If you wager your entire bankroll every time you place a bet, your bankroll will eventually be 0.
Expected Value
Expected value is the average amount we receive if we repeat a bet an infinite number of times.
E[X]=∑ixiP(xi)Where:
- xi - the percentage of stake won or lost from outcome $i$
- P(xi) - the probability of that outcome.
For a typical sports bet, $x_i$ can be found with the equation:
xi=S(Oi−1)B0Where:
- S - stake
- Oi - decimal odds of outcome $i$
- B0 - initial bankroll before bet
This calculates the relative increase in our bankroll from each possible outcome. For a losing scenario, xi=−SB0 as we just lose our stake.
Using EV
This can be used as a performance metric for a bet – if one bet has an expected value of... (read 336 more words →)