Tuesday, 19 October 2010

Value Required

One of the intentions of this blog is to promote intelligent debate about various aspects of betting. My last post prompted a sensible comment, or more accurately a few questions, from Sam, which were these:

Hi. I am working on my own ratings at the moment, and then turning it into what I see should be correct odds. However, If possible, please could you explain the following to me:

1. What should be the minimum value that I should look for, i.e. 10%, 20% etc.
Assuming commission at 5%, on a bet with a probability of .5, you need to be backing at 2.06 or more to be profitable so your edge has to be 3% at least. The problem is that you are unlikely to be certain about the precise size of your edge until you have had a large number or trials, and so it is prudent to err on the side of caution. 10% seems a reasonable figure to me, at least for a relatively new system, but once an edge is firmly established, this can be reduced. Any profit after commission is good, and where you draw the line on what is worth the time and effort is a personal choice.
2. The bookies and Betfair markets are more or less very efficient. If I see too much value to be had, i.e. 30%+ then should I disregard my bet as I can't see the market being that wrong most of the time.
Absolutely. If you’ve read this blog for a while, you will know that on one occasion I found what appeared to be huge value on a Weymouth v Rushden and Diamonds Conference fixture. What I didn’t know was that Weymouth’s first team had quit, en masse, and that their team for the match would essentially consist of the youth team. Weymouth lost 0-8 I believe. The rule in investing that “if something appears too good to be true, it probably is”, is very pertinent here.
3. In your opinion, would it be better to concentrate on one aspect, i.e. Home win, Away Win or Draw only. Or should this not matter. All help and advice will be greatly appreciated.
It shouldn’t matter, but if your ratings are anything like mine, you will probably find that they turn out to have their strengths and weaknesses. I started off looking at home winners, but as I collected more data, the biggest edge turned out to be on the draw. You may also notice that some match-ups show value on other markets than Match Odds, e.g. the under or over markets. I would play with your ratings for small stakes until you determine where they are finding value, and then you can focus your efforts on improving that edge even more. My ratings have evolved over time, from a very basic Elo system, to one that now ‘predicts’ goal supremacy, prices up matches, and that takes into account form and home / away strength. It can be improved further, but I have a job and there’s only so much available time.

Those are just some of my thoughts on the subject, though others may well have their own ideas.

Of course, pleasant comments only would be too much to ask for, and sure enough there's the seemingly obligatory nonsensical comment from 'you know who' - yesterday's was this gem:
think you've pretty much nailed why your systems won't work.
Nothing about when they will stop working or why. Just a pointless remark, followed by
And your last sentence pretty much nails why you thought they might work.
Eh? My last sentence was this
Still, even a broken clock shows the correct time twice a day.
Apparently Anonymous didn't get the memo - I am not using the SBP's systems. Never have, never will. They don't work.

I'm trying to ignore Anonymous' comments, but every once in a while they are ridiculous enough that I rise to the bait.

In tonight's football, Real Madrid were -1.75 v AC Milan and won 2-0 in the only game between teams from leagues that I follow.

Top-rated Luton Town were -2 favourites v bottom-rated Forest Green Rovers, and covered the spread handily winning 6-1.


Anonymous said...

You say your system now prices up matches I've never seen you (publicly) price up a match, perhaos you'd care to enlighten us.

You missed the point of the broken clock comment. The insinuation was that the broken clock analogy is perhaps appropriate for your "systems" too.

sam said...

Hi. Thank you for the informative post. I've decided to put up my ratings/odds on my blog and paper trial it to see if anything comes up.

Anonymous said...

It's fair to say that as the perceived edge increases the reliability decreases (in a stable liquid market - sort of counter to Kelly but thats a separate argument), give me the 2% system over the 25% system, as the 25% one will almost certainly be a statistical fluke. Find a system that hugs along the bookmaker price and you've found a very good system, one that gives 10/20+% edges is almost certainly rubbish.

Anonymous said...

In mainstream markets such as football, 5% is at the higher end of realistic long-term targets for the professionals amongst us.

(NB. On betfair, I would suggest you look for 5% value AFTER commission is taken into account).

There's little point trying to pinch what you perceive to be 1 or 2% as, however good you are, it's incredibly difficult to be so precise.

The comments on being wary when you estimate your value to be particualrly high are correct. You should always revisit your calculations and check your info when your price is so different to market price. I don't use Kelly as such but if I did I'd certainly be using a modified version (and not just a half or quarter Kelly. Something a little more exponential or however you would describe it)