Fixed Odds Sports Betting Statistical Forecasting And Risk Management Pdf

fixed odds sports betting statistical forecasting and risk management pdf

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Introduction Exchanges vs.

Download Fixed Odds Sports Betting: Statistical Forecasting And Risk Management

Introduction Exchanges vs. Odds and probability What are odds? What is probability? Different types of probabilities Some background on probability Forecasting probabilities Elo rating systems Risk management When should you bet? How much should you bet? What system should you use? Introduction This book has one aim: it is about how to take your skill in betting and turn it into a consistent profit by applying the portfolio management techniques described in this book.

Regardless of the sport, or how you decide on your bets, this book outlines a system for managing your portfolio of bets by controlling risk and allocating your capital efficiently across the large range of available betting options.

The most important requirement to be successful in betting is to have an edge. The edge can be gained by having information that others don t have, or through superior analysis of publicly available information. To be clear about what an edge is: it is not about picking winners most events have a clear favourite with the bookies and the favouritism is usually justified. An edge comes from you being a better judge of the probability of future sporting results than a bookmaker or other punters on a betting exchange.

In other words, determining where the odds are wrong. Your edge is a necessary step for you to become a successful punter but it takes more to turn that edge into a consistent profit. Betting is fundamentally risky and there is no way around the fact that even where you have an edge and get great odds on an event, any bet can lose as the events you are betting on are inherently random.

This book describes some of the tools for taking your edge and turning into a betting strategy it does not detail a specific system for a specific sport. It is about understanding the types and level of risk you are taking on, and running a portfolio of bets with an eye to controlling risk while maximising your returns.

My experience in investment management has taught me that quantitative processes are of mixed benefit in picking investments but considerable benefit when constructing a portfolio. This comes with a strong caveat: the portfolio management process still has to be designed and used wisely as no quant process will work consistently when used without common sense. Some readers may think this approach takes all of the fun out of betting, that this is betting for accountants.

That s a fair comment. One way in which this system works is to keep the profitable side of your edge while containing the painful losses. Even if you choose to keep some adrenaline in your betting, hopefully this book will offer you some ideas for how you might size your bets to avoid painful long runs of large losses. To make money from betting you first need to identify a sport and a type of bet where you have an edge. Most examples in this book are English Premier League because it is well known internationally and a very large betting market.

Different markets have different characteristics so some other markets are considered but this book does not cover every sport or type of market. Before you try any system with real money you should test your edge by running it with paper money. Type the market odds and the amount you would bet into a spreadsheet before the event starts and see how your system would go over a season.

As a second step you. This is a big money saver as many seemingly good ideas don t work in practice. As any experienced punter knows, some good ideas don t make money, some even lose money.

Rational betting This book is written with the rational punter in mind. Unless you re a robot you will always have some behavioural biases but the book has a clear focus on head over heart punters. There are a number of obvious behavioural biases that some punters fall for such as supporting your team by betting on it, or trying to win back what you ve just lost.

There are many less obvious biases that undisciplined punters can fall for. After winning a bet have you ever said I should have put more on that bet? Then why didn t you? This is an example of hindsight bias. With the benefit of hindsight it is obvious that the outsider was going to win the game and you should have bet your house. The reality is that before the game it was far from obvious that the outsider was going to win. That s why the odds were so long and it s probably also why you didn t put more on the bet.

It s also why you probably shouldn t have put more on the bet. You will find that over time you will have good runs and bad runs, and this will impact your confidence but this is often just chance messing with your head. You should never forget the importance of luck in betting. In the long run a skilful punter will win, but the fact that luck always plays a part in your results is another reason why you should not put all of your eggs in one basket.

This is no different to investing you can tilt the odds in your favour but there will always be times when you underperform. The reality is that most people do lose money betting that s how bookmakers make their money. Betting exchanges take a commission from your winnings so on average, punters lose after costs and commissions there too. Most punters don t keep good enough records to know whether they are winning or losing and tend to remember the winning bets rather than the losers.

Two messages here: be realistic it s tough to come out in front after the bookies have taken their cut; and keep good records so you know how you are really doing. Another bias relating to past bets is a tendency to believe bets that won were the good bets this is a skill vs.

A good bet is not necessarily one that you won it might have just been a dumb bet that got lucky. A good bet is one where the odds were mispriced and you positioned yourself to take advantage of the mispricing, regardless of whether you ended up winning or losing money.

If you can reliably pick bets like this you will end up in front in the long run. Accepting odds of 1. If you win this bet then you make money but it still doesn t make it a good bet.

It s very important to understand the difference between a good bet and a lucky bet. If you pursue bets like the coin toss above that you won, you will be pursuing bad bets where you have just been lucky in the past. Luck averages out over the long run and this will be a losing strategy.

A cornerstone of rational betting is a system for sizing positions. Most of these systems are based on the Kelly formula. The Kelly formula is really designed for card games where you put down a series of single bets with well defined and well known probabilities.

Applying it to the real world is much more complex and difficult. While it is possible to solve a set of equations about how to optimally. This idea is the core of this book and is expanded upon in Chapter 4. Similarities with financial markets There are many comparisons between betting markets and financial markets, especially if you are using a betting exchange. There are also some important differences. Take the stock market as one example of a financial market.

With stocks, the whole market may be expensive but usually you can still find some stocks that are attractively priced. It s possible that all stocks are expensive and none of them represent value. In this instance, you may outperform the average investor but still lose money when the market returns to fair value. With betting, the whole market can t be expensive as probabilities must add to 1 ignoring the overround for now.

Within this, individual bets can still be mispriced. If you outperform the average punter then, unlike for the stock market, you will make money subject to the overround and commissions not being too high. The idea is the same in both situations: buy cheap, sell expensive and you should make money as luck averages out. Other strategies To borrow the language of the financial markets, this book is about investing rather than trading.

Investing is about forming a view on the correct odds and placing your bets accordingly. Trading strategies typically don t have a view on the correct odds but aim to make money through other means such as finding risk-free opportunities arbitrage , having a view on how odds will move from their current level in the short run or making a market.

There are many variations on how to implement arbitrage. You need to be wary of what financial markets call basis risk, that is, the risk that the two bets are not exactly the same and that neither wins.

You also need to be careful that one side of the bet doesn t disappear as you re placing the bets and leave you exposed. Making a market is only possible if you are using a betting exchange and relates to the situation where you offer odds for and against every bet. This is essentially what bookmakers do. Making a market is usually done with a view of what the correct odds should be, but is also impacted by the views of other punters through the weight of money. In its purest form this is a sophisticated strategy but some elements of the approach can be incorporated into your strategy relatively easily.

A final point to remember is that if something looks like a guaranteed way to make money then chances are you ve missed something. When you see it, take it.

What to avoid When someone tells you that buying their betting system will make you a fortune they are fibbing. If someone has a system that makes a fortune they will not sell it to anybody and certainly not a complete stranger. In theory, each of these could work but in practice is unlikely to. Arbitrage systems can work but opportunities are small and hard to find because lots of people are looking for them.

After paying the price of the software you will never make money. If you want to use this approach, you can build basic arbitrage software yourself in a spreadsheet in a few minutes. Exchanges vs. When you use a betting exchange, you are betting against another punter and the exchange is merely facilitating the bet in return for a percentage of winnings.

This differs from a traditional fixed odds bookie where you are betting against the bookie. There are some other important differences between exchanges and bookies in the way your money is handled, and in the strategies that can be effectively used. When you bet against a bookie, the money you deposit goes into their bank account and if they go broke you are an unsecured creditor meaning you won t be getting all of your money back.

When you bet on an exchange, the money you deposit goes into a trust fund.

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Fixed Odds Sports Betting: Statistical Forecasting and Risk Management. Pages · · MB · 6, Downloads· English. by Joseph Buchdahl.

Fixed Odds Sports Betting: Statistical Forecasting and Risk Management

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