Reader questions about "Value" bets
I have had a few comments recently regarding the concept of "Value" when trading on Betfair's exchange.
I answered those queries but after responding to another one today I thought I would put up a quick post using my reply in case other readers are wondering about it too.
Maybe it's just a coincidence or maybe there is a forum thread buzzing somewhere on this topic lately, either way.....
"Just wondering about this whole "value" concept that I have read about so much over the last year or so and how this relates to the methods used to pick LTD selections. How do we know we are getting value with our selections? Even if we do our research and the game looks like a cracker for laying the draw, that will be reflected in the price of the draw. I keep hearing people say that "you will lose if you don't take value prices!"
My reply went something like this...
Getting good value is useful, but listening to everyone who has something to say about trading (especially online “chatter”!) will do more harm in the long term for any full-time BF trader, than not getting “value” every day!
Value is a blurry line and it’s completely subjective. This is because the only way to determine true value, is to decide what the betting probabilities are in your opinion, then compare that to the IP (implied probability) of the odds. You don’t actually need to do the calculations like that, put it this way…..
You spot a game between Manchester City v Huddersfield Town. The Betfair odds on Man City is 5.5. The price of Huddersfield is 1.7. The draw is 3.0. Do you reckon that’s good value prices?
You could back the home favourite, lay the underdog, or lay the draw on the game - all would be great value in my opinion and probably anyone else's if they are following the league form or stats! But how do I know this?
Well that’s not straight forward to explain, it’s not black and white. To my wife, she wouldn’t have a clue if that was good value or not because she has no idea which team is better. There’s no point giving someone a scientific theory because it’s subjective, but let’s do it anyway….
5.5 on Man City means they have an implied probability of about 18%, meaning the odds translate to them having an 18% chance of winning that game.
Do you think they have more chance than that? If so, it’s a good value price in your estimation. The more likely they are to win (above 18%) then the more “value” there is. However, remember that they could lose the game. 18% is theoretical after all.
On the other hand, someone who knows the game is rigged, and Man City are going to throw the game, to them 5.5 is great value to LAY!!!!!! As they know they have 0% chance of winning, so in that case even a price of 1000 would be 'good value' to that person with that knowledge.
As you can see, the value can only be guessed at, and each person has a different view, but generally we all know that 5.5 on Man City to beat Huddersfield would be great value! It gets more tricky as you never get prices far away from what they “should” be in terms of price comparison to IP.
So there isn’t a lot of big value around with so many savvy punters online these days, it’s a very fine line and in all honesty, saying “you will lose if you don’t get good value” is in some ways old-fashioned and untrue, if you are picking enough winners you will make money even if not getting great value on every trade, you just need them to be green, and don't forget nobody has a crystal ball, nobody can see the future, and everyone can be wrong.
I do agree with the general sentiment, you don’t want to be ignorant to the concept of value, but you mustn’t obsess about it either.
There are ways to increase value in any sports trader's strategy, including in the lay the draw method. For instance let's say you have a LTD pick, and the price on the draw is 4.5. Its a good pick, but not a GREAT pick, in that case 4.5 is pricey (which means not great value). But you also notice on the stats that the home team never scores before 30 mins.
Well you could wait for the draw price to come down for 30 minutes, getting into the inplay live betting action at around 3.8 instead (lets just say), and suddenly you have a lot more value. However the time factor has reduced, there is less time to score, so it’s not a linear line, its definitely more value but not as much as the same game at kick off being priced at 3.8.
Hope this makes some kind of sense. It’s really not to be worried about it. I would advise avoiding trading 'conversations' before avoiding games which are not “great value”.
You only have your own barometer for "value" and you improve it by improving your knowledge of the stats and your strike rate. A bad trader needs a lot more value because they lose more, a good trader can virtually ignore "value”. (Virtually, no good trader is unaware of a good value bet when he sees one!)
I think this stuff is much more relevant when it comes to straight betting rather than trading, although it's obviously still a part of trading. If you are betting on things to win, you need to be finding value to ensure that your long term profitability sees rewards for winners and losers don't overly punish your bottom line.
If you bet on sports without considering the price then you're going to struggle. If you're trading sports correctly, the same rule does apply but to a much lesser degree. All in my humble opinion of course. 🙂
Remember we are traders, not punters. We make our money from predicting price moves.
Bettors make their money from the actual outcome of football games.
So 'who wins' is of paramount importance to them, but of zero importance to us. For this reason 'value' will always be of much more importance to bettors than traders.
However, as traders there's a good argument for banging in a back bet when you spot huge value, and that's because we know the bettors will come along soon after and back it too, which means the price will shorten.
At that point, we trade out for a small but safe green, they hold onto their crotch for the big win! (Or not, as the case may be!)
Edit: I have recently added a page covering Value Betting in much more detail.
I dont even look whether there is value ..I just trade what I see and I am then out before the race starts
These queries were mostly aimed at football matches but your comment is still relevant, even more so with racing. It's all about catching a likely move, well that's what trading is about anyway as opposed to pure betting. But better entries are always helpful whether trading or betting, and when trading the horse racing value is completely irrelevant yes.