Cymatic Trader Community

[Gavin]

Search for added 'value' when building a strategy. Gaining a profitable advantage can be achieved in many different ways, but in essence your techniques should involve finding value, which means backing above or laying below the actual true odds of the outcome occuring (or ideally making both bets).

'True odds' means the actual probability of an outcome occuring, which obviously can't ever be calculated with 100% accuracy for a future sporting event, so mathematical techniques are usually used to estimate it as accurately as possible. Often the exchange prices will diverge from the estimated true odds for the event, for example due to an imbalance of supply and demand, or because some participants have differing opinions of what the true odds should be. These movements in prices can create opportunities to trade and find 'value'.

When a bookmakers sets their odds at the start of the day, they will choose odds that are below what they have calculated and believe to be the true odds for each outcome, thus they achieve 'value' by tilting probability in their favour by their desired profit margin. Calculating odds with reasonable accuracy can be very complicated and often requires a considerable grasp of mathematical probability distributions and statistics, so understandably most punters might not want to calculate the odds themselves!

There are lots of ways that you might be able to create value for yourself, depending on your skill set and interests. For example any of these might contribute to your success:

• Being good at statistics and applying mathematical distributions to predict the fair odds and then look for value bets (as mentioned above).
• Being good at trading with software such as Cymatic, for example repeatedly backing and laying to earn a tick, working the order book queue, etc
• Being faster, for example using faster technology such as a quicker video feed, or by going to the actual event to see the tradeable action before it is noticed by other punters who are at home watching a delayed TV stream.
• Studying recent performance, injuries, tiredness, new players, etc. and then trying to develop an extra insight.
• etc...

Perhaps it is worth pondering that the robot feature on the ladder in the Cymatic software, could actually be considered as just another variation on the value theme. It tries to near-simultaneously back higher and lay one tick lower, which is perhaps a form of market making that assumes, in that moment at least, that the market believes that the true odds ('fair value') is to be found mid-way between the back and lay price. Or at least that the markets interpretation of true odds is likely to hover around that point for long enough for you to earn a tick.

Whatever approach you choose, good luck searching for value. Then with value in your favour, who needs luck?!

Best wishes,

Gavin

[Gavin]

Following on from my article above, if your strategy is not profitable then I suggest asking yourself whether there is positive value in the odds at which you are placing bets. In other words, are you placing bets at advantageous odds, on average over many such bets in the long run?

For example, imagine a punter decides to design a strategy that always submits a back bet on any horse that reaches odds of 1.05 during the race, because he hopes he will capture some profit by betting on every horse in the last moment just before it wins the race. This strategy will not work, unless it is discovered that horses reaching odds of 1.05 are found to have a better chance of winning on average than the probability implied by odds of 1.05.

At odds of 1.05, the implied probability of winning is 95.2% (1 divided by 1.05). So if the above strategy is to be successful, then the well informed punter would need to have discovered through some research that horses reaching odds of 1.05 do actually win more than 95.2% of the time. Discovering whether that is the case, would probably require analysing a large data set of historic odds. If such a data set is not readily available, then the punter might have to create the data by doing a lot of speculative bets with small amounts of real money over a long period of time. There is no shortcut.

Assuming we believe that markets are generally efficient (priced accurately), then when the odds are 1.05 these are probably the true odds (on average) so there is no point just always making bets at 1.05 because there is no value in it. However the punter has discovered through research that the market is not efficient (not priced accurately) when a horse is about to win a race and reaches market odds of 1.05, then this could actually be a profitable strategy. Otherwise the punter will simply always be betting at odds that are too close to the true probability of the outcome and thus not making a profit, because he will win 95.2% of the time but then hand back all of the profits by suffering big losses whenever his horses lose during the other 4.8% of the time. In practise this would probably be worse than break-even, if the punter is constantly taking the market prices because he will be losing the spread to the market makers, i.e. he keeps taking the back price of 1.05, even though the true odds might be halfway between the front back (1.05) and lay (1.06) prices. It gets even worse if the bets are placed through a commercial bookmaker instead of Betfair, because the bookmaker will be offering even worse odds to ensure that there is value (profit) in it for the bookmaker.

So in summary, if a punter did research and discovered that the market odds represent good value whenever they reach 1.05, then it makes sense to always back at that price on a regular basis. However, what if he then discovers that in practise the strategy is not profitable, contrary to his research. The natural thought process would be to make a new strategy that tries to do the opposite and always lays at 1.05. That might actually work, if the value in the odds is good enough to overcome any bet execution risks and to overcome the cost of always paying the spread by taking the best odds on the other side of the market (as mentioned earlier, the true odds might be midway between the front back and lay odds). So the punter might be more successful if he places unmatched lay bets in advance at 1.05 and thus hopes to earn the spread during his strategy, instead of always paying the spread, but there is no guarantee that he will earn the spread so close to the end of a volatile market.

An example of a strategy that seeks to discover betting opportunities based on 'value odds', is shown in the videos below and uses the Football Odds Predictor feature in Cymatic to estimate what the 'true' odds should be in each football market. Football is resuming tomorrow in the German Bundesliga and there should be plenty of opportunities to trade football tomorrow and hopefully find some 'value odds'.

Football Odds Predictor - Part 1

Football Odds Predictor - Part 2

There is further information on the football odds predictor tool in the user manual:

User manual - Football Odds Predictor

Happy trading,

Gavin