If favourites are more likely to win, why not trade on them

[OvergrownHeffo]

I know this is going to come across as hilariously stupid but I cant wrap my brain around why this wont work.

A favourite has a higher chance of winning, thus lower odds. Higher risk for a lower reward. I get that. But if you're looking at it from a pure trading point of view,Chill Guy Clicker would it not make sense to back the favourite and hope it comes in?

For example, a tennis match. Favourite's odds are 1.7. If I back at 1.7, then queue up a lay at 1.5, and a 'stop loss' at 1.9 - either way its the same absolute value in the negative or positive. However as the fav is more likely to win, then 6/7 times out of ten I would hit the 1.5 mark rather than the 1.9 mark?
I would either lose 0.2 or gain 0.2, but Id more likely profit over time?
I know its not that easy, what am I missing?

Even if favourites win more often, that doesn't necessarily mean the price will always move in your favour before they do. If your exit at 1.5 happens 6/10 times but the stop loss at 1.9 happens 4/10 times, the losses could outweigh the gains over time.

How would the losses outweigh the gains? In the event I hit the exit at 1.5, then I have a 20p gain if the fav wins, and if I hit the stop loss,
then I stand to lose 20p when the fav wins (which is not less likely according to the market as well)

As other have said I think I’d hit the stop less more than anticipated but if I was to hit the 1.5 exit more then it’s profitable overall surely?

[SpikeyBob]

To OP,

Have a think about making your original bet an evens chance.

i.e. your original example wins 70% of stake, what if your stop loss lost 70% as well (in you example you could hedge at 5.7)?

A stop loss is no guarantee of getting out at the price you want, the odds will quite often shoot through it before it can be placed.

There is also another way to effectively create the stop loss, by backing the opponent for the same stake when the price is correct (in your example 1.3). This also has the advantage of the original bet coming back in after hitting your 2nd bet and could/would lose less (odds dependant) than the original loss. Also, 'as others have said the odds will move slower the lower they get', giving you more chance of getting it matched than a stop loss on your original bet. Under these rules based on your example, if the do goes on to win you lose 70% (excluding commission), if the fav comes back to win you lose 30% (excluding commission), regardless both are better than losing 100% of stake which may be enough to tip the balance in your favour.

I suppose that an injury to the Fav, could also scupper your 2nd bet being hit in this scenario, but hey, sh!t happens sometimes.

Will this be enough to make it a profitable strategy? I dunno, it's just food for thought. Have a play.

SB