Probability Calculations and Value Betting
Usually, inputing data, variables and stats into an excel spreadsheet is dull and when it’s done on a daily basis it can get frustrating. Now, the clever part of building a betting system is making proper use of those numbers in order to calculate a probability percentage as close as possible to the real probability of an event. How this is done depends only on the bettor’s knowledge, skill and method. Here is how you can do it…
Up to now, your excel sheet should have at least 10 columns containing games’ information and data collected according to the previous article on the sport you have selected initially. In the following columns there will be equations calculating the probability you will use later in your staking plan and back testing. Let’s see examples of some methods to get you started (football will be used as a reference):
- You examine the stats of average goals scored and conceded per game by the home and the away team in the first row of your sheet. Home team shows 1.25 goals for and 0.80 against. Away team reads 1.5 and 0.50 respectively. You then add all those numbers (=4.05), you add 1.25 and 0.50 (home goals for and away goals against) and divide the result with the previous sum, that is 1.75/4.05 (=43.21%). This is your calculation for home win probability. The away win probability is calculated at 56.79%. An easy procedure but there is a problem. Where is the draw probability and how will affect the other 2 probabilities?
- Since the above method is inadequate, you need some other stats. You check now the draw stats for each team. Home team appears to draw about 28% of the time overall and away team draws 34%. You calculate the average of these and come up with 31%. The remaining 69% will be shared by home and away win according to the previous ratio. 43.21% of that will be for home win (=29.81%) and the rest for away win (=39.18%). Final you come up with 30-31-39 for home-draw-away probabilities.
- Nevertheless, it can get a bit more complicated. Say you have heard of an interesting theory which implies that football results follow the Poisson distribution. You may check out 2 free Poisson calculators online here and here. The equations behind the distribution can be easily added into your spreadsheet, since the distribution is available in the formulas section of Excel. Hence, you can calculate probabilities in excel with that formula, given you supply the necessary input data.
- However, the task of calculating probabilities may turn out to be either the simplest thing in the world or the hardest. You may explore all the distributions available, all the mathematical models, apply neural networks into your calculations and indeed see it as science. Yet you may just read the news and papers, make up some probabilities of yours (i read that and that, so I conclude the probabilities are 20-20-60, end of story) and carry on. It really depends on how much effort and accuracy you want into your betting system
We have arrived now to the point we have imported the games, the data, we have the probabilities ready and… now what? It would a good idea to convert the probabilities into odds to make our life easier. This is done by dividing 1 by each probability. For example, 33% is 1/0.33 (=3.33 odds), 50% is 1/0.50 (=2.00 odds) and so on.
Next, you need to import the actual odds offered by the bookmakers or Betfair . Finally you are interested in value betting, meaning betting on an event only when there is value in it. A value bet is on offer when the odds you have calculated are lower than those available to bet. If you have calculated odds of 1.80 and the odds offered are 2.2, you should back it. If the odds offered are 1.50 you should lay it. You should additionally consider the commission and how odds are affected by it before submitting your bet. You can in fact apply the commission effect into your excel spreadsheet, in order to check for a value bet at once.
Ok, bet now? Of course not, without proper money management we are doomed to fail, even if we have designed the most favorable betting system. We are going to need a starting bankroll and a staking plan in order to succeed.