Inflection points are the points at which the curvature or concavity on a curve changes from plus to minus or, from minus to plus. Translated into layman’s language – the turning points on the profit/loss graph where profits turn to losses or, where losses turn to profits.
Inflection Points in Football Betting
If you have ever calculated your own odds you will certainly have noticed that bookmaker prices often do not show the ‘true’ picture.
In other words, their odds seldom adhere to ‘true’ mathematically calculated values (the statistically expected values).
In the majority of games, odds are either higher than mathematically expected or lower…
Why Is This So?
A bookmaker’s aim is to make a profit and they price their odds to ensure that sufficient action is taking place on both sides of a bet, with enough profit retained whatever the outcome.
In addition, bookmaker betting odds are often aligned to public opinion to guard against a disproportionately large amount of money being placed on just one side of a bet.
Thinking this through with a mathematical mind, it seems very plausible that there must be certain odds clusters which are regularly under-priced, whilst other odds clusters are habitually over-priced.
The evidence to support this ‘theory’ can be easily spotted in the HDA Simulation Tables using visualisations (see example below) in the form of Profit/Loss curves based on the data within these tables.
For example, the EPL: Between 2009-2014, if you had gambled unemotionally and systematically on all English Premier League matches to be home wins (at average bookmaker odds) and placed a constant stake of 100 units per fixture, then at the end of the fifth season, your losses would have accumulated to -3,157 units.
Even higher losses would have been incurred backing all home teams to win if you would have limited your betting to the zone of odds between 1.49 and 6.53. Within this zone your losses would have totalled -7,711 units (198 plus 7,513).
However, if your strategy had been based on home wins at odds below 1.49 and above 6.53, after five seasons your profit would have been 4,554 units (7,513 minus 3,157 plus 198).
Inflection Points for Home Wins for the EPL
The above screenshot shows the Profit/Loss curve for the EPL if back bets (at average bookmaker odds) were placed on all 1,900 matches between 15/08/2009 and 11/05/2014 (at 100 unit stakes).
You can see from the graph that the first real turning point is at home odds of 1.49. The P/L curve reaches a peak of 198 units profit before starting to fall. The erosion of profits continues until home odds of 3.49 are reached (P/L value: -7,084 units), where the curve turns for a spell before dropping again and reaching its final inflection point at odds of 6.53.
This type of graph is of great help in visualising profits and losses and in this case, the curve shows that in this odds group (60% of the matches), bookmakers under-price home team wins. Bookmakers make a long-term profit, whilst bettors lose more than they win.
The interpretation is that ‘home win’ bets must be quite popular on EPL matches at odds between 1.5 and 3.5, and bookmakers react to this high demand by reducing prices. Of course, this also means that the odds on other sides of the bet (draw and/or away win) must then be increased.
Working Out Inflection Points using the HDA Tables
Here’s a handy little tutorial:
How to Use the Knowledge of Inflection Points
(1) check your own betting pattern
Do you recognise your own betting patterns within the most common odds clusters; those which show a falling Profit/Loss curve? (For example, backing the home team to win at odds between 1.50 and 3.50 in the EPL).
If so, perhaps reconsider your strategy and avoid the tranches of odds used by the bookmakers to make their profits. Of course, no matter how hard you try, betting in the zones where bookmakers habitually reduce prices (odds) is asking for long-term losses.
It is very rare that people succeed in any walk of life by swimming against a strong current and you can safely assume that the bookmakers know their job and have made a living from manipulating figures for centuries.
(2) don’t even try to “beat” the bookies
Swim along with them. ‘Play’ the market the same way as they do. Start looking at strategies which are not in conflict with the market, but in rhythm with it.
(3) be aware that each league has different inflection points
Customs and habits of people vary from country to country. Every nation has different cultural settings, and everybody has certainly noticed regional differences expressed in tangible goods such as food or housing.
Unfortunately, differences in betting patterns and the subsequent reaction of bookmakers when setting their odds cannot be spotted without some mathematical calculations. Customer habits, especially in the betting market, remain well hidden from the bettor.
Whichever league you prefer betting on, identify the odds clusters which are utilised by the bookmakers to make their profits – and then work around them.
(4) use the market inflection points for your own benefit
Concentrate on developing your personal betting strategy by taking the market rules into consideration.
For example, in the EPL, you may wish to look at a ‘back the home team’ strategy which embraces home odds under 1.50 or, alternatively, over 3.50, or even better, over 6.50.
(5) find a strategy and identify matches for producing long-term profits
Using the HDA simulation tables and finding the various inflection points will provide you with knowledge of odds clusters which produce a long-term profit or loss when backing.
If you already use our Value Bet Detector for calculating odds for individual matches then the knowledge of profitable odds clusters will help you to pick matches which are worthwhile re-calculating.