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Showing posts with label odds. Show all posts
Showing posts with label odds. Show all posts

Sunday, May 02, 2010

How to Read Odds

It’s short and simple, but a lot of people don’t understand how to read odds ratios in the standard format of #:# (e.g. 7:5 or “7 to 5”).  The key element when looking at odds in this format is to understand that they are describing the chances that an event will happen out of a total number of tries on average. 

So in in the example of 7:5 the total number of tries we’re looking at is 7 + 5 or 12 tries total.  This first event (perhaps losing) will happen 7 out of 12 times and the second event (perhaps winning) will happen 5 out of 12 times.

Another example.  The odds are 4:1 against you winning.  That means that 4 out of 5 times you will lose and 1 out of 5 times you will win.

Another example.  The odds are 7:2 against.  That means 7 out of 9 times you will lose and 2 out of 9 times you will win.

You can get the decimal or percentage by dividing a portion of the ratio (which portion depends on whether you want to show the winning or losing percentage) by the total number of tries.   So if the odds are 3:2 against you winning your odds of winning are 2 / 5 or = 0.4 = 40% represented as a percentage.  (remember the total number of tries are the two portions of the odds ratio added together in this case 3+2=5, and the winning portion of the ratio is the 2 since the odds are 3:2 against)

Tada