I need help understanding value betting (page 2)

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Alfa1234
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Alfa1234

Re: I need help understanding value betting
« Reply #15 on: June 01, 2017, 12:37:02 PM »

While we're at it, let's look at the difference between arbing and value betting as well.

Let's say Pinnacla has 2 teams with odd 1.96 right before the start of the game and you have a soft book with odds of 2.1.

Each outcome has a 50% probability of winning in this case.

If you were now to place 100 bets you'd get the following results:

Straight arbing with equal profit on each side would mean you'd bet 100€ in your soft book at 2.1 and €107.14 at Pinnacle.  This would give you a profit of 2.85€ every time regardless of the outcome.  Total profit 285.  No variance.

Arbing with the profit maxed out at the softbook and no profit on the sharp side would mean you'd bet €100 in your soft book at 2.1 and €104.17 at Pinnacle.  This would give you 50% of the times a profit of 0 and the other 50% of the time a profit of €5.83.  Technically, you'd end up with 291.5€ after 100 bets.  However, taking standard deviation into account, 95% of the time you'd end up anywhere between winning 40 and 60 of your profit bets.  Giving you a total profit between 233.2€ to 349.8€.  The other 5% of the times can be even a little lower or higher.  There is a high variance but overall you end up with more profit this way than straight up arbing.

Value betting would mean you'd straight up bet €100 at your soft book every time.  This would give you €100 loss 50% of the time and €110 profit 50% of the time.  So technically you'd end up with €500 profit after 100 bets.  However, taking standard deviation into account, 95% of the time you'd end up winning anywhere between 40% and 60% of your bets.  This would give you anything between a €1600 loss and a €2600 profit.  As you can see the variance here is huge but the potential profit is as well.

Summary:

Straight up arbing gives you a decent profit, no variance.  Profit guaranteed.

Arbing with profit maxed at the soft side gives you guaranteed profit which in general will be higher than straight up arbing, but variance can kill the higher profit short term.  Long term you are better off this way than straight up arbing.

Value betting could end you up with a big loss due to variance, however long term you will be better of as with a larger number of bets the standard deviation will drop and you'll end up winning closer to 50% of your bets.  Harder to do and you need more discipline and a good staking model.

« Last Edit: June 01, 2017, 12:39:19 PM by Alfa1234 » Logged
maletaja
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Re: I need help understanding value betting
« Reply #16 on: June 01, 2017, 01:18:48 PM »

Arbing is nothing more that you pay insurence bet to the pinnacle. And that bet costs you 2-5%. Its expensive
I think people should more value bet then they have 100bets you are quite safe. In my experience when i have started 5-10 bets soft book. I very rearly goes to zero. Practicalloy i have 5% value every bet

Only question is some bookies offer promotional 100% payout!
Lets say promotional bookie offers 2.0 2.0
pinnacle 1.9 1.9
How should i deal with that promotional offers?
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showMeDaMoney
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Re: I need help understanding value betting
« Reply #17 on: June 01, 2017, 01:33:50 PM »

If you are really going to try...please, make some rules for yourself first.

- First of all: forget about smaller markets like local basketball, volleyball and ITF/challenger tournaments.  Pinnacle/Betfair do NOT have accurate odds and DO NOT reflect the true probability in these games.  You need bigger games with lots of volume.
- 2.  Set some max and minium odds you want to take.  The higher the odds you take, the bigger the variance you'll see.  If Pinnacle has odds of 7 and you find an odd of 25 somewhere, this is huge value however you can still easily lose 20bets like these in a row and end up losing a good chunk of your roll.
- 3 adjust your stake according to Kelly criterium and the odds you take.  A value bet of odds 2.5 where Pinnacle has 2.0 should have a much higher stake than a value bet where you find 4.0 and Pinnacle has 3.5.
- 4 please, don't do it unless you have a clear plan and understand all of the above like the back of your hand.  You'll end up losing a lot of money, get frustrated, will start increasing your stake to chase losses and lose a lot more money.  I know your are anxious to give it a go...but just don't.  On top of that there is nothing going on right now besides tennis.

Wow amazing advice, I will keep that in mind.
Each of my bet that is value is also an arb, or close to an arb
It can be -2% to about %5

So I'm covering bets as I'm value betting. I doubt I will lose much money doing this.
Its more of a trial run, worst that can happen is a void/or limitation.
The hardest part is the closing price on pinnacle, that can make it a non value bet.
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NedlogViiibes
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Re: I need help understanding value betting
« Reply #18 on: June 01, 2017, 01:44:25 PM »

I agree with your last post Alfa, but arbing lets you place a higher percentage of your bankroll, which means your profits will be higher, if you are not close to the limits from the bookmakers.

People tend to focus on a high yield rather than $$$.

@Maletaja

If you rarely experience a loss from 10 bets with 5% value, then you are nothing other than lucky :) It tells nothing at all. I read somewhere some time ago, that the record on a specific casino hitting same colour in a row on roulette was 28. That would be possible even if we got odds 10 on that particular colour all 28 times.

As for your question, then it is quite simple. 1.9/1.9 means 50% chance of each outcome (if the requirements are met earlier posted in this thread). We would need a bet that gives us more than 2.00 for it to be profitable.

The value of the bet is calculated like this:

% (probability of something happening) * odds = Value of the bet.

In this case

50 (based on Pinnacles current odds) * 2.00 (odds from soft book) = 100. We need a number higher than 100 for it to be profitable.

@Showmedomoney

"The hardest part is the closing price on pinnacle, that can make it a non value bet."

This is where the real challenge lies. Every betters goal should be to be able to bet at Pinnacle profitably.
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Alfa1234
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Re: I need help understanding value betting
« Reply #19 on: June 01, 2017, 02:52:47 PM »

I agree with your last post Alfa, but arbing lets you place a higher percentage of your bankroll, which means your profits will be higher, if you are not close to the limits from the bookmakers.

This is very true as well.
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maletaja
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Re: I need help understanding value betting
« Reply #20 on: June 01, 2017, 03:51:15 PM »

Quote
The hardest part is the closing price on pinnacle, that can make it a non value bet.
Yes but price can move away as well. You win some or lose some. I theory you should be even
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NedlogViiibes
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Re: I need help understanding value betting
« Reply #21 on: June 01, 2017, 04:11:58 PM »

Quote
The hardest part is the closing price on pinnacle, that can make it a non value bet.
Yes but price can move away as well. You win some or lose some. I theory you should be even

What theory is that?
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csampion
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Re: I need help understanding value betting
« Reply #22 on: June 02, 2017, 06:23:47 AM »

Quote
The hardest part is the closing price on pinnacle, that can make it a non value bet.
Yes but price can move away as well. You win some or lose some. I theory you should be even

What theory is that?
Vice versa: what theory says that it shouldn't even out long-term? Your question suggests that you have a different view. Is the chance of odds going either up or down not 50%? It could perhaps be argued that when a value bet is created due to pinnacle's odds dropping (when we're nowhere near the start of the game), then shortly afterwards pinnacle's odds could bounce back as it could have been only a temporary swing after some large bets at pinnacle, and so the value on the soft side wasn't really there... Other than this, I don't see why we couldn't take it for granted that odds movements (and therefore wins/losses) even out over time.
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NedlogViiibes
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Re: I need help understanding value betting
« Reply #23 on: June 02, 2017, 06:54:29 AM »

Quote
The hardest part is the closing price on pinnacle, that can make it a non value bet.
Yes but price can move away as well. You win some or lose some. I theory you should be even

What theory is that?
Vice versa: what theory says that it shouldn't even out long-term? Your question suggests that you have a different view. Is the chance of odds going either up or down not 50%? It could perhaps be argued that when a value bet is created due to pinnacle's odds dropping (when we're nowhere near the start of the game), then shortly afterwards pinnacle's odds could bounce back as it could have been only a temporary swing after some large bets at pinnacle, and so the value on the soft side wasn't really there... Other than this, I don't see why we couldn't take it for granted that odds movements (and therefore wins/losses) even out over time.

You rely your bet on the fact that Pinnacle indicates the true probability. Pinnacle only reflects the true probability through their closing lines. Therefor we place our bet on something that isn't a good indication yet. The odds can move a lot and I don't think you can expect it to even out in the long term as it is completely random. That is why I asked the question - I'd like to get challenged my view with some good arguments.

If someone has a large enough sample size to show valuebets based on Pinnacle odds +48 hours before the start of the event. Possibly even with small arbs/valuebets - then we'd be done.
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Alfa1234
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Alfa1234

Re: I need help understanding value betting
« Reply #24 on: June 02, 2017, 07:57:44 AM »

Nedlogviibe, by saying that the movements are completely random you contradict yourself as that would indicate there is a 50% chance of a movement up and a 50% chance of a movement down.

I tend to disagree however and I say there's probably a bias toward the odds moving farther down and thus the value would increase more over time.  Reasoning is this:

For there to be a value bet, the Pinnacle odd has to drop a decent percentage all at once.  Enough so there is a fairly large discrepancy between the soft and Pinnacle.  If the move is more gradual, the soft books have time to slowly adjust their odds as well and there will be no value bet (because of the Pinnacle juice -> the difference between Pinny and the soft would not be large enough with a gradual move).  Usually when there's a fairly large move, this is because of some sort of news or new information that came out (e.g. a football player getting injured during practise and not playing).  As soon as the news hits, sharp players will pound that side on Pinnacle and create a value bet with the softs.  However, as more people are getting aware of this knowledge, the Pinnacle odd will slowly continue to drop for several more hours...giving you more value on your initial soft bet.

I have no proof of this and have no data, but have observed this many times.  It's often not a bad idea to immediately bet the Pinny line as well after a fairly large initial move as the line keeps steaming down and you'd end up with value in Pinny as well. 

My argument...no actual data though and it's only a theory.  :)
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NedlogViiibes
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Re: I need help understanding value betting
« Reply #25 on: June 02, 2017, 08:17:33 AM »

While I know what you mean with me contradicting myself, I tend to disagree. We don't know how the odds are created x hours before the start, so we try to make sense out of something we can't make sense out of.

As for your example, I believe it goes both ways. Sometimes the market does not react enough to teamnews. Sometimes the market overreacts the impact on certain news and eventually the market will adjust it self and get back to the real price.
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NedlogViiibes
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Re: I need help understanding value betting
« Reply #26 on: June 02, 2017, 08:28:28 AM »

I also heard an argument once, that the sharp customers would bet the value side down to a payout of close to 100%. Which means the Pinnacle odds on the side with value (or the one that had value) will payout at ~100% and the other side will pay out at ~96%. This makes good sense, but I still haven't seen any actual data on it.

Example:

The match is 50/50. Odds is currently 2.10 on team A. The customers will bet Team A down to 2.00. So the closing odds would be 2.00/1.92.

In this case there is value in anything above 2.00 on team A, but if we beat the closing odds on team B with 2%, then we would still have minusvalue.
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maletaja
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maletaja

Re: I need help understanding value betting
« Reply #27 on: June 02, 2017, 09:01:41 AM »

Nedlogviibe, by saying that the movements are completely random you contradict yourself as that would indicate there is a 50% chance of a movement up and a 50% chance of a movement down.
Recentle i had some soccer games pre odds were smth 2.0,x,x   pinnacle drop to 1.8 and i got 2.0
Just by accident followed odds prestart and pinnacle was 1.4!   Im not sure that odds bouncing back surely.
When dropping there is always reason for that
« Last Edit: June 02, 2017, 09:18:55 AM by maletaja » Logged
Arbusers
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Re: I need help understanding value betting
« Reply #28 on: June 02, 2017, 09:22:50 AM »

You might want to take a look at the following link guys:
http://arbusers.com/index.php/topic,1358.0.html
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NedlogViiibes
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Re: I need help understanding value betting
« Reply #29 on: June 02, 2017, 10:03:50 AM »

We can both come up with a lot of examples. One of the biggest matches lately between Huddersfield and Reading. Odds on Huddserfield started in ~2.57, went down to 2.22 (maybe lower) ended in 2.35. Mind you - this was not due to injuries, news or anything. This was simply the market finding the right price.

@Arbusers

Read through the link, but I don't see the discussion at hand answered.

This post from Skaggerak sums up the issues here:

"I started experimenting at the beginning of this season and am pretty much back where I started. I began using any exchange with good liquidity or sbo/pin as a reference point and then taking any outlier odds.
This hasn't had great results because even value-betting on the "weak" side of 4-10% arbs can prove unprofitable when the event or sport in question is not a major one and has little liquidity. Some of these are practically palps but the events in question seem to be very uncertain even on the "sharp" side as there is not enough money in the market to define the accurate representation of value, as others have said before it's quite difficult to define the weak or valuable side when the sport/event is not a major one.
I've been barely taking bets under a 3% threshold so thought I would yield some positive results regardless but I was obviously naive. Value-betting is a whole other area that I think requires different skills, it's probable that it has also become more difficult as the whole landscape of the industry changes to a more efficient model for the big companies"

Our goal should be to only make profitable bets. We can't be sure about the profitability in small markets or markets where the liquidity is still poor.

I agree that you will be profitable if you take the soft side of an arb with Pinnacle. I just think there are spots where we should leave the bet alone, as we don't have enough evidence on the bet being a profitable one.
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