The Importance of Value Part 2

Welcome again or just welcome if this is your first time  at my blog – scratch that double welcome to everybody and many thanks for reading!

Apologies are again in order as this post is arriving a bit  later than I intended – some 3 weeks or more to be honest! Cheltenham managed to get in the way as it always does and since then a variety of factors have conspired to scupper my posting ambitions.

Today’s post is an important one. In it I reveal a value finding method that has made me a vast percentage of my betting profits over the last few years and it is probably the most important and useful betting technique I will ever post on this blog. Here goes!

Finding Value – The Most Important Factor in Profitable Betting

We established, in The Importance of Value Part 1, that getting value when you bet is crucial to making long term betting profits. Without it, in the long run, you will lose money. Guaranteed.

But how do we know when we are getting value?  How can we know that we have priced the event right and the bookmakers wrong? Initially we can’t. We need a statistically significant number of bets to show a profit before we can say with any certainty that we have found value when placing those bets ( and of course this will only tell us we found value the majority of the time – it won’t tell us whether we found value in each individual bet).

There are a thousand ways of assessing an event such as a horse race and then creating your own prices about each of the possible outcomes. These include studying the form, different types of ratings, previous statistics and on and on ad infinitum. All of these are viable ways in which to find value once you are experienced in using them

Is there another way that we can ensure  we’re finding value? More quickly than waiting until we have placed 1000 bets (or more depending on the price ranges in which we are working) ? More quickly than spending the years and years required to master some of the methods mentioned above?

What we would need is a reliable indicator of the true probability of  a particular outcome actually occurring. Is there such a thing?

Luckily for us there is.

The betting exchange markets.

Numerous pieces of research have shown us that the Betfair markets just before the off of a race (or Betfair SP these days) are the most reliable indicator of a horse’s true chance of winning a race. This is particularly true at the head of the market and becomes less so as prices increase because of the relatively lower amounts matched at those higher prices. These markets are a great example of “the wisdom of crowds” in action.

The  prices on a betting exchange represent the sum total of all available knowledge about the event and it’s likely outcome. And they are amazingly accurate as the off time approaches.

You might ask why this is true. Surely bookmakers know more than the average punter on betfair? Yes, they do know more than the average individual punter. But they don’t know more than the pooled knowledge of every single punter on Betfair.

If we were to ask one person to estimate the distance from point A to point B just by looking at it, they might guess quite close. But if we were to ask 1000 people to estimate that same distance and then take the average of their answers, that average would be closer to the true distance than the sole individual’s answer. That’s the wisdom of crowds.

It therefore stands to reason that the prices on Betfair, representing as they do the estimates of 1000s of people, are likely to be a very accurate guide to the true probability of the each possible outcome. And all statistical analysis bears this out.

If you accept this argument ( and I know it to be true), the logical conclusion is very enlightening. If you can consistently beat the prices at Betfair just before the off (or Betfair SP ), you are guaranteed to make money over the long term. It’s that simple.

The doubters among you might now think, it’s all well and good knowing that Betfair SP is an uncannily accurate guide to the true probability but we don’t know those prices until the event has started! And the doubters would be right.

However, it is possible (and this is the good bit) to predict whether Betfair SP is likely to be lower than the price you are looking at earlier in the day. Obviously this can’t be done with absolute accuracy but it can be done often enough to make it profitable in the long term.

Here’s how you can do it. You might look at a particular horse race at around lunchtime, several hours before the off. By comparing the prices available on Betfair with those being offered by the various bookmakers on an odds comparison site such as Oddschecker, you can identify a horse that is likely to shorten in price during the day simply by spotting those horses which are a shorter price on Betfair than with the bookmakers. The trend of the graph on Betfair for that particular horse can then be used as confirmation of whether the odds have been shortening and whether they are likely to continue that trend.

You can then back that horse with the bookmaker offering the best price safe in the knowledge that the Betfair SP of that horse is highly likely to be lower than the price you have taken. You have, by definition, found value!

This “technical analysis” method  has been responsible for more than 60% of my betting profits over the last 5 years and it is, by my reckoning, the most valuable piece of information I have ever posted on this blog. It doesn’t guarantee winners (in fact, betting across all price ranges, you’re strike rate will be pretty low), it doesn’t guarantee profits every week or even every month but it does guarantee that you are betting value and therefore that you will make money in the long term.

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Before I go, I thought i’d make a mention here of one of the systems that has been a mainstay of my betting portfolio for a number of years.It has been a consistent earner for me during that time and I can wholeheartedly recommend it. It’s an oldie but goodie and it rewards persistence through some of it’s quieter spells.

The Legacy and Saver System

The Legacy and Saver System has been around for more than 20 years but I’ve been using it for around 4. I started operating it with a small bank and staking 2% of the bank on each selection. Within about 18 months my bank had grown by 500%  and since that time I have drawn down profits on a monthly basis. It generally kicks a few hundred pounds on to the bottom line each month and I am more than happy with that.

It takes about 10-15 minutes a day to identify the selections which I then back with Betfair. Very simple and steady. It has had a few sticky periods over the years but they’ve not been a problem to me because of the careful staking approach I’ve used.

The system vendor is offering a 56 day no questions asked money back guarantee and I would use that period to test the system without risking any money. If at the end of that period it doesn’t suit you, just get your money back!

Have a look at it here

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That’s all for today. As ever all comments/suggestions are warmly welcomed.

I’ll be posting again at the end of the week but in the meantime, have a great one and find lots of value!

Kieran

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4 comments

  1. Brilliant insight, Kieran. Presumably you have the option of ‘greening up’ on most runners as well, thus locking in a profit / no loss situation…

    Very smart.

    Matt

    p.s. keep on blogging! 😉

     
    1. Thanks for that Matt.

      Although I tend to let all these bets run, it can certainly work as a trading strategy as well.

      All the best

      Kieran

       
  2. Nice piece Kieran. Although I do subscribe to the wisdom of crowds theory the Betfair situation is not a level playing field in that not everybody has the same size vote.

    IE the person with the biggest stake has the biggest vote not the person with the most knowledge.

    If the market was a true reflection in every case then we could never get value from Betfair SP (always 1-2% negative).

    It still pays to be smarter than the crowd and you can still get value from BSP.

    Just Saying 😉

    Darren

     
    1. Hi Darren

      Thanks for commenting.

      I agree entirely that profits can be made at Betfair SP (in particular at higher prices where there can be massive value). By being very selective value prices can be found without a doubt. My point is that, averaged out over a large number of races, the prices are an incredibly accurate guide. If you were to blindly back all horses with a Betfair SP of 5.0 for 1000 races you would almost certainly win 20% of the time, break even and ultimately be killed by the commission.

      All the best

      Kieran

       

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