Please like and comment on the video below that will allow me to produce better quality videos and more of them in the future, if you’re interested in learning to trade successfully in sports, then why not visit the BET angel’ Academy, where we have more detailed videos? So, if you’re looking at a betting market, the only way that you can make money in the longer term is by backing at odds that are above the implied chance of that particular event occurring. So if you can back a football team and that has a 50 % chance of winning, but the bookmakers gon na give you odds that represent a value above that you will make money in the longer term.
The way that bookmakers make money is by offering the odds that just don’t represent value or the true chance of something happening. In order to understand that properly, you need to really understand what the odds mean. So that’s what we’re going to explore in this video?
What we’re actually going to do here is we’re going to take fractional odds, we’re going to convert them to decimal odds and then convert that to implied chance. So you can actually see and understand exactly what value is or isn’t being created when you place a bet. Now the problem that most people have when they place a bet is they’re, just placing a bet to win all that they do is stick a tenner on something because they think it’s going to win. There’S no concept of value in there whatsoever, but by understanding odds you will get to understand value and therefore you will be able to place more sensible bets. So let’s have a look and see how odds are constructed, so you may go into a market and you may see odds quoted at something like 9 to 4, so we’re going to have to use a spreadsheet here, but I’m going to use a spreadsheets to show You the calculations that I’m doing and how I’m arriving at the conclusion that I am so you can see at 9 to 4 if you put a tenner at 94. What what does that mean?
What does 9 for mean, and basically when you’re, looking at fractional odds, you’re looking at a ratio? So if you put 4 pounds down, you will win 9 pan back. That’S the easiest way to understand fractional odds for pan down. You get 9 pan back, of course, with your tenner, and that makes no sense, because you’re gon na put a tenner down how much you’re gon na get back so effectively.
What you’re, looking at with fractional odds, is a ratio. So if I actually go in here and type in a calculation, if I do 9 divided by 4, it’s a basically a ratio. 2.25 times your stake, you will get returned.
So if you put 100 pan down you’ll, get to point two to five times back what you have originally state. So that’s the way the fractional odds work. What you’re viewing when you’re looking at fractional odds, is a ratio.
So one hundred thirty six, two four five, two four seven, two four and ninety-four. All of those things are ratios based upon how much the bookmaker is willing to pay you based upon the stake that you give him now. When you look at a betting exchange, they tend to not use fractional odds, and now, if you move your mouse over the odds you, it will very often give you a comparison of fractional odds.
So you can actually do a direct comparison between fractional and decimal. But let’s have a look at how you would and convert a fractional odds to a decimal and then into an implied chance, because that’s the most important part of what we’re going to do. So if we look at odds of 94, you can see what I’ve done here is I’ve done, I’m nine divided by four equals 225 to convert it to decimal. All you need to do, then is add one to it. So if you’re, looking at odds of nine to four and the ratio is 225 and it means the decimal odds will be 325.
So if you go on to the exchange that you’re going to use – and you see odds of 325 – that is nine to four basically, but what does that actually mean? Is that a value bet if we saw a football team price priced at 325? Is it value or not, and how do we know that that is the case? So if we go in to the spreadsheet again and I do 1/3 25 – you can see that that comes out at point three, oh seven, seven!
So what is that number? That number is actually a percentage to make it easier to understand. If I click on it and then click on the percentage on the spreadsheet, then you can see that this is basically saying that 325 represents a thirty point. Seven seven percent chance of this event. Actually going on and occurring so for the sake of completeness, what I’ll do over here is. If I just do 1/3 25 sorry one divided by the percentage you can see, we can flip it back the other way.
So to get this percentage, I did one divided by the odds and if you’ve got a percentage, then you can actually do 1 divided by the percentage to get the odds and convert it back in the other direction. So if we’re going to place a back bet at odds of 325, we’re saying that we think the thing where were backing has a thirty point: seven, seven percent chance of winning. But let’s say that, for example, that we think that it’s got a 40 percent chance of winning.
So I’m going to go in here and type in 0.40, which you can see the spreadsheet is updated from is forty percent. If I now do 1 divided by 0.4 – oh that cell over there can you see it comes out, it’s two and a half. So what we’re saying is we think the chance of this event occurring this this election winning is forty percent, which would mean that we’re willing to accept odds down to two point: five, any odds below two point: five, it becomes a lay bet if the odds are Above two point five, then it becomes a back about why!
Well, if we look at this, we think it’s got a 40 % chance of winning we’ve done all of our stats, food and all of our maths. We’Ve religiously thought, through the whole thing, we’ve really focused on it and looked at it in great depth and we’ve come up to the conclusion that there’s a 40 percent chance of this happening. However, the bookmaker thinks there’s only a 30 % chance.
So if we do 40 percent minus that 30 percent, can you see that says nine point two to three: that’s saying that actually we have a nine percent edge here effectively if our maths is correct. If our theory is correct, then we think it’s got a 40 percent. Chance were convinced that it’s got a 40 percent chance of winning and the bookmaker has got his odds wrong, so we do actually have some margin there. If we can back at 325, when we think it’s true odds should be at 2.5, we’re going to make money there. However, let’s change these odds up here. If we say we’re now, looking at five to four we’ll go through the same process again.
So if I go into this cell – and I do five divided by four and then we add one to it, can you see the odds come out it’s 225? So this is now saying that the market thinks there’s a forty four percent chance of this particular event occurring this person wing or this team, winning whatever the market you’re. Looking at and yet we’ve said, there’s a 40 percent chance and it’s 225, and you can see that number is turned negative here. So we think it’s got a forty percent chance of winning which equals to 25 we’re willing to back down to odd. We will place a back bet if we get odds at 2.5 or greater.
However, if something is at five to four, the market is offering it to us at 2.25, it’s below our threshold, there’s no reason that we should place the back bit in this market. In fact, you may even want to consider placing a lay bet in this particular market, because the odds are just no good there. So the thing you’d have to say is: is that 4 % margin enough? Am i confident enough that I think that my guess for want of a better word?
My model is a better word is accurate enough that I know that I’ve got a 4 % edge in this particular market, in which case you would lay. But basically, when you go into a market, this is what you’re saying you’re saying: okay, you know Manchester United are playing this tight team. If they played them 10 times, they would win four of those games and that’s where your 40 % is coming from and if you, if you can come up with the reason why that is definitely going to happen. Given all of the circumstances, the team then use the weather, fixtures they’ve got coming up and you think they’re going to win four out of ten of the next matches.
Then that would be how you come up with that forty percent figure. You can convert that. Forty percent figure to odds and then see if those odds are available so on this occasion it isn’t.
But if we go in and we modify the odds that are being offered here, we’re offering ten to four, which then resolves at a ratio of two and a half which converts to decimal odds of three point: five: zero. Obviously, if you can, if you were willing to back a team, that’s two point: five, the markets offering you three point five. Then it necessarily makes a lot of sense to back it, but the most important thing by understanding the way that these odds are created and the way that you can convert them is this tells you that, according to your model, that has a 40 % chance of Winning you have an 11 edge here and therefore it’s worth placing the back bet. And obviously, if you want to make money in the long term on any betting market, you need an edge and you need a definable edge and one that delivers as much margin as possible. So you could assess a whole range of bets, see which one has the biggest theoretical margin and then go for that particular bet and if you do have an edge and you have priced the market correctly and better than the market has then over time. While you may not win on this particular event or the next one over a long long period of time, if you’ve got an edge of this sort of magnitude in the market, then you definitely will make money.