# Key concepts and terms in Sports Betting and Trading explained

### EDGE, EDGEBET, VALUE BET AND TRADES.

To put it simply a value bet, edgebet or trade is the edge that you have versus the bookmaker. Because bookmakers offer different odds, inefficiencies occur. For instance, once the lineups are released and a key player is injured the odds on the other team will drop and some bookmakers lag behind the rest of the market.

### THE DIFFERENCES BETWEEN SPORTS BETTING AND SPORTS TRADING, BETS AND TRADES, SPORTS BETTORS AND SPORTS TRADERS.

We consider traditional sports betting or punting to be for entertainment purposes only. Sports trading is when you are serious about making a profit from betting and view it as a form of investment. This also applies to us describing bets as trades inside Trademate. It is also why we refer to ourselves as sports traders, rather than sports bettors.

### ODDS

A different way of writing probability. Odds = 1 / Probability. There are different odds types, such as decimal odds, American odds and fractional odds.

### PRESET

A customizable filter on edges inside Trademate.

### TURNOVER

The total amount wagered on all of your trades or for a given time period.

### ROI

Return on investment

### EXPECTED VALUE (EV)

In probability theory, the expected value of a random variable, intuitively, is the long-run average value of repetitions of the experiment it represents. E.g. the expected value of getting tails in a coin toss is 0.5 or 50% chance of the outcome occurring. With Trademate your EV is equal to your edge % x your stake size in a given game. We also separate between your EV based on your edge placed and your EV based on your closing edge. The latter being the most important. See paragraph on the closing line.

### VARIANCE

Basically the deviations from the mean / expected value. You can watch a video that explains it in detail below.

### MARKET LIQUIDITY

In this particular instance, how high the max bets are. In general we are referring to how much money has been wagered on a particular game, but since one can not see the actual amount, the max bets give a good indication of whether a game has a high or low liquidity. Higher liquidity markets are better, because money wagered = information. So basically the odds in these markets are more efficient. This also reduces the volatility of the odds, meaning that it takes larger wagers to move the odds.

### PAYOUT RATE

How many percents of the money wagered on the game a bookmaker pays out to customers. E.g. if the payout rate is 98%, then the bookmaker will keep 2% (margin) for themselves and pay out 98% to customers. Alternatively, they keep \$2 out of every \$100 wagered and pay back \$98 to customers.

### MARGIN

The bookmaker’s cut of a bet. Margin = 100% — Payout rate.

### VIG-FREE

Vig is another word for margin. So vig-free = margin free. Vig-free odds = the odds when the bookmaker’s margin has been removed.

### THE DIFFERENCE BETWEEN AVG. FLAT ROI PER TRADE AND AVG. ROI PER TRADE.

Avg. ROI per trade is based on the actual stake sizing you register on each trade you record with Trademate. Flat ROI per trade is what your average ROI per trade would have been if you placed a fixed amount per trade. See flat stake sizing. To wheter we actually have an edge versus the market, flat stake sizing is the best measurement, as it removes the effect stake sizing has on the actual returns. While in practice using a proportional staking strategy is better as it does not make sense to given a 2% edge, bet as much on a 2.0 in odds and 10.0 in odds game.

### THE DIFFERENCE BETWEEN A VALUE BET AND AN ARBITRAGE BET.

In an arbitrage bet or surebet you will bet on all outcomes of the game for a sure win. In a value bet you only bet on one outcome of the game. Thus the risk is higher, but so is the potential reward. A typical arbitrage bet is typically around 1%. In theory arbitrage bets are great, but in practice there are a couple of elements that makes them less appealing. E.g. the odds changing after you have placed one side of the bet or that the bookmaker voids the bet (palpable error). Both of these would lead to the surewin no longer existing. If you loose that bet, it will take you a lot of arbitrage bets to make up for the losses. Also, the number of arbitrage opportunities are less frequent as the odds needs to be high on all of the game’s outcomes. Because of this it is also a lot easier for bookmakers to identify and limit arbitrage bettors than value bettors.

Value bets are typically between 1–5%. However, the largest value bet recorded with Trademate was 182% ! Valuebets occur far more frequently than arbitrage bets, because there only has to be deviations in odds on one outcome of the game. This means that you can get in several hundred bets/trades per week. Which again implies that you can get in a higher overall turnover and a higher compounded growth. The downside is that there is more variance, so the ups and downswings are larger. This is best mitigated by reducing the odds range and stake size.

### PROPORTIONAL STAKING STRATEGY

Betting an amount proportional to your overall bankroll on each bet. E.g. 1% of your bankroll. Inside Trademate we use something called the Kelly Criterion to calculate stake size. You can read more about it here. Or watch the video below.

### FLAT STAKING STRATEGY

Betting a fixed amount. E.g. \$10 per bet.

### EUROPEAN / SOFT BOOKMAKERS

For example Unibet, William Hill etc. Caters to punters. They are position takers, so you are betting against the house. The majority of soft bookmakers are European. The difference between European and Asian bookmakers and how they make money are explained in the video below

### ASIAN / SHARP BOOKMAKERS

For example SBO, IBC and ISN. Caters to sharp bettors and traders. They are book-balancers, so you are betting against other players. The Asian bookmakers are sharp, but they are not the only sharp bookmakers. The difference between European and Asian bookmakers is explained in the video above.

### BETTING EXCHANGES

For example Betfair and Matchbook. Enables players to give and take bets from each other.

### BETTING BROKERAGES

For example Sportsmarket, VIP Sportsbook and Asian Connect. Enables sharp bettors and traders to place bets on exchanges and sharp bookmakers with only 1 account.

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