Welcome to the first of my 7 Pillars of Betting Wisdom. And our first Pillar is, inevitably, Value.
I intend to add a new Pillar every few days throughout July. By the time I have produced all seven, you will have a complete blueprint for sports trading. The only remaining issue will be whether or not you are serious about taking the decisive steps needed to achieve success. Later Pillars will include specific actions you can take to make more money from sports trading, including free techniques.
So we begin…
And yet…. we must begin down here, at sea level, when I know you are yearning for the distant peaks of profit!
We will get there!! We are just not ready to board that particular train just yet! So PLEASE – bear with me in Pillars 1 and 2, and we will start looking at money-making techniques in Pillar 3!
So… we begin again…!….
And to paraphrase Jane Austen, it is a truth universally acknowledged that a successful bettor must have a Betfair account. (Well, I’m sure it was something like that. )
And yet I wonder…..
Many bettors will spend forever making the right selection, maybe evaluating the chances of every horse in a race, or studying the form stats for the two teams in a football match, then take whatever odds are available on their selection at the moment they place their bet.
Typically, nowadays, these odds will simply be the current best available Betfair price, or just possibly Betfair SP, for our hopeful punter will be able to comfort him or herself that, on average, Betfair offers better value than the bookies.
We will look at the question of Betfair’s value offering shortly, but for now, realise this. The difference between consistently taking, say, 7-1 instead of 6-1, isn’t just significant; it’s enormous.
It’s the kind of difference that makes book-making a worthwhile industry.
And the more experienced I get, the more I realise that good pricing is probably more important than inspired selection.
Make no mistake… An amateur bettor talks about picking winners; but an experienced bettor settles for buying good value risk. It’s a completely different approach.
If all this sounds crazy, consider: bookmakers don’t pick winners, they merely price risk. And they’ve been in this game a lot longer than you. Picking winners is too difficult, so they don’t bother doing it. Instead, they offer you a price, and let you live with the selection risk. And as long as they get their pricing right overall, their winners will more than compensate for their losers.
But there are two particular reasons why beginners should obsess about price.
1. Price is more important for novices than for successful punters.
Consider an experienced bettor who places eight £20 bets at 6-1, and a further eight at 7-1. In each sequence, suppose he secures two winners. In the first run, he therefore makes a net profit of £120; and in the second £160. Not very different, you might think, and our successful punter would no doubt be pretty content with both runs, though the second sequence still produces an additional 33% profit.
Now consider a novice punter who also has two runs of 8 bets, again at 6-1 first time, and 7-1 the second. But he can only manage one winner in each sequence. The 6-1 sequence therefore yields a loss of £20, whereas the 7-1 run breaks even.
Thus, the novice is a loser in the 6-1 sequence, but feels content he has broken even the second time around. The difference, in percentage terms, is not marginal, as with our experienced guy, but technically infinite – for such is the result when you divide 20 by 0. Thus pricing, for beginners, very often makes all the difference between success and failure.
But this isn’t all. The biggest difference may be in the way our novice feels.
I shall have a lot to say about emotion in my second Pillar, but for now, I merely note that, although long, losing sequences are difficult to bear, accumulated net losses are harder, because you feel a fool. And as we shall see, managing emotion is as important as managing money when you’re learning to bet.
2. There is an immense compounding effect from both good and bad pricing.
Compounding is often claimed to have been called the eighth wonder of the world by Albert Einstein. I personally think his general theory of relativity pips it, but maybe he was a modest sort. However, it is undeniable that compounding can make the difference between living in poverty and moving up to Easy Street.
If we assume a £500 bank, repeat the above sequences twenty times, and reset our stake at the beginning of each new run to 4% of our bank balance (which is effectively what we did when we selected a £20 stake at the start), we end up with the following outcomes.
Successful punter / 6-1 sequence – final bank = £36,932.07
Successful punter / 7-1 sequence – final bank = £128,958.10 !
Novice punter / 6-1 sequence – final bank = £221.00
Novice punter / 7-1 sequence – final bank = £500.00.
If we add in an 8-1 sequence, things get even more extreme…
Successful punter / 8-1 sequence – final bank = £418,341.28 !!
Novice punter / 8-1 sequence – final bank = £1095.56 (hey, at least our novice manages to double his money here!).
Now it is of course extremely doubtful that we would be able to place the £11,952 bet that the final Successful Punter sequence requires, but the conclusion is self-evident. Good value pricing is absolutely essential, and can make all the difference between abject failure and glorious success.
So what about Betfair?
So we all agree that Betfair offers generally better value than the bookies.
Or do we?
The truth is, there is very little additional value to be had at Betfair on favourites.
You may dispute this with reference to the data on timeform.com, but in my opinion, the simple comparison of Betfair and bookmaker prices is questionable, if one does not include the impact of commission charges. I’m actually a little surprised this is deemed allowable within the context of UK advertising standards legislation.
Furthermore, Timeform makes comparisons between Betfair Starting Price and Industry Starting Price (ISP) – which is of course notoriously mean. It is very easy to get better prices at the bookies than ISP, plus of course, in the world of horse racing, there is the seductive appeal of ‘Best Odds Guaranteed‘, whereby an enlightened bookie awards you the longer of the price at bet placement time, and the price at the off.
Given that we now know that a single point of improved pricing can have remarkable long-term effects, it is essential we check we are getting the best possible value every time we put on a bet, wherever that price may be being offered. Slavishly accepting the best that Betfair can offer is just a form of laziness. We must be ruthless in hunting down the best possible odds if we are going to win at this game. And very often the best price, especially when betting on short-priced favourites, is available from your BOG bookmaker.
BOG pricing is in fact so valuable that some bookmakers have concluded they can’t afford it. Stan James for instance recently withdrew their BOG offering, though rumour has it that a quick phone call may lead to it being reinstated on your account (worth a try anyway!). The betting industry is more competitive than ever, so let’s make the exchanges and bookmakers earn our custom, and we in turn will be rewarded handsomely.
To sum up then...
My advice is to
- Use a site like oddschecker.com to compare prices between the bookies and the exchanges
- Remember to allow for commission costs at the exchange (typically 5% at Betfair and a bit less at Betdaq)
- Bear in mind that the Betfair advantage may be minuscule or, even non-existent, at the short end of the book
- Never take ISP!
- Spend as much time looking for the best price as you would do coming up with your selection
- Obsess about price and think BOG!
All of which wraps it up for Pillar 1!
To jump to Pillar 2 right now – click here!…. For it’s time to talk about … Emotions.
After which we get to Pillar 3, when we can start talking about making some money!
Any questions, comments or even praise(!!) – please leave them below… or email me at email@example.com.