In simple terms, a value bet occurs when you’ve got the upper hand on the bookmakers or the markets.
One easy way to spot a value bet is to use Trademate Sports, which, via its betting software, provides you with an edge percentage. This is an estimate on how much you will profit off that bet.
If you place £100 on an 8% edge, you will profit by £8.00; £100 * 8% = £8. There are primarily two reasons how an edge bet occurs – and to comprehend them, we need to understand how the bookmakers operate.
Value Bet? Tails the bookmakers win, heads the bookmakers win!
In order to make money, all bookmakers and exchanges operate with a margin, this figure may vary from as low as 3% to as high as 20%.
Imagine tossing a coin where you can bet on heads or tails. Assuming you discount the coin landing on its side, the odds should be 2.0, which means 50% probability of hitting either heads or tails.
For bookmakers to make money, remember their margin, they provide odds at 1.8 on both sides, which means they make 10% off whatever the result is.
Based on flipping
The Wisdom of the Crowd is what drives the markets
The sharpest and top bookmakers are purely market driven, most use the exchanges to form their markets, which means that when a weight of money is put on one of the teams, their odds will decrease while the other team’s odds increase.
This means the odds are ultimately decided by liquidity in the market. This is primarily (but exceptions do occur) down to the Wisdom of the Crowd. For those unsure, Wisdom of the crowd is the shared opinion of a group of individuals as opposed to that of a single expert.
When the quantity of money traded is high enough, usually by thousands of different bettors/traders – the odds are as close to perfect as it should be.
By investigating the odds of high liquidity markets, one can obtain the knowledge of hundreds of thousands of people. This doesn’t mean the ‘majority’ opinion will always win but generally, the value has been eroded.
Information is king to creating profitable opportunities in betting markets.
A value bet can be found when any kind of new information that impacts the game is acquired. An excellent example is the FA Cup game between Chelsea vs Manchester City.
Two hours before the game, the best odds you could get on Chelsea victory was around 1.75-1.8, however, 60 mins before the game, the lineups are announced. Manchester City give five teenagers their full debutants.
Based upon this new information, and in the space of 10 minutes, all the high liquidity markets dropped from 1.75 – 1.8 to 1.35 – 1.45. However, several European bookmakers didn’t react nearly quickly enough, some took over 30 minutes to change their odds.
This meant you could now get 1.7 – 1.8 for Chelsea to win. Based on the Wisdom of the Crowd, armed with the fresh team news, everyone else agreed they should have no more than 1.35 – 1.45. This provided an edge of more than 15%.
Regardless of the outcome of one match, if you can find that kind of edge long term, you will be well placed to make a significant profit.
Find out more on how Trade Sports can give you the edge over the markets.