General Betting
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a bag has 3 balls of different colurs, one green, one blue and one orange.
I'm offered odds of 4/1 to pick out the orange ball. Obviously the true odds are 2/1. How do I express my edge mathematically?
Is it (q-p)/q*100, where q=true odds as percentage, p=odds taken as percentage?
(33-20)/33*100= 40% edge? So every £1 invested should return 1.40
I'm offered odds of 4/1 to pick out the orange ball. Obviously the true odds are 2/1. How do I express my edge mathematically?
Is it (q-p)/q*100, where q=true odds as percentage, p=odds taken as percentage?
(33-20)/33*100= 40% edge? So every £1 invested should return 1.40
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Every £1 invested returns £1.67, so ROI (for me the same as edge) is 66.67%.
Imagine 3 goes, staking £1 each time. Probabilistically, you will win once. Total stake = £3 Returns = £5 Profit = £2 ROI = Profit/stake = 2/3 |
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Edge is your change in EV. (expected value).
Expected Value is Sum of Probability*Profit over each outcome. At 4/1 you win 4 pounds 1 in 3 times and lose 1 pound 2 in 3. So, your EV is 4*(1/3) - 1*(2/3)=2/3 = 66.7% edge. Probability(Win)*Profit - Probability(Loss)*Stake. Or if you prefer, you can do Probability(Win)*Return - Stake. |
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Let F=fair odds
Let P=payoff odds House advantage F-P/[1+F] Punter advantage P-F/[1+F] So in your example 4-2/[1+2]=2/3=67% |
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one more answer can't hurt.
To put it in your language: (q-p/p)*100 =(0.13/0.2)*100 = 67% you just got the choice of divisor wrong |
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thanks all - knew i was wrong but couldn't see wood from trees..
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