Ive read on a number of blogs and forums about people talking about the liquidity being poor on certain days on the horses even when they are talking there is say 400K+ on the race.
What is the importance of the liquidity because i dont think these traders are wanting to bet 400K+. Is it because if there is a lot of money in the market pre race on the favourites there will not be big gaps in the market and therefore big jumps in the odds and therefore no surprises???
Therefore if they are looking at their charts in BA and the Weight of money they can see which way the odds are going to move and have a relatively safel scalp of the market without risking any big sudden losses?
Why the importance of liquidity for Pro Traders
-
JacoboPolavieja
- Posts: 91
- Joined: Thu Sep 10, 2009 6:00 pm
Liquidity is important because, the more money in the market, the bigger stakes you can use. This is the basic, though more liquidity also varies the market in other ways.
When is said that liquidity is 400K is not that you could put a 400K bet. It means that the sum of all the money matched on all horses adds up to 400K. If I'm not mistaken Betfair calculates this in the manner of:
- I BACK 100€, so anyone else is LAYING 100€ => Money matched = 200€. Add up all these matchings and you get the "matched total".
Just for the record...
1. There's usually no gaps in the prices, at least on the favourite. Trading usually tries to look at swings in the prices.
2. Weight Of Money is just one of many indicators. Never base your decissions just on that (at least that's my humble advice
).
Cheers!
When is said that liquidity is 400K is not that you could put a 400K bet. It means that the sum of all the money matched on all horses adds up to 400K. If I'm not mistaken Betfair calculates this in the manner of:
- I BACK 100€, so anyone else is LAYING 100€ => Money matched = 200€. Add up all these matchings and you get the "matched total".
Just for the record...
1. There's usually no gaps in the prices, at least on the favourite. Trading usually tries to look at swings in the prices.
2. Weight Of Money is just one of many indicators. Never base your decissions just on that (at least that's my humble advice
).Cheers!
More money means you can exit your position quickly. Poor liquidity or a low fill rate means that if you have an open position in the market for any length of time it is at more risk. When there is loads of money coming through the market and filling orders quickly larger traders will feel much more in control of their positions.