This topic must’ve been explored at some stage to some extent but I haven’t notice the discussion so I thought I’ll throw it out.
There must, at least I think, exists a relationship between price and % of volume for each runner/player given that price is correlated to probability of outcome. If A is priced at 2.0 (and therefore implied probability of 50%) then it should, in theory, attract half of the total volume.
However, this does not appear to be the case, at least looking at horse racing market. I can only think of two reasons why this might be the case. The first is that high level of scratch trades on favourite(s) means that they end having disproportionately high percentage of the overall volume. Scratch trades doesn’t necessarily have be your own two entries netting of to nil to be a scratch trade as one traders profitable trade can be an overall scratch trade if its matched by an equally opposite trade).
The other one is co-ordinated betting based on insider information. This may be a weak one but a real possibility as insider knowledge of potential outcome means that certain runners may get high volume in short space of time that there isn’t adequate amount of time for the market to bring price in line with volume.
Does this resonate with people’s experience or am I on the wrong track (as it were)? Any criticisms of the conjecture are welcome as well as any further reasons why price may not correlate to volume would be even better.
Price / Volume Relationship
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psycho040253
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Photon
Now that's what I call a top banana post. It certainly does resonate with me. What you are saying, if I have understood you correctly and got my analysis the right way round is that, sometimes, a horse has attracted too much money, given it odds. If this is the case, the odds on the horse are too high. Let's forget why for the moment and look to see how we profit by it.
We could trade it because, eventually, the odds will catch up with the moolah and fall. So we back then lay and exit with a profit. We could also just back it because the odds, being too high, must have backing value. The one thing that we don't do is lay because its odds are too high.
BTW, what I've noticed is that if this happens shortly before the off, the odds, generally, continue to fall at the start of in-running.
Now to the reason: My best bet is that it is primarily due to coordinated betting.
Psycho
Now that's what I call a top banana post. It certainly does resonate with me. What you are saying, if I have understood you correctly and got my analysis the right way round is that, sometimes, a horse has attracted too much money, given it odds. If this is the case, the odds on the horse are too high. Let's forget why for the moment and look to see how we profit by it.
We could trade it because, eventually, the odds will catch up with the moolah and fall. So we back then lay and exit with a profit. We could also just back it because the odds, being too high, must have backing value. The one thing that we don't do is lay because its odds are too high.
BTW, what I've noticed is that if this happens shortly before the off, the odds, generally, continue to fall at the start of in-running.
Now to the reason: My best bet is that it is primarily due to coordinated betting.
Psycho
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psycho040253
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- Joined: Thu Mar 10, 2011 9:29 pm
I think that Photon should field this question.
Psycho
Psycho
I've looked into this before using Betfair historical data as well as data I've collected and have never been able to find anything of substance.
I've also never been convinced that there is any 'meaningful' relationship between the volume of money and the odds price either.
Interesting topic though
I've also never been convinced that there is any 'meaningful' relationship between the volume of money and the odds price either.
Interesting topic though
Photon's thoery would be correct on Price / Volume relationship if the market was made up of straight bettors only. However because the market is made up of several different types of participants traders, bettors, bookies etc... The price / volume relationship on the favourite will always be skewed. That's not to say there is not an angle or edge to exploit between price / volume relationship, but you are better off looking for these on other horses in a race apart from the favourite.
The one thing you do know when the price / volume on the favourite is out of sync with the implied probabilty is that, this is where most of the action will be in this market for a trader. Markets are organic in behaviour and the crowd mentality will add the edge / angle you are looking for such as greed/fear and herd mentality to name but a few and once you understand these behaviours you can look to take advantage.
The one thing you do know when the price / volume on the favourite is out of sync with the implied probabilty is that, this is where most of the action will be in this market for a trader. Markets are organic in behaviour and the crowd mentality will add the edge / angle you are looking for such as greed/fear and herd mentality to name but a few and once you understand these behaviours you can look to take advantage.
Surely this is only true if the price is set by the volume bet on a horse, the classic method of creating a book.There must, at least I think, exists a relationship between price and % of volume for each runner/player given that price is correlated to probability of outcome. If A is priced at 2.0 (and therefore implied probability of 50%) then it should, in theory, attract half of the total volume.
But in fact a horse's price is set by its odds of winning, the set of all horses sent off at evens win around 50% of the time.
I spent a long time using the Volume % pre race trading and recently switched my attention to the financial markets due to the PC issues. Over a few years I have taken much from this forum and as I will not be returning to sports trading I am now going to volunteer the following.
1) Purchase Fracsoft and the data and look at the movement in volume % and price in the build up to the off, the last hour is key due to the volumes exchanged and the last 10 mins tends to reflect the trends of the previous hour.
2) When the volume % increases there is no obvious pattern of price movement although patterns do exist, the benefit of using this information comes from finding the runners where the volume % decreases as a very large percentage of the time the runner will drift. If you think about why it makes perfect sense. The ‘edge’ comes from having the Volume % change prior to it being reflected in the price.
3) To interpret the info quickly you will need to graph the movement for the top 6 runners. I commissioned ‘nigelk’ on this forum to produce an Excel Spreadsheet.
Like anything it will take some study,effort and investment however it is a worthwhile tool to have in your trading armoury.
1) Purchase Fracsoft and the data and look at the movement in volume % and price in the build up to the off, the last hour is key due to the volumes exchanged and the last 10 mins tends to reflect the trends of the previous hour.
2) When the volume % increases there is no obvious pattern of price movement although patterns do exist, the benefit of using this information comes from finding the runners where the volume % decreases as a very large percentage of the time the runner will drift. If you think about why it makes perfect sense. The ‘edge’ comes from having the Volume % change prior to it being reflected in the price.
3) To interpret the info quickly you will need to graph the movement for the top 6 runners. I commissioned ‘nigelk’ on this forum to produce an Excel Spreadsheet.
Like anything it will take some study,effort and investment however it is a worthwhile tool to have in your trading armoury.
When I say insider trading, I don’t necessarily mean race fixing, which may be happening in some instances. What I mean is that certain individual or group of people that have access to trainers, horses, stables, track etc. and because that gain information that is more valuable than that can be analysed from form, track condition etc. And this information then used to without regard to market reaction then sudden surge of money for a particular runner will send signals to the market which will then influence price. And if it pushes down/up price significantly then actual price will become fair price and there won’t be much intrinsic value remaining. So to profit from it, at a tangible level, there has to be high frequency of co-ordinated betting than we think.Ferru123 wrote:Hi Psycho
Co-ordinated betting by whom?
And to what end?
Jeff
psycho040253 wrote: Now to the reason: My best bet is that it is primarily due to coordinated betting.
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psycho040253
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- Joined: Thu Mar 10, 2011 9:29 pm
Ferru
Your last post was perfectly correct - provided that the info emanating from the stables etc. is correct. However, your last post was perfectly incorrect if the info. emanating from the stables etc. is incorrect.
Let's suppose that the word from a stable is that a certain horse will romp home. If you pick up on this rumour, you can bet that lots of others will have also. So, the odds on the horse crash. In this case, we now have a horse whose odds are way too low and therefore has laying value. Let's face it, we've all been there. We pick up on a stable whisper that a certain horse will win easily. We lump on, it trails in a distant last.
Psycho
Your last post was perfectly correct - provided that the info emanating from the stables etc. is correct. However, your last post was perfectly incorrect if the info. emanating from the stables etc. is incorrect.
Let's suppose that the word from a stable is that a certain horse will romp home. If you pick up on this rumour, you can bet that lots of others will have also. So, the odds on the horse crash. In this case, we now have a horse whose odds are way too low and therefore has laying value. Let's face it, we've all been there. We pick up on a stable whisper that a certain horse will win easily. We lump on, it trails in a distant last.
Psycho