How exchange odds work: decimals, implied chance and ticks

Every price on an exchange is a decimal number such as 1.85, 3.40 or 12.0. Three things are packed into that number: how much a winning bet returns, what chance the market gives the outcome, and where the price can move to next. Once you can read all three, a market screen stops looking like a wall of figures.

Decimal odds include the stake

Multiply your stake by the decimal price and you get the total return if you win, stake included. ₹100 at 3.40 returns ₹340, which is ₹240 profit plus your ₹100 back. Odds of 1.00 would return only your stake, so prices start at 1.01. There is no upper limit in principle; in practice very long prices have little money behind them.

If you are used to fractional odds (3/2, 6/4) or American odds (+150, -200), the odds converter turns any of them into the others. Fractions are profit to stake, so 3/2 is decimal 2.50; +150 is also 2.50.

A price is a probability

Divide 1 by the decimal price and you get the chance the market is implying. At 2.50 that is 0.40, or 40%. At 1.25 it is 80%. At 10.0 it is 10%. This is the most useful habit an exchange user can build: whenever you see a price, say the percentage to yourself. "They are offering 4.0, so the market thinks this happens one time in four. Do I think it happens more often than that?" If not, backing it is a losing bet in the long run, whatever happens today.

Why the total is over 100%

The three chances above add up to 103.7%, not 100%. That extra 3.7% is the overround: the gap between the back prices on offer and a perfectly fair market. On a busy exchange market it is small, because many people are competing to offer prices; on a bookmaker's board it is much larger, because the bookmaker builds its profit into it. If you add up the lay prices instead you get a total slightly under 100%; the back and lay columns sit either side of the fair price.

Ticks: the steps a price can take

Prices do not move smoothly. They move in fixed steps called ticks, and the size of a tick grows with the price. A typical ladder goes in steps of 0.01 between 1.01 and 2.00, 0.02 between 2.00 and 3.00, 0.05 up to 4.00, 0.1 up to 6.00, and so on, with steps of 10 above 100. So 1.85 can move to 1.86 but not to 1.855, and 3.40 can move to 3.45 but not to 3.42. The exact ladder is set by the exchange.

Ticks matter because the back and lay prices usually sit one or more ticks apart, and because the value of a tick is not the same everywhere: moving one tick from 1.50 to 1.51 changes the implied chance by about 0.4%, while one tick from 6.0 to 6.2 changes it by about 0.5%. Traders think in ticks; everyone else should at least know they exist.

Try it

Put a few prices into the odds converter and read the implied chance for each. Then open the next lesson, which puts a rupee figure on what each price risks and costs.

Information only, 18+. Real-money online gaming is restricted in India: see the lesson on the law.