Value is created where the odds on offer don’t reflect the true reality of the underlying event. If you back when you think value is high and lay when it is low you should, over long periods of time, profit from this discrepancy. The key question of course is, what is value and how do you spot it?
Let me give you some scenarios: -
Match one description
The home team is ranked 1st in the division and is also ranked 1st for current form, home and away form, attacking strength, goal supremacy and total goals.
The away team ranks 5th in the division. 9th for current form, 6th away and for attack. Goal supremacy and total goals were 8th and 14th.
- The home team is available at 1.81.
Match two description
The home team ranked 8th in the division and 10th for current form. They are ranked 5th for attack and ninth for defence.
The away team rank 9th in the division, 16th for current form, 11th away.
- The home team is available at 1.41 to back.
Which team would you back and which would you lay? You could in fact do either or both in this case, but looking at those stats your judgement is really whether one rating is justified and correct or not. Is 1.81 correct, or 1.41, maybe neither? I have a two pronged approach to looking at value. First I price markets using a model in much the same way an odds compiler has too. But I also do something much simpler, I have a database of past odds and results. Having a database like this will allow you to go back and examine what was on offer in the past and make a firm judgement on if you see value, usually adjusted for any mitigating circumstances.
In this case the first match was Man Utd vs Everton and the second Liverpool vs West Brom. When I looked at matches where Man Utd were priced between 1.90 and 2.10 it threw up opposition such as Chelsea, Arsenal (2008), Barcelona, Liverpool & Man City. So your judgement on value comes down to whether you think Everton rank alongside those teams in the context of this match. In this match you did have the mitigating circumstances, Man Utd may have wanted to rest players; but all said and done the teamsheet was still very strong IMHO. In the Liverpool match, prior opponents at this price are listed as Fulham, Wigan, Southampton, Stoke, Wolvs, Bolton, West Ham, Portsmouth etc. So a different set of judgements there. But you should be able to see the difference in value between the two? I think it’s fairly clear in this example.
Of course, the market is pretty efficient and it’s tricky to make a judgement against the masses, especially clued up ones. But value is there to be had, it’s just rare to find exceptional value. I should point out that you often have a contradiction that can fool people; in that something can represent value, but never show in the stats. This because for every bit of value created in a 100% book, value is being destroyed elsewhere. So the two tend to net each other off from a statistical perspective. From a trading perspective value is worth spotting because it enhances returns and can lead to a corrective sometimes, but it’s a fun game anyhow.
The downside with spotting value is that you quickly learn that nothing is nailed on, so it gets very frustrating when people ask you ‘for a tip’. You will know that you never really can be sure something is going to happen, but you can be sure that only that over the long term you will be right. But of course people don’t want that fiddling detail, they want a winner!! Unfortunately value doesn’t really work like that, neither does trading; but I’ve come to accept that a lot of people will just never understand that. Such is life!
Don’t let that stop you searching for value though.
Category: Football / Soccer