What is Value?

I was on the Betfair forum the other day having a chat with various people about various things and we got onto the subject of value and one guy was adamant that there was never any value in backing tennis players at odds of less than 1.08.

Now I could see his point in that you have to risk a lot of money to make decent returns backing at odds as low as this but as far as I'm concerned you can get value at any price if the price you are paying is too low. You will notice as well that liquidity on matches where the favourite is priced at under 1.1 is normally very high because a lot of punters see backing the favourite at these prices almost as 'free' money which of course it never is as now and again the huge underdog pulls off a massive shock and wins - thats the beauty of Sport!

From a traders perspective its less stressful trading down at 1.1 price range but clearly to make decent returns you have to have a large bank to play with. The reason its less stressful are that say you back the server at odds of 1.1 and he gets his serve broken in the first game then his price would only go out to around 1.2 maybe 1.25 so you have 'lost' 15 ticks eg using a stake of £500 you would be £60 down if you were to hedge out but remember the favourite is still priced at 1.25 so still heavily expected to win so you have a choice, you either let the trade run in the hope that he comes back (the chances are that he/she will) or you hedge out and take the £60 loss and recover this later by backing the favourite at the new higher price.

Compare this to backing a moderate favourite priced at 1.6 with £500, now obviously the returns are much higher if this player wins and you have backed them but in the same scenario if the favourite's serve was broken early then their price could quite easily go out to around 2.1, if this happened you could hedge out for £120 loss - its more likely to happen and if it does you have a much bigger loss. The problem with trading in this price range is that when a point goes against you, the money on the ladder can disappear and if you want to hedge out you end up having to hedge out at a ridiculous price as its the only price available.      

I guess as with all these things it depends on your attitude to risk but you do have to question why liquidity in matches - tennis especially - is so much higher when there is a heavy favourite involved.

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