Finding Value
What people mean by value, why it is a statement about price, and how to tell early whether you are getting any.
Lesson 1
Value is about price, not confidence
After this you can: Separate how likely you think something is from whether the price is good.
A bet has value when the price pays more than the true chance warrants. Notice what is absent from that sentence: any claim about the bet being likely to win. A 25 percent chance at +450 is a good bet and will still lose three times out of four.
This is the hardest habit in betting, because losing feels like being wrong. It is not. A good process produces long losing runs, and evaluating a decision by its outcome will lead you to abandon the decisions that were correct.
The discipline is to judge the decision on the information available when you made it, and to judge the process on hundreds of results rather than the last few.
Key takeaways
- Value describes the relationship between a price and a chance, not your confidence.
- Positive-value bets lose frequently, and that is expected rather than evidence of error.
- Judge a decision by its inputs and a process by a large sample.
Terms used: Expected value, Positive EV, Implied probability, Variance
Lesson 2
Closing line value tells you early
After this you can: Use the closing line to judge your prices long before results become meaningful.
Results are a slow signal. Hundreds of settled bets are usually needed before a modest edge separates from noise, which is far too long to wait if you want to know whether a process works.
Closing line value is faster. If you consistently bet at prices better than the market offers at kickoff, you are buying numbers the market later judged too generous. That is measurable straight away and does not depend on whether any individual bet won.
It is not a guarantee. Beating the close consistently is strong evidence of a real process; beating it once is noise, exactly like a single winning bet.
Key takeaways
- The closing line is the most informed public estimate of an event.
- Beating it consistently is evidence about process, available immediately.
- One instance of CLV means as little as one winning bet.
Terms used: Closing line, Closing line value (CLV), Sample size, Line movement