How to bet? The 10 Step Trademate Guide to Improve Your Betting

20 min readJun 29, 2017

Here are some key concepts you should know about, educational resources, tools and practical steps you can take to improve your betting.

1. Find value from odds deviations at bookmakers

Different bookmakers offer different odds. Therefore you should spread your bankroll over accounts with multiple bookies in order to get the best odds possible.

Value occurs when you’ve got the upper hand on the bookmakers or the markets. There are mainly two reasons an valuebets occur — and to understand them, we need to cover how the bookmakers operate. All bookmakers and exchanges have a margin — that’s ultimately how they make money. Their margin may vary from as low as 3% to as high as 20%. Imagine a pure coin flip where you can bet on heads or tails. The odds should be 2 on each side, which means 50% probability of hitting one of the sides. For bookmakers to make money, they put their odds at 1.8 on both sides, skimming 10% off whatever the winning bet is.

The best and sharpest bookmakers in the world are purely market driven, which means that when enough money are put on one of the sides, that odds will decrease while the other one increases. This means the odds are ultimately decided by liquidity in the market. When the amount of money going through is high enough — the odds are as close to perfect as it will be. By looking at the odds of these high liquidity markets, one can acquire the knowledge of hundreds of thousands of people. Not many bookmakers can pull this off, because they don’t have a large enough customer base makings things too uncertain. The ones that can are mostly placed in Asia. Value occurs when any kind of new information that impacts the game is acquired.

A very good example is the FA cup game between Chelsea vs Manchester City on February 21st. A couple of hours before the game, the best odds you could get on Chelsea to win was around 1.75–1.8. Then, exactly 1 hour before the game the lineups went public — and it turned out that Manchester City brought five teenage full debutants in their lineup. As seen in the picture, that information triggered a huge change in the market. All the high liquidity markets dropped from 1.75–1.8 to 1.35–1.45 in less than 10 minutes. However — a lot of the European bookmakers didn’t react nearly quickly enough. Some bookmakers spent more than 30 minutes changing their odds. That means you could now get Chelsea to win at 1.7–1.8 when everyone else agreed they should have no more than 1.35–1.45. This turned out as an edge higher than 15%.

An edge can be reviewed as a bet with a +EV%. If you place $100 on a 15% edge, you can expect to net profit $100 * 15% = $15. Edges as high as 15% is a bit uncommon, but plenty exist in the range of 2–6% at the soft bookmakers.

The aim is to get in a high volume of bets / turnover with a small edge to make a profit in the long term.

This article on “How Value Occurs in Sport Betting Market” originally appeared on our blog.

The aim is to get in a high volume of bets / turnover with a small edge to make a profit in the long term.

This article on “How Value Occurs in Sport Betting Market” originally appeared on our blog.

2. Start with clearing signup bonuses on the soft bookmakers.

The majority of soft bookmakers offer bonuses with a turnover requirement, e.g. a 10x. You can use arbitrage to clear these bonuses. For instance let’s say you are betting on an Over / Under in a basketball game. Bookie A offer 2.05 in odds on an over, while Bookie B offers a 2.05 in odds on under. By placing $100 on each side, you have a surebet with a guaranteed profit of 2.5%. [ 1 / (1/2.05 + 1/2.05)]. Remember that you’re goal is to clear the bonus, so you can go break even by taking 2.0 and 2.0 or even go slightly below. Just make sure that your bonus is large enough to justify taking bets with a slightly negative expected value.

3. Know that “tipsters” who are profitable would never give away their advice for free.

Most tipster make money from affiliate deals with bookmakers where they get money if you use their links to sign up to the bookmaker site or by getting a percentage of losses made by bettors. If a tipster has an actual edge or inside information they will act upon this themselves. Only once they have taken a position in the game will they be willing to give up this information. The result being that they get better odds than you. For instance if a tipster recommends Troy at home versus South Florida in the NCAA at 1.75. They could take an earlier position at 1.80. Once people start following their advice and the market drops to let’s say 1.65 they can take a bet on the other side to make a surebet. Most tipster also don’t want to give away their track record and for the once that do, there is no guarantee that they have not simply deleted some of the bets they have lost. For the tipsters who actually do show you their full track record, the sample size is often very low. If they only place 250 bets a season for example their results will mainly be down to luck. There are two good articles on Pinnacle, which covers how to evaluate tipsters track records and survivorship bias.

4. Don’t bet on accumulators.

Bookmakers need to be profitable so on every bet they offer, they take a cut which typically on average is around 10%. Thus the odds you are getting is lower than the actual probability of that outcome and in the long run you are losing 10% of every bet you make. By combining multiple bets your disadvantage gets compounded, actually making you lose on average 34% of your stake. Let’s say you place a £10 on a 4 leg accumulator at 60 in odds. The bookmaker is essentially saying this will happen 1 time every 60 times. However, you should be getting odds of 91 (average payback at 90% giving 0.9⁴ = 0.6561, 60/0.6561 = 91.45). That means the bookmaker has an edge of 34% over you. Doesn’t sound very fair does it? That’s why bookmakers are spending millions on advertising accumulators.

5. Not having a staking strategy.

Even if you are placing profitable trades, without a correct staking strategy, variance could wipe you out. So what does a profitable staking strategy look like? Well there’s two options you can deploy profitably. A flat stake, and a proportional stake.With a flat bet size, you either put the same wager on every single game, or you put the same wager on games that have the same odds and edge. Flat bet sizing is fairly easy to use, but it’s hard to select a proper size. A size too big will increase the chance of going broke, while a size too low will not yield big enough profits.A proportional strategy is where you place a certain percentage of your current bankroll on each bet. Kelly’s Criterion is a formula that maximizes the growth rate of your bankroll. You should be aware that following the Kelly Criterion is high risk. You can reduce your risk by following for instance 30% of whatever the Kelly Criterion tells you to. I’ve also made a video on Youtube where I explain the Kelly Criterion and how to apply it in betting.

6. Know how bookmakers work and measure by whether you are able to beat Pinnacle or the closing lines of the other sharp bookmakers.

This article on “Closing Lines: the Most Important Metric in Sports Trading” originally appeared on our blog.

As part of any form of investing it is important to have a benchmark that you can compare your performance against. Otherwise, you do not know whether the results you are getting are because you have made smart decisions or luck. Professional poker players use analysis software to track their hand history, enabling them to review whether they make decisions with a positive expected value. E.g. calling hands where they have pot odds. For stock investors, a suitable benchmark is how you perform against the S&P 500, an index fund consisting of the 500 US companies with the highest market cap (Stock price x volume of shares). For sports traders, the benchmark is the odds at the time the match kicks-off, what is known as the closing line.

How bookmakers decide upon their odds

Typically an odds line will be placed by a bookmaker after they have performed a statistical analysis, which takes all the information they have available into consideration for instance, the team’s lineup, injuries and historical performance. Once the initial odds line has been set it will be adjusted based on market movements, meaning how much money is put on the different outcomes. The efficient market hypothesis used in financial markets states that it is impossible to beat the market because the existing asset prices always incorporate and reflect all relevant information. So if an asset is underpriced in the stock market, it will lead to investors buying the stock until it returns to its intrinsic value or in other words a fair price. The same applies to the sports market, if a bookmaker underpriced the odds of a particular outcome, let’s say a home win to Liverpool vs Manchester United, then smart sports traders will put money on this outcome until it is priced at a fair value. So for instance, if someone places a $1 million on Liverpool to win, the odds will shift. If another person believes that the odds is now mispriced and that there is value on the other side, they might place $1 million on Manchester United to win and the odds will shift again and thus eliminating the inefficiency. The more money that is put on the outcome of a game, the more likely it is that the all of the inefficiencies have been eliminated. Thus the odds at the time the match kicks off, the vig-free (bookmaker’s margin removed) closing line, will reflect all of the information that is in the market.

Are bookmakers able to accurately predict the outcome of a game?

Now which bookmakers are the best at accurately predicting the outcome of a game? First, let’s define the bookmakers and exchanges into two main categories: 1) soft bookmakers, who have low limits on how much money can be placed on games. 2) Sharp bookmakers, who have high limits on games. The majority of the sharp bookmakers will have higher payout rates (Soft: 85–95% vs Sharp: 95–98%). What typically happens at the soft bookmakers is that they limit winning players in order to protect their profit margins. The sharp bookmakers however, choose the opposite strategy, they want to have smart traders at their site because it makes their odds more accurate. The sharp bookmakers have much higher limits on the amount of money that can be placed on a game. This basically allows them to have more information incorporated into their odds, which makes the bookmaker able to more accurately predict the real world outcome of the game.

How efficient is the sports market?

Through looking at the correlation between the expected probability of a game’s outcome and the actual outcome it is possible to determine how accurate a bookmaker’s odds are. From a sample size of 397,935 football games offered by Pinnacle Sports, a sharp bookmaker, there existed a high correlation (r-squared = 0.997) between the closing lines and the observed probabilities. In other words, Pinnacle’s odds accurately predicted the real world outcome 99.7% of the time. Meaning that that their odds are very efficient. In their business models, bookmakers make a tradeoff between their margin and the total turnover of bets that are placed through their service. Because Pinnacle is so confident in their odds being correct it enables their business model to rely on a high volume of money being placed on their games and them to have a low margin, approx. 2 % and a 98% payout rate to their customers.

The majority of the soft bookmakers are European, while the sharp bookmakers operate in the Asian market. Because of the higher amount of money that is placed on games in the Asian market, it has higher liquidity. This attracts professional sports traders with large bankrolls, which increases the level of competition. The consequence being an efficient market because smart sports traders exploit any inefficiencies that occur. Now it is easier to finds arbitrage opportunities in the European market however, the limits on how much money you can place on the game effectively puts a cap on potential earnings. Because the Asian market is more efficient, the best sports traders are only able to beat the market with a couple of +EV%. They counter-balance the lower edge by placing a high volume of trades at high sums. Because the soft bookmakers limit winning players, sports traders will eventually have to move into the Asian market.

The goal of sports traders is to beat the vig-free closing line of the sharpest bookmakers.

No one is able to accurately predict the outcome of every sporting event. However, this does not imply that it is impossible to become a profitable sports trader nor that those who are profitable are merely lucky. The goal when trading sports is not to win every bet you place, but to make decisions that have a positive expected value (+EV). E.g placing trades that have a larger chance of winning than implied by the odds. Over a small sample size of trades anything can happen or in other words variance will have a large impact on your results,. However, over a large volume of trades the variance will even out and only sports traders who are able to consistently beat the vig-free closing lines at the sharp bookmakers will be profitable. In the sports market, the sharp bookmakers’ closing lines are considered to be the expected value. Meaning that If you traded at a higher odds than the closing line you have made a +EV trade, while if the odds you traded at is lower than the closing line you have a -EV trade. Now obviously at the time you decide on whether to place a trade or not, you do not know what the closing line will be. However there are multiple factors that impact the movement of the odds and thus the closing line, such as the time before kick-off, the bookmakers payout rate and the liquidity in the market, which will be discussed next.

Time before kick-off.

The odds are a reflection of the information possessed by the market. Thus the longer before kick-off you place a trade, the more information might appear that can affect the odds one way or the other. Therefore trades that are placed closer to kick-off will most likely experience less fluctuations.

Payout rate and liquidity — The difference between edges (+EV trades) at soft vs sharp bookmakers.

The main difference between the soft and the sharp bookmakers is their payout rate and liquidity. An edge occurs in the market, when there are differences in the odds offered by the various bookmakers. The majority of the soft bookmakers have a lower payout rate than the sharps. So for instance the odds at Manchester United winning at home vs Arsenal this weekend is 2.50 at Ladbrokes and 2.68 at Pinnacle. Their respective payout rates are at the time of writing, 92,6% and 98%.

Because Pinnacle have a higher payout rate and allow larger bets to be placed on the outcome of this game than Ladbrokes, more money is placed on the game through Pinnacle. The result being that Pinnacle has more liquidity. More liquidity means more information, which means that odds at Pinnacle is a better reflection of the true odds (the true probability of the game’s outcome). Now let’s imagine the scenario where news gets out 1 hour before kick-off that Alexis Sanchez, Arsenal’s best player is injured. The sharp traders know that this decreases the likelihood of Arsenal winning the game, so they will place a large bet of $1 000 000 on a Manchester United win, the result being that the odds of United winning at Pinnacle drops to 2.30. If we look at the vig-free odds (removing Pinnacle’s margin of 2%), the odds is 2.346 (2.30 * 1.02). The odds at Ladbrokes remains at 2.50, meaning that there now exists an edge in the market of 6.56% [ ((2.50 / 2.346)-1)*100 ]. The market movement from 2.68 to 2.30 is a fluctuation of 16.5%. For Pinnacle odds to swing the other way and eliminate the edge, it is going to take new information. This information must then convince bettors to place hundreds of thousands of dollars on a draw or away win to change the odds. Now there is only 1 hour before kick-off so we can assume that the probability of this occurring is rather low. This implies that what is an edge 1 hour before kick-off is also likely to remain an edge at the time of kick-off. Or in other words if we had placed that trade 1 hour before kick-off at 2.50, it is likely that we would have beat the closing line of the sharp bookmaker, thus it is a +EV trade.

In general the odds at the soft bookmakers is way lower than the sharp bookmakers, because their payout rate is lower. Thus for an edge to occur at the soft bookmakers, the market must drop by approximately 10% (because of the soft vig). The probability that the market will swing back to its original position is then fairly low. Whereas a 2–3% drop between the sharp bookmakers will create an edge, it then takes a lot less new information for the market to move out of your favor as opposed to the 10–13% drop at the soft bookmakers. The point being that if an edge occurs at a soft bookmaker, it is much more likely to remain an edge versus the closing line when the game starts, than an edge that occurs between sharp bookmakers.

Which bookmaker is the sharpest?

The bookmaker with the consistent highest liquidity in a particular market is considered to be the sharpest within that market. This is because more liquidity attracts sharper traders. Sharper trades possess information. Once they place a trade the market reflects the information possessed by this trader. Close to kick-off in a high liquidity market all of the sharp traders will have placed their trades and thus the market reflects the sum of the information possessed by the individual traders. The closing line represents what the market believes to be the true odds and thus probability for the different game outcomes.

Pinnacle usually has the highest liquidity and is therefore most often the sharpest of the bookmakers. Thus when edges occur between the sharp bookmakers it is usually because a sharp trader is placing a lot of money on a line at Pinnacle. This causes the odds to drop by 2–3 % and a 1% edge to occur versus the rest of the market. When this happens other traders will compete to capture the same liquidity on the other sharp bookmakers before someone else does.

When an edge occurs in the asian market, the sharp traders will keep betting the line until the value is on the other side, hence equilibrium is usually not the lowest-most point on the graph. Thus if you are able to place your trades at the peak edge it is very likely that the line will stabilize slightly lower than the odds you placed at. By placing trades on edges, you are placing your money on what is the right side of the market. Therefore it is more likely than not that the market will move in your favor.

Trademate is a valuable tool for sports traders, because it allows you to monitor market movements. Sometimes “false deviations” will occur at the sharp bookmakers, meaning that the line is pushed back to its original position, by someone taking a large position on the other side of the market. The result would then be that what was a +EV trade at the time you placed it, becomes a -EV trade 2 minutes later. As more money is placed on a game, meaning that the liquidity increases, it requires more money to shift the odds. Thus placing trades closer to kick-off means increases the likelihood of your trade being a +EV trade at the time the line closes.

Low liquidity versus high liquidity markets

In general, bookmakers only allow smaller stakes to be placed on lower leagues and smaller sports. Thus these leagues have lower liquidity than the major leagues such as PL, CL, NBA, NFL and MLB. As a sports trader this is important to know, because if there is a 5% edge on both a Premier League game and a game in English League 2, it is going to take a lot less money to shift the odds in the L2 game and thus turning your +EV trade into a -EV trade. Now, this could swing both ways, so your +EV trade could be even higher. The point is that the only thing that is guaranteed is that the lower liquidity markets are much more volatile than high liquidity markets. Therefore they can be considered to be riskier. In an example where you place both trades close to kick-off (<1 hour) then most likely both of the trades will end up as +EV trades versus the closing line. However, let us assume that you place both trades 4 hours before the game. Then it is much more likely that the L2 game is going to swing out of your favor than the PL game. Thus as a sports trader, you have to weigh up whether placing that trade at that edge is worth the risk.

7. Not tracking performance or analysing your game.

Lack of knowledge and analysis of your performance against the bookmakers is one of the biggest factors in not becoming a profitable long-term sports trader. Whether you are a poker player or day trader, keeping track of your results enables you to determine whether your strategy is working and whether you are running good or bad. This can in turn enable you to change your strategy for the better. When trading sports you should measure your performance versus the closing lines of the sharp bookmakers. If you are able to consistently place bets where you get better odds than the bookmakers closing lines you should be profitable in the long term.

8. If you are profitable at the soft bookmakers you will be limited.

Here are some advice to last longer:

Bet whole amounts. Arbitrage betting is very usual in sports betting — so bookmakers look out for bet sizing out of the ordinary. Instead of placing the exact recommended Kelly amount of $162, bet $160.

Never cash out from a bookmaker before you’re limited. Bookmakers are paying fees whenever you cash out, so that’s an easy way for them to do a second look at your account. So you’ve tripled your bankroll in the past 3 weeks? Let’s take an even closer look.

Don’t push the max limit on games. Let’s say you try to place a bet of $250 on a game. The bookmaker may tell you that you can only place $238 on the particular bet. Instead of putting the $238, bet 60–70% of the max stake, in this case $150. Some bookmakers even give you the opportunity to automatically put the max limit of $238 and send the remaining $12 for manual clearance. Never do that.

Add in some accumulators with a lower bet size. This will make you look more of a “recreational bettor” and its something bookmakers appreciate. Lower your bet size for these as the variance is higher.

Only place one bet per game. Bookmakers place betting limits for a reason. The reason is usually that they’re not really sure if their odds in a particular game are any good. If someone comes in and places bets on Over 198.5, Over 199.5, Over 200.5 and Over 201.5 — it’s pretty clear that they’re trying to get value. Bookmakers don’t like that.

Also — placing more than one bet on a game has a great impact on your variance, but that’s a whole other discussion.Make your first deposit small and try to look like a hobby Sports bettor. Depositing $10,000 in a brand new account is an obvious way to tell bookmakers that you’re trying to beat them.

You can bet the occasional accumulator to disguise your value betting. Bookmakers make most of their money from accumulators as their margins increases for each bet in the accumulator. The variance is bigger, but matching different edges still give a positive expected value. By doing this, you look more like a non-profitable player to the bookmakers.

Unfortunately, by continuously placing profitable bets and beating the bookmakers — chances are they will limit you eventually. After all — they are losing money on you.

9. Market liquidity = information

The bookmakers employ top sports experts and data scientists who take in huge amounts of information on everything from lineups, injuries and team form to place their initial odds line. In other words, information is used to calculate the probability of let’s say Arsenal beating Tottenham this weekend. One of the best sports traders in the world is Tony Bloom, the owner of Brighton Football Club and the betting syndicate Starlizard (http://read.bi/2fiaisZ). According to Business Insider, Starlizard employs 160 workers who spend their day crunching statistics and building their own computer models for calculating the odds of sporting events, e.g. Arsenal winning. To run a company of Starlizard’s size and pay all the employees, the betting size and volume needs to be huge, in the range of hundreds of thousands to millions of pounds per bet. If they believe that the bookmaker are giving odds of 2.0, when their own calculations say that the true probability of Arsenal winning is 1.9. They will bet a large amount on any odds above 1.9, causing the odds to drop until it reaches 1.9. It is not possible to place large bets on the soft bookmakers, so the professionals perform their betting at the sharp bookmakers who offer higher stake limits on games. Once the odds goes down on one side, it will inevitably rise on the other. So now the odds of a draw or away win could be at 3.40 and 3.90 respectively. Now, someone else might believe that there is value to be had by betting on an away win based on the information they possess. They will then place a bet on Tottenham to win, shifting the odds line again. Eventually the odds line will reach equilibrium, where no-one is willing to place any more money on any of the game’s outcomes. If you are going to place $1 million on the outcome of a game, you better make sure that you get it right, if not you will go out of business over time. This also implies that when someone is willing to place such high stakes on a game, they possess information that suggests that this is a profitable bet. Thus one can draw the conclusion that the more money is placed on a game (liquidity) is equal to information. Watching and analysing these high-liquidity markets, allows you to follow big movers such as Tony Blom. Essentially giving you access to their positions and information.

10. Some good free tools and resources are:

Trademate’s youtube channel where we trade live in the European betting markets and discuss key topics in sports trading.

Trademate’s blog on sports trading, where the advice shared in this post originally appeared.

Other resources

Oddsportal is a free service that allows you to compare the odds offered by different bookmakers in one place. They also have a surebet (arbitrage) and some other nice to have tools.

Flashscore is another free service that is great for keeping track of the score on the trades that you have placed and for checking the results. They also have an app and if you create a user, you can get notifications whenever there is a goal in a game you want to follow.

Using an odds converter (https://www.aceodds.com/) enables you to quickly see the relationship between decimal, American, fraction odds and implied probability.

Betting brokerages enables you to place trades at the sharp bookmaker’s with one account. It reduces the hassle of managing multiple accounts in addition to increasing the speed with which you are able to execute trades. They make money by taking a percentage of your turnover. If you are trading at the sharp bookmakers using a brokerage increases your speed of placing bets a lot, which makes it worthwhile.

Pinnacle’s blog

In addition to being one of the bookmaker’s with the highest liquidity and payout rate, Pinnacle has some great educational content on a range of topics that are important for sports traders.

CONCEPTS

How betting odds and the bookmaker’s margin work

FIVETHIRTYEIGHT

A stats centered blog run by Nate Silver that covers American sports. Nate is known for his predictions on Baseball and past US elections.

TRADINGEUROPE & The Trademate Blog