priced), a 20% chance of a draw (although these were the bookmakers offering the top odds on the draw they were still under priced) and a 60% chance of an away win (where bookmaker 2 quotes a price that gives a lower percentage chance so offers value) consideration should be given to an away win bet with bookmaker 2.
Stake allocation
There can be occasions when it's necessary to allocate your stake between different outcomes. This could be the situation where a selection of bookmakers odds produce an under round opportunity or where there is a strong reason to include 2 of the 3 possible outcomes so it's essential to allocate the stake between them. In the illustration below the odds happen to be exaggerated. It's very seldom in reality that an under round opportunity arises however the illustration is the best one to show just how to use percentages.
It really is generally obvious which bookmaker is or bookmakers are offering the best odds. All you will need do is compare them. Identifying value is the one other matter. For this you need to calculate the odds percentages to compare with your own, or your advised, perception or assessment of the probability of each outcome. By comparing the available percentages with your assessment you can identify where the value lies and make your selections accordingly - as well as perhaps now and again identify a no lose position where a selection of the odds provided by the different bookmakers produce an under round position! Disciplined utilization of percentages should form a serious part of your strategy in identifying value in the odds offered and leading to your betting profits.
A perfectly "balanced book" where the odds offered exactly reflect the opportunity of each team winning or perhaps the draw would produce an overall of 100.00%. Theoretically the bookmaker will profit through the total percentage on the match less 100.00%. In the above table bookmaker 1 should profit by 11.89% of turnover on the match and bookmaker 2 by 11.23%. At first sight there will not seem to be much between them but when we compare the theoretical profit of each the margin on the bookmaker 1 odds (i.e. 111.89 - 100.00 = 11.89%) is 5.84% higher than the 11.23% margin on the bookmaker 2 odds! Where the odds on offer produce a theoretical profit for the bookmaker the book is said to be "over round". The bookmaker 1 book is over round by 11.89% and also the bookmaker 2 book by 11.23%.
Where the odds on offer total less than 100.00%, which never actually occurs with the odds provided by any person bookmaker as they'd in theory be sure to lose on the event, safe gambling they can be "under round" . The losing percentage would be 100.00% less the total odds percentage. Not surprisingly this does not happen. Individual bookmakers don't offer odds on the possible outcomes that will provide them with a loss. What does happen, although very infrequently, is that the odds provided by a selection of bookmakers will vary to the extent that you can locate a combination where those for the 3 possible outcomes are under round. Therefore you can bet on all three possibilities - win, lose and draw - and provided you allocate your total stake in the correct proportion you shall get a profit of the percentage by that you just can bet at under round odds.
Identifying value
From the above mentioned data it's pretty obvious that the 4 - 1 provided by bookmaker 1 in respect of the home team winning is the best price, there is no difference in the odds offered for the draw but bookmaker 2 offers the most effective odds for the away win. The question then arises, which is the greatest value? Obviously the 20.00% provided by bookmaker 1 on the home win will be the lowest percentage so may be the most effective value, but this is too simplistic. There has to be a yardstick to measure the odds against. That is your own assessment or your advised assessment of the chance of each outcome. If you give each possibility your own percentage rating you can compare this with the bookmaker odds percentage to establish where the value lies. The way you assess the probability of each outcome just isn't for this article. It deserves more detailed treatment than may be given here where we have been dealing with bookmakers' margins and value bets.
Assuming that the true reflection of the chances on the aforementioned match were home win 20% (bookmaker 1 had that about right and bookmaker 2 was under priced), a 20% chance of a draw (although these were the bookmakers offering the top odds on the draw they were still under priced) and a 60% chance of an away win (where bookmaker 2 quotes a price that gives a lower percentage chance so offers value) consideration should be given to an away win bet with bookmaker 2.
Stake allocation
There can be occasions when it's necessary to allocate your stake between different outcomes. This could be the situation where a selection of bookmakers odds produce an under round opportunity or where there is a strong reason to include 2 of the 3 possible outcomes so it's essential to allocate the stake between them. In the illustration below the odds happen to be exaggerated. It's very seldom in reality that an under round opportunity arises however the illustration is the best one to show just how to use percentages.
It really is generally obvious which bookmaker is or bookmakers are offering the best odds. All you will need do is compare them. Identifying value is the one other matter. For this you need to calculate the odds percentages to compare with your own, or your advised, perception or assessment of the probability of each outcome. By comparing the available percentages with your assessment you can identify where the value lies and make your selections accordingly - as well as perhaps now and again identify a no lose position where a selection of the odds provided by the different bookmakers produce an under round position! Disciplined utilization of percentages should form a serious part of your strategy in identifying value in the odds offered and leading to your betting profits.
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