Money and control of market

[stueytrader]

in an extreme example a backer that has more money than the other players will always force a price

Remember all the bookies are watching BF too, it would be a hell of a player to hold back PP or WH if they saw anything really wrong.

Markets are a complex ecosystem and how they behave is the sum of it's participants actions

The other question is why would a PP or WH want to take on a heavy backer for example? Wouldn't they rather just let the price collapse and lay at lower prices?

[napshnap]

How do you know it's huge value? This is starting to sound like you'd judge that by price proximity to something like vwap or vpoc but that alone doesn't appear to reveal much from what i've seen?

Check out the horse racing thread, Shaun. He made bets again and again for many days, it was very obvious pattern. it didn't feel like "wow! this dude sure knows what he's doing!", no. He was an obvious outlier.

Yep, those kind of very heavy backers were kind of examples I was also thinking of in this question. As you say, selections have had their prices massively shortened in such cases previously, maybe even halved!

But what is practical value of this knowing? Crush the market and watch how panicking mob crush it further down to 1.01? Never gonna happen, not enough panicking morons here, it's not a financial market. Make a lay bet? Maybe, but it's quite a rare situation.

[stueytrader]

Check out the horse racing thread, Shaun. He made bets again and again for many days, it was very obvious pattern. it didn't feel like "wow! this dude sure knows what he's doing!", no. He was an obvious outlier.

Yep, those kind of very heavy backers were kind of examples I was also thinking of in this question. As you say, selections have had their prices massively shortened in such cases previously, maybe even halved!

But what is practical value of this knowing? Crush the market and watch how panicking mob crush it further down to 1.01? Never gonna happen, not enough panicking morons here, it's not a financial market. Make a lay bet? Maybe, but it's quite a rare situation.

The 'bomber' types are basically examples of the more extreme case I agree. But, the point is there could also be less extreme examples, where heavy money manipulates and controls the price, though maybe to a lesser degree than a classic 'bomber' style.

[weemac]

The bomber's just placing huge bets at any old price. That's not manipulation.

[stueytrader]

The bomber's just placing huge bets at any old price. That's not manipulation.

I do get that, it was just an extreme example of how money can affect the market and price.

The point was there could be similar issues and examples, even though less extreme.

[jimibt]

The bomber's just placing huge bets at any old price. That's not manipulation.

I do get that, it was just an extreme example of how money can affect the market and price.

The point was there could be similar issues and examples, even though less extreme.

i'm sure a little bit of stdev (gross understatement) across a given market comparing volume/price/roc could highlight some interesting examples. if you've collected high precision historical data in any shape or form, this would be a relatively simple exercise to see if such events lead to opportunity and what conditions need to be present to facilitate exploitation.

[stueytrader]

The bomber's just placing huge bets at any old price. That's not manipulation.

I do get that, it was just an extreme example of how money can affect the market and price.

The point was there could be similar issues and examples, even though less extreme.

i'm sure a little bit of stdev (gross understatement) across a given market comparing volume/price/roc could highlight some interesting examples. if you've collected high precision historical data in any shape or form, this would be a relatively simple exercise to see if such events lead to opportunity and what conditions need to be present to facilitate exploitation.

Yes, I agree - for specific details it would need various quants analysis.

TBH I was more posting about the general idea that in lower liquid markets (compared to past) that in theory it should be easier to influence or change a market, and whether most would agree with that. Funnily most posted against the idea that markets could be largely influenced instead.

In one sense, it seems obvious to me however - I mean isn't this exactly what drives trading - money??

[weemac]

For many years, up until a couple of months ago, you could place an unmatched back for say £100 at 25.0 an hour before a race and instantly several folk would back at 24.0. Now nothing happens at all (I just tried it for fun), so it seems people do learn a) to programme their bots better, and b) that others are constantly trying to relieve them of their money, by whatever means they can.

Participants will tend to, over time, learn to adapt to what others are doing. It can take a long time though.

[decomez6]

Not sure I'd agree that no control is possible given sufficient heavy money.

Market participants :

Smart money + Dumb money + Cross Matching =

shape of the market.gif

The volume will be distributed appropriately to maintain the shape of the market.

in essence , a smart Bomber will only move the market if the odds are high enough and Dumb bomber is Only digging their own grave.

[stueytrader]

Thanks for this interesting discussion.

Can I just add a simple point into this - what do people believe is the value of the WOM values? This is a staple of the systems we use such as BA, isn't it?

I do realise it's not a simple equation, but it is a central tenet of what we do isn't it?