Calculate your stakes
Calcultaing your stakes seems like a complicated task but i can show you how to
go about it without having to buy expensive spreadsheets or computer software.
It really is simple when you know how. We need to use the odds offered to work
out what the percentage chance each selection has of winning and then weight
your stakes in accordance with this %.
Calculating the percentages
Fractional (UK-style) odds.
When odds are expressed as fractionas (e.g. 5/6), divide the right hand number(denominator)
by the sum of both numbers(numerator and denominator) and multiply by 100.
Example:
Snooker
Stephen Hendry 5/6 is 6 / (5 + 6) x 100 = 54.54%
Ronnie O'Sullivan 7/5 is 5 / (7 + 5) x 100 = 41.66%
Decimal Odds (European-style) odds
When odds are expressed as decimals(e.g. 1.83), divide 100 by the odds.
Using our Previous Example:
Stephen Hendry at 1.83 is 100 / 1.833333 = 54.54%
Ronnie O'Sullivan at 7/5 calculates as 100 / 2.40 = 41.66%
These percentages represent the cover of the event that the bookmakers have.
Added together anything under 100% means there is not total coverage and this is
an arbitrage opportunity..
If we add the percentages from the example above it comes to 96.20%, Subtract
this from 100% and we have an arbitrage 3.80%
Calculating the stakes
Lets calculate how much money to stake on each selection, This is a vital part
of the arbitrage process. If you stake you money in the worng proportions then
you wont guarantee a no lose position.
You must back each selection to a stake that is proportionate to their
percentages calculated above.
So, stakes of £54.54 on Stephen Hendry at 5/6 and £41.66 on Ronnie O'Sullivan at
7/5 both return £100 no matter which selection wins and you only invested
£96.20!
You'll only ever have one bet that wins since only one selection can win any
event but lets calcualte the winnings for both scenarios.
Ronnie O'Sullivan Wins
41.66 @ 7/5 returns = 99.98
Less Stakes of 54.54 + 41.66 = 3.78
Stephen Hendry Wins
54.54 @ 5/6 returns = 99.99
Less Stakes of 54.54 + 41.66 = 3.79
