Today, I believe that the following is true…
One of the many things that traders and bettors have in common is the pursuit for an “edge”. I’ll use Ben Little’s definition of edge from his great article A Different Kind of System.
Ben says: “An edge is a mathematical calculation that shows us quantitatively that, over time, we should expect to win more than we lose.”
Yep, that’s the perfect definition; it’s not about a hunch or feeling… it’s about MATH! If you don’t like that word, no worries because I’m going to show you how to let the machine do the work for you. Let’s see how we can find an edge for betting the NCAA Mens College Basketball Tournament otherwise known as March Madness.
Once you have a source, that you trust, for game outcome probabilities you’ll want to look for money lines that reflect a different probability. Oh, and the probability difference needs to be in your favor.
That’s it. That’s the system.
Since the system is so easy, you have to REALLY trust your source huh? If the source of your picks/data does not give you the implied probability of a game then, well, this system isn’t going to work for you.
The source I use for March Madness is The Power Rank. The Power Rank is put together by Ed Fang. I trust Ed, his probabilities are reliable enough to bet on. Some years I win a little, some years I lose a little. Using Ed’s probabilities, I’ve never lost my ass. There are some MLB probabilities out there that I can’t say the same about.
For each game, I look up the implied probability of each team, convert that to a Money Line and look up what my books have the money lines at to see if I have an advantage. You are using multiple books to get the best line, right?
For example, Ed says that San Diego State has a %58.5 of beating St. John’s. This converts to a money line of –140.96 So, if any of my books has this line at less than –141 I have an advantage and could/should place that bet. Personally, I don’t make a bet unless I have a 20 point or better difference in the line. So, this would trigger for me at –121. Most books have this line at –190, so it’s a no play.
Now let’s look at San Diego’s opponent; St. John’s. St. John’s has a probability of 41.5%. This converts to a money line of +140.96. I’m looking for any line that is 161 or higher. Bingo, most books have St. John’s at +170… find the highest line and place the bet, you have an advantage!
Some of you are nodding and saying, this is the type of stuff I could really use with the Kelly Criterion. Yes, yes it is. Only if you’ve back-tested your system and have a high degree of confidence in it. (more on this on another day)
The Workflow – With Pictures
Here’s my own workflow, letting the machine do the work for me. I’m using an Odds Conversion Calculator from OnineGambling.com to convert probability to moneyline.
Here’s an example with a really high moneyline.
|Hey Ed, can you shows us Oklahoma VS Albany?|
|Convert probabilities to moneylines.|
|I find I have an advantage on Oklahoma.|
Laying that much to win only a little is going to be a personal choice. Personally, I draw the line at –700. Yeah, I’m not “pure math” yet, but I know myself and how I feel about losing 10 units trying to win .25 units.
Here’s an example with a very small edge.
|We are looking for a line greater than +135 on Dayton.|
|With this book, we have a 5 point advantage. Is that enough for you to take a position?|
What do you do when you only have a small advantage, lay off or get down?
What’s the probability that you root for Gonzaga and bet against them every game? 99.5%?
Do you have a good source for implied probabilities for every sport you bet on?
Are you using Ed’s book to win your bracket this year?
Is it moneyline or money line?