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Quantitative Finance · Glossary

What is Edge, odds?

Also known as: odds · edge

Definition 29.1 Markets II: Rates, FX and Credit · Chapter 29 — Thinking in Expected Value

The odds bb of a bet are what it pays per unit staked if it wins, the stake being lost otherwise. Its edge is its expected profit per unit staked, pb−qpb - q, where pp is the probability of winning and q=1−pq = 1 - p.

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