A couple of weeks ago I wrote this post about the Ultimate Staking Plan. We’re all looking for a way to make a profit with less risk.
Part of the formula to using the staking plan in the Ultimate Staking Plan article requires you to enter the edge that you have on your bets.
But you need to know how to calculate that edge if you want to use the staking plan. Which is why I’m going to show you how to do that in just a moment.
First let’s look a little bit at what your “edge” is.
Your edge is the advantage that you have over the market. If you’re finding an edge then you are finding value in your bets which means that you will be making a profit.
The calculation for finding your edge requires two pieces of information:
- Your Strike Rate
- Your Average Odds
Whenever we calculate the average odds for the purposes of working out your edge, we need to make sure that the odds we are using are the actual average odds that you would be paid out at.
That means if you use Betfair then you need to take commission off them.
If over a few hundred bets you have average odds on Betfair of 6.00 then for working out your edge you would actually use 5.75 because that’s what you are being paid out on after commission.
To calculate this you:
Subtract one from your average odds: 6.00 – 1 = 5.00
Multiply this by one minus your commission rate: (If your commission rate is 5% then 1 – 5% = 0.95) 5.00 x 0.95 = 4.75
You only need to do this calculation if you use a betting exchange to place your bets. If you use a bookmaker then the odds you take are the odds they pay you out at, making this calculation unnecessary.
Let’s move on to how we actually calculate the edge in your bets. We can break this calculation down into three parts.
Probability of Winning x Winning Average Odds
To work out the probability of winning take your strike rate and divide it by one hundred. If, for example, you have a strike rate of 20% then you would do:
20 / 100 = 0.20
0.20 is your probability of winning.
If we take the Betfair Winning Average Odds above of 5.75 and the winning probability of 0.20 we would get:
0.20 x 4.75 = 0.95
That’s the end of part one 🙂
(1 – Probability of Winning) x -1
Part two is simple as we’ve already worked out our probability of winning. In our example it is 0.20.
That would make this sum:
(1 – 0.20) x -1 = -0.8
Now we move on to the third and final part…
Part One + Part Two
0.95 + -0.80 = 0.15
The edge in this example is 0.15. If you’d prefer to have it represented as a percentage then you simply need to multiply it by 100.
0.35 x 100 = 15%
An edge of 15% is pretty incredible over the long-term, and the figures I used in this example were for illustrative purposes only.
But the steps followed are exactly those you should do on your own results if you want to find your edge.
Once you’ve done this you can go back to the Ultimate Staking Plan and use your edge in the formula there to work out the perfect stake size for your bets.