1. Implied Probability
Implied probability is the win chance a price represents. From decimal odds it is simply the reciprocal.
Implied probability = 1 / decimal odds
Odds of 2.50 imply 1 / 2.50 = 40%
Full breakdown in How Betting Odds Work.
2. Expected Value (EV)
Expected value is the average profit or loss per bet if you could place it many times. It is the single most important number in betting.
EV = (P x profit) - ((1 - P) x stake)
P = 0.55, +120 odds, $100 stake:
(0.55 x 120) - (0.45 x 100) = +$21
A positive result is a +EV bet. Dive deeper in the +EV betting guide or run numbers in the EV Calculator.
3. The Vig (Hold)
The vig is the margin a sportsbook builds into its prices. Because both sides' implied probabilities add up to more than 100%, you must remove the overround to find the fair price before judging value.
Overround = sum of both implied probabilities
Two -110 sides: 52.4% + 52.4% = 104.8% (4.8% hold)
See the vig guide and the Hold / Vig Calculator.
4. Variance
Variance is the natural swing around your expected result. A 55% bettor still loses 45% of the time, so losing streaks are normal even when you are +EV. Understanding variance keeps you from overreacting to short-term results - and from over-staking.
5. Bankroll Sizing & Kelly
The Kelly Criterion converts your edge into an optimal stake as a fraction of your bankroll. Most bettors use a fractional Kelly (e.g. half) to smooth out variance.
Kelly fraction = edge / odds
Larger edge -> larger stake; no edge -> no bet
Learn it in the Kelly Criterion guide and size stakes with the Kelly Calculator.