The following is a detailed explanation of my Formulated Spread Indicator (FSI) which we use to predict outcomes of NBA and NCAAB games. The FSI is very similar to the formula the bookmakers use to set their lines. The difference being that the bookmakers lines then get adjusted relative to the public perception and amount of action on each side. The FSI is in essence, the "true" spread.
The FSI formula takes into consideration 4 factors which I believe are the best 4 indicators to predict a true and accurate spread. Once the FSI is calculated, I take this number relative to the Vegas spread in order to come up with our pick as well as the number of units to wager.
Below, I explain the 4 factors and the values given to each factor.
Simple Rating System (SRS): This rating takes into account average point differential and strength of schedule. The rating is denominated in points above/below average, where zero is average. The value given here will be the actual SRS figure.
Example: The Nuggets have a Simple Rating System (SRS) rating of -3.55, they would receive a value of -3.55 for this category.
Offensive Rating (ORtg): An estimate of team points scored per 100 possessions. The value given will be based on the team's NBA ranking. I'll use the schedule below to determine value:
Rank 1-4 +1.5 Rank 9-12 +0.5 Rank 19 - 22 -0.5 Rank 27 - 30 -1.5
Rank 5-8 +1 Rank 13 - 18 0 Rank 23 - 26 -1
Defensive Rating (DRtg): An estimate of team points allowed per 100 possessions. The same schedule based on the team's ranking will be used as with ORtg.
Home Court: The general rule of thumb is a 3-point home court advantage in the NBA and that is what we will go with here.
Totals: Simply the sum total of all 4 categories for each team.
Formulated Spread: This is the difference of the totals of the 2 teams. The team with the higher total will be deemed the FSI favorite and the number will be preceded by a - sign and the team with the lower total will show a + sign prior to the number.
Example: In a matchup between the Cavaliers and the Rockets, the Cavs' total is +3.26, while the Rocket's total is -2.31. The difference between these totals is 5.57. Since the Cavs have the higher total, they are the "favorite" with a -5.57 Formulated Spread. The Rockets are the "underdogs" with a +5.57 Indicator.
Pick (units): Here, we will now compare our Formulated Spread to the Vegas Spread. Our pick will be the team whose FSI is favorable to the Vegas Spread. The (units) indicate the number of units, from 1 to 3, that we recommend betting. We determine the units simply by using the schedule below based on the difference in the FSI and the Vegas Spread.
0 1 unit on the underdog 4.1 - 8.0 2 units
.01 - 4.0 1 unit 8.1 and above 3 units
Example: The Blazers are a 5.5 point Vegas favorite over the Knicks. Our FSI calculates Portland as a 9.12 point favorite. We will pick Portland -5.5 (1 unit) as the FSI sees the spread as favorable for the Trailblazers by 3.62 points.