Value Betting 101 - How to Start Making Money With Value Bets

My name is Mauricio and I am the Marketing Manager of Trademate Sports.

Before working for Trademate, I had no interest in sports (and that hasn’t changed much), but after starting at Trademate Sports, I realized the potential of sports trading. 

How I felt the first day of betting

How I felt the first day of betting

For me, value betting is a way of investing your money. After four months of working for this company, I decided to try out the product.

We decided to start with the challenge: “Start betting with no experience and with 1000 euros”.

The first week started out quite slow, these were some of Marius (the CEO) recommendations:

  1. Read our FREE Ebooks, they have a lot of essential information about value betting and the software.

  2. Be active from Tuesday to Thursday, from 19h to 21h.

  3. Weekends are essential, be active from 11h to 16h (this is when the action happens)

  4. Mondays and Fridays are resting days (but I still placed some bets)

Your presets are also essential, here's an article about the recommended presets.

The original idea was to distribute 1.000 euros into five bookmakers: 

  • 300 in Bookmaker 1,

  • 300 Bookmaker 2,

  • 200 in Bookmaker 3,

  • 100 in Bookmaker 3,

  • 100 in Bookmaker 5.

(I do not reveal the name of the bookmakers not to get limited even faster.)

How did I pick these bookmakers? 

I looked at the signup bonuses. I am based in Norway, so I used Odsen.nu, but as I’ve seen, most bonuses are country dependent, so you will need to check which bonuses work better for you. 

Since I was not an experienced bettor, I chose to use the “not so generous” ones first, otherwise, I will risk not to cash them out. 

A rookie sports bettor trying to cash out their bonuw without Trademate Sports

A rookie sports bettor trying to cash out their bonuw without Trademate Sports

As a beginner, I felt a lot of pressure, bonuses have normally a lot of conditions, and if you want to cash them out, you have to be aware of their term and conditions, “there’s no free lunch”, and indeed, bookmakers don’t just give away free money. 

Their main intention is for you to use your money and the bonus, and end up with nothing. And even if you don’t lose everything, not to be able to cash out the bonus. 

The main condition is to turn over your bonus money five times within 30 days, which sounds challenging. Nonetheless, with a tool such as Trademate Sports, that should be relatively easy, after 2 weeks of betting and being away my two first weekends, I still managed to turn over more than half of what I need to. 

Although my starting investment will be 1,000 as mentioned earlier, I started only with the first bookmaker. 

Why? Sadly, the day I decided I would start betting, I realized that the 2 following weekends (when the action happens), I will be away or with friends visiting, so I wouldn’t have much time to place some good bets. 

Because of that, I decided to wait a little bit, I didn’t want to waste my starting cupon, and to turn over my money, I knew I needed to be committed to the work.

Some of my recommendations: 

Betting tips and recomentations

- Create an e-wallet: I personally use Netteller, since the CEO of Trademate recommended me to use it. 

Why? You will notice that in some bookmakers, it’s really hard to deposit money using a physical credit or debit card. E-wallets make this part easier and they are normally cheap to use.

- Start with a few bookmakers: I planned to start with 5 bookmakers, but as I just mentioned, I won’t have much time during weekends to trade, therefore I focused on getting the coupon on one bookmaker instead of starting with a few and not being able to cash them and miss the getting them.

Do I recommend this? NO. Just start when you know you will have more time, otherwise, it can be frustrating staring at the software, waiting for a +EV trade to appear. 

- Plan ahead: If you know you will start to bet, and if you are a newbie just like me, you will have the chance to use many coupons, when you are using coupons, you surely want to have some time to bet because you will need to turn over your money at least 5 times in 30 days to be able to cash out your coupon.

Check that you don’t have very busy weekends, especially from 11h to 16h (Central European Time), or that you can at least have your laptop close to you every 20 minutes.

- Round up or down your bets: The software is going to recommend you relatively precise amounts (e.g. EUR 2,6). If you start winning, these bets look like very “educated” bets (which they are), but we need to fly under the radar if we don’t want to get limited way to fast.

Since I started with a relatively small bankroll, I got a lot of bets under 5 euros, which I just ignored (I’m not sure if that was the smartest idea). Nonetheless, try to place bets of in chunks of 5. Let’s call it the “rule of 5” (EUR 5, 10, 15, 20…).

- Bets with a higher stake are “better bets”: if you get two options and you need to pick one of them, the one with the higher stake will be considered a better bet, this is because they normally have very decent odds (more likely to win) and higher edge (according to our calculations, the odds should be much lower).

This is easy: the algorithm takes many things into consideration, if you see a small stake, the algorithm probably considers this bet as riskier or less likely that you will win.

- If you have any problems, just reach out: Accidentally, I had another bet that became -EV while I was about to place the bet (the odds lowered), and when I placed another bet, the previous one stayed in my basket and the bet became a combo. 

I panicked! I thought I already lost my money. 

Luckily, this bookmaker has a very responsive customer care team, I told them my problem, and they fixed it immediately. 

If you ever have a problem like this, just give it a try and reach out to customer care, the worst thing you will get is a No as an answer.

- Activate your notifications: It can be annoying sometimes to go to the website and refresh every 10-20 minutes. The best option is to click on the bell icon, so everytime a new trade comes in, a little bell will ring, which means that there are new trades coming in.

You can also activate pop-up notifications, and while you’re working in the office, you will see when there’s a trade. 

- Set a goal of minimun amount of bets per day: Go to the bonus section of each bookmaker and check how much you need to wager to be able to cash out that money, divide it among the days you have left, and start turning over that money!

Remember that some days will be harder to do so, but we always have weekends to make it up for that.

I hope you enjoyed this first post and stay tuned! We will be updating my progress, next time I promise screenshots. If you have any questions, please comment.

 

What is Value Betting?

Imagine you were to bet on the toss of a coin. Assuming the coin can’t land on its rim,
there is a 50 % chance of heads, and 50 % chance of tails. Now, imagine you were to
bet on the outcome , and had two people offering you the following odds:

Coin flip odds with a positive expected value

Coin flip odds with a positive expected value

Expected Value

Coin flip and probability

Coin flip and probability

This article explains what expected value is. Obviously, you choose the bet with the highest odds, since the probability of each outcome is the same. Now, let’s see what happens if you place a bet on heads at 2.10. Half of the time, you’ll lose your $10 bet, and half of the time you’ll earn $11. From
this, we can calculate the expected value of your bet to be $0.5.

After one toss, you won’t have profits of $0.5. You will either be $10 down or $11 up.

However, if you increase the number of tosses, your average earning per bet will
theoretically converge towards half a dollar per toss. This means that if you toss the coin 1000 times, you should expect earnings of $500. Whether you end up a bit above or
below $500 is a matter of luck, but it is skill that landed you there in the first place. You can read more about what happens if you increase your number of bets in this article on the law of large numbers and how it applies to sports betting

Finding Value in the Odds

It doesn’t require much skill to realize that 2.10 is a good odds on the toss of a coin. In
fact, since odds = 1 / probability, fair odds would be 2.00. Because the odds offered is
higher than what the underlying probability suggests, it is a good bet.

So why don’t we do the same in sports? Why don’t we use the probability of each
outcome to calculate the corresponding odds, and in turn distinguish a good bet from
a bad?

That’s exactly what we do. Welcome to value betting.

How value betting works and how value occurs in betting markets

The next article covers how value betting works and this article shows an example from a game between Chelsea and Manchester City

 

Hedging Bets: A strategy for reducing your risk when trading sports?

Key takeaways

  • Hedging sports bets can enable you to reduce your risk, but it will also reduce your potential ROI. Therefore it is a tradeoff between risk and reward that you as a trader have to make.

  • Be aware of potential pitfalls such as bookmakers voiding your bets as they can leave you exposed with high risk and no upside.

“A hedge is an investment to reduce the risk of adverse price movements in an asset.” - Investopedia

Russian Premier League: Ural vs Rostov

Russian Premier League: Ural vs Rostov

An Example of Hedging a Sports bet in a Russian Premier League Game

As a sports trader you can reduce your risk by hedging a trade you have placed. For instance on November 30th, 2016, Ural played Rostov in the Russian Premier League. The opening odds for the game offered by Pinnacle is included in the table below. Rostov both being higher placed in the League and being a team that beat Bayern Munich at 15 in odds in the Champions League the week before was the favorite to win the game.

Soft bookmakers typically place their odds lower than the odds offered by the sharp bookmakers such as Pinnacle, because they have a lower payout rate. 2,5 hours before kick-off, November 30th, the Norwegian bookmaker Norsk Tipping (NT) offered the game at 2.95 for a Ural win. However at this point in time the odds at Pinnacle had dropped to 2.17 (removing their 2,5% vig, the true odds would be 2.26) resulting in a 30.5 % edge [ ((2.95 / 2.26) -1) *100% ]. Next, Norsk Tipping most likely noticing a large amount of money placed on a Ural win adjusted their odds to 2.6 resulting in the odds below.

However, this was still a 15% edge versus Pinnacle. I placed the bet at 2.6 on NT with a stake of 850 NOK or approximately 100 USD. If Ural wins I would get a return of 260 USD and a profit of 160 USD (Stake returned - Initial stake). After I had placed my initial bet, I kept monitoring the odds at Pinnacle, which kept dropping. With such a large edge I now had the opportunity to hedge my bet to completely eliminate any potential losses if Ural failed to win, while making a smaller profit if they win. This was achieved by placing a bet on Rostov to win on the Asian Handicap line of +0.5 at Pinnacle at 1.96 in odds about 20 minutes after taking my initial position. Meaning that if the match ended in a draw, Rostov would have a 0.5 goal handicap, the result being a Rostov win. By hedging on Pinnacle I would have a return on investment of 11,7% given a Ural win [ 1 / (1/2.6 + 1/1.96) ]. While breaking even on any other outcome (a draw or a Rostov win), so basically I was freerolling the game without any risk of potential losses. An important point to note is that hedging differs from arbitrage, because the bets take place at different points in time. This enabled me to get a much higher ROI while taking positions on both sides than what I would have achieved through arbitrage at the time I placed my initial bet. 

Odds for hedging my bet

Odds for hedging my bet

Expected profits after hedging my bet

Expected profits after hedging my bet

New Information in the form of Lineup Changes Made the Odds Drop

The odds at Pinnacle kept on dropping all the way until kick-off as new information became known to the market. Most likely due to Rostov resting several key players, the pictures below compare the lineup Rostov fielded vs Bayern on the left and Ural on the right.

 

Lineup comparison for Rostov in this game vs their last game

Lineup comparison for Rostov in this game vs their last game

When the match started Ural had become the favorite and Rostov the underdog. Pinnacle offered the following odds:

Closing odds at Pinnacle

Closing odds at Pinnacle

The vig-free closing odds offered by Pinnacle at a Ural win would be 1.76 [ 1.71 / 0.973 ]. (You can read more about why the closing line is a good approximation of the true odds of a game here). The closing edge versus my initial trade at 2.6 would have been a 47,7% edge [ ((2.6 / 1.76) -1) * 100%) ]. It is also worth to note that I would have had better odds on my hedge trade if I had placed it closer to kick-off.

The Pros and Cons of Hedging a Sports Trade

The game ended with Ural winning 1-0, giving me a profit of $60. However, if I had simply stuck with my initial trade of a Ural win at 2.6 in odds without hedging I would have made a profit of $160. This highlights the pros and cons of hedging sports. The advantage of hedging was that I managed to eliminate my risk on the game. However, the disadvantage was that I reduced my potential ROI.

Btw, the winning goal was incredible! (27 seconds into the video)

Now, because of Norsk Tipping’s specific rules, the Ural - Rostov game was not offered as a single, meaning that I had to match it with another game to form an accumulator. I ended up combining it with another team scoring 2 goals or less in another game at 1.01 in odds. They ended up scoring 2 goals, so it was a close call, that ended with the trade being good. However this also meant that in reality my hedge trade was not completely risk free. If the 1.01 game had not gone in, I would have ended up losing the $100 I placed through Pinnacle. Also, bookmakers often reserve the right to void bets where the odds is wrongly set. This could potentially have left me with a huge -EV trade. So if you are going to hedge your trades, make sure you are familiar with your bookmakers rules and practices. 

Lessons Learned from Hedging a sports bet

What did I learn from this experience? One can only make decisions with the information one has available at that point in time. I could not know whether the market would continue dropping in odds on a Ural win after I placed my initial trade or whether it would swing the other way. Therefore I made the decision to hedge my trade and freeroll the game for a guaranteed profit if Ural ended up winning. In hindsight, I would have made the same decision if the trade had been a single on NT. However if I come across trades in the future where there are hedging opportunities, but the game is not offered as a single I would rather run the risk with the potential upside of a larger return on investment

Key takeaway

To sum it up hedging a sports bet can enable you to reduce your risk, but it will also reduce your potential ROI. Therefore it is a tradeoff between risk and reward that you as a trader have to make. In addition, you should be aware of potential pitfalls such as bookmakers voiding your bets as they can leave you exposed.

By

Marius Meling Norheim

Value bets: How does value occur in sports betting?

Learn what value bets are and how it can improve your sport betting strategies today!

Read More

Closing line: The most important metric in sports trading

The Closing Line is the No. 1 most important metric by which professional sports bettors judge their performance in order to determine if they have an edge over the market.

Read More