How do the odds move?

[sriel1]

This is more a technical question than a theoretical one.

I trade horse races in play and I know that if a horse is performing well the odds will come in, or drift if it's not doing well. I also know that if a well backed horse is pulled then the odds will come in on the other horses to keep the over round near to 100%.

What I would like to understand is how the prices actually fluctuate? Betfair doesn't control what the exact odds are, it's all based on matched bets, so what does control what the odds are?

For example, I back a horse at 5.4 and then the price comes down to 5.0 - how does that price movement actually happen? Again I'm thinking technically in terms of how the numbers change.

Thanks in advance.

[deansaccount]

Algorithms and cross matching, is my best guess. It is an interesting question and one I have pondered. If (for example) the front 3 horses are all trading at the same price and one drifts heavily, what dictates which of the other two horses (or possibly both) shorten in price? The weight of back money as a % comparison with each other? I assume the current odds of each horses is included in the calculation due to them having a larger book percentage than something trading at 50/1 but has a WoM of 70% on the back side.

[sa7med]

its our good old friend supply and demand: if money taken at price x exceeds money available at price x then the price will move to the next available money. So if there are more backers, then the price will drop, and if there are more layers then the price will rise. In effect, this reflects peoples opinions about the chances of an outcome occurring. In theory, the more money matched, the more accurate the market odds will reflect the true odds of the event - though this is for a perfect world. Thats the way I think of it anyway.

[CallumPerry]

Never managed to find an answer to this either mate, has anybody found this out?

Take deansaccount's example, if three horses are each trading at 4.0 and one comes in to 3.4 for example, which of the other two horses trading at 4 will drift out? Will they both? If the 4.0 to 3.6 on the now favourite happened over 10 seconds would it take into account the WOM of the other two horses over the last 10 seconds to make it's decision or use some other mechanic?

[Euler]

If I want to back the favourite at odds of 4.00 with £200 but only £100 is available, I'll take the odds at 3.95 and hey presto the odds have moved.

[Dabbla]

Think of the market as a fish tank split into sections.
100% book is a full tank.
If you plunge the fav then water will have to come out somewhere else.
This is where wom comes in to play.
If there is a big plug on the 2nd fav (lots of backing money) then the water will have a hard time getting through that plug. So other will have to move out instead.

In principle that’s how it works but obviously these lots of over traders pushing and pumping at the same time and you never really know the real WOM.

[Derek27]

Never managed to find an answer to this either mate, has anybody found this out?

Take deansaccount's example, if three horses are each trading at 4.0 and one comes in to 3.4 for example, which of the other two horses trading at 4 will drift out? Will they both? If the 4.0 to 3.6 on the now favourite happened over 10 seconds would it take into account the WOM of the other two horses over the last 10 seconds to make it's decision or use some other mechanic?

It all depends how they are travelling. They could both drift, one could stay the same and the other drifts, or both stay the same and other horses drift.

When you ask would "it" take into account, make "it's" decision, who or what is it?

The Betfair prices are not controlled by Betfair or any computer software, they're controlled by me, you, and everybody else placing bets. The prices are simply bets placed on the exchange that haven't been taken.

[deansaccount]

Think of the market as a fish tank split into sections.
100% book is a full tank.
If you plunge the fav then water will have to come out somewhere else.
This is where wom comes in to play.
If there is a big plug on the 2nd fav (lots of backing money) then the water will have a hard time getting through that plug. So other will have to move out instead.

In principle that’s how it works but obviously these lots of over traders pushing and pumping at the same time and you never really know the real WOM.

Do you know this to be true? Because I had previously come to this conclusion, but when watching the ladders this is not always the case.

[deansaccount]

Never managed to find an answer to this either mate, has anybody found this out?

Take deansaccount's example, if three horses are each trading at 4.0 and one comes in to 3.4 for example, which of the other two horses trading at 4 will drift out? Will they both? If the 4.0 to 3.6 on the now favourite happened over 10 seconds would it take into account the WOM of the other two horses over the last 10 seconds to make it's decision or use some other mechanic?

This is exactly the question nobody has been able to answer. I guess nobody really knows

[Derek27]

Never managed to find an answer to this either mate, has anybody found this out?

Take deansaccount's example, if three horses are each trading at 4.0 and one comes in to 3.4 for example, which of the other two horses trading at 4 will drift out? Will they both? If the 4.0 to 3.6 on the now favourite happened over 10 seconds would it take into account the WOM of the other two horses over the last 10 seconds to make it's decision or use some other mechanic?

This is exactly the question nobody has been able to answer. I guess nobody really knows

I've just answered it.

[spreadbetting]

Never managed to find an answer to this either mate, has anybody found this out?

Take deansaccount's example, if three horses are each trading at 4.0 and one comes in to 3.4 for example, which of the other two horses trading at 4 will drift out? Will they both? If the 4.0 to 3.6 on the now favourite happened over 10 seconds would it take into account the WOM of the other two horses over the last 10 seconds to make it's decision or use some other mechanic?

This is exactly the question nobody has been able to answer. I guess nobody really knows

Just read the x-matching documentation if you want to understand how money will be absorbed into the market based on the money in the market at that time, it's not rocket science just simple maths. What it's not going to tell you is if those moves will continue in the same direction or if the supply and demand will be maintained.

[Dallas]

Never managed to find an answer to this either mate, has anybody found this out?

Take deansaccount's example, if three horses are each trading at 4.0 and one comes in to 3.4 for example, which of the other two horses trading at 4 will drift out? Will they both? If the 4.0 to 3.6 on the now favourite happened over 10 seconds would it take into account the WOM of the other two horses over the last 10 seconds to make it's decision or use some other mechanic?

It all depends how they are travelling. They could both drift, one could stay the same and the other drifts, or both stay the same and other horses drift.

When you ask would "it" take into account, make "it's" decision, who or what is it?

The Betfair prices are not controlled by Betfair or any computer software, they're controlled by me, you, and everybody else placing bets. The prices are simply bets placed on the exchange that haven't been taken.

They are referring to the XM engine and how it determines which selection to XM against should two or more runners be trading at the same price.

[deansaccount]

Never managed to find an answer to this either mate, has anybody found this out?

Take deansaccount's example, if three horses are each trading at 4.0 and one comes in to 3.4 for example, which of the other two horses trading at 4 will drift out? Will they both? If the 4.0 to 3.6 on the now favourite happened over 10 seconds would it take into account the WOM of the other two horses over the last 10 seconds to make it's decision or use some other mechanic?

This is exactly the question nobody has been able to answer. I guess nobody really knows

Just read the x-matching documentation if you want to understand how money will be absorbed into the market based on the money in the market at that time, it's not rocket science just simple maths. What it's not going to tell you is if those moves will continue in the same direction or if the supply and demand will be maintained.

Thank you, I did not know such documentation existed.

[Derek27]

Never managed to find an answer to this either mate, has anybody found this out?

Take deansaccount's example, if three horses are each trading at 4.0 and one comes in to 3.4 for example, which of the other two horses trading at 4 will drift out? Will they both? If the 4.0 to 3.6 on the now favourite happened over 10 seconds would it take into account the WOM of the other two horses over the last 10 seconds to make it's decision or use some other mechanic?

It all depends how they are travelling. They could both drift, one could stay the same and the other drifts, or both stay the same and other horses drift.

When you ask would "it" take into account, make "it's" decision, who or what is it?

The Betfair prices are not controlled by Betfair or any computer software, they're controlled by me, you, and everybody else placing bets. The prices are simply bets placed on the exchange that haven't been taken.

They are referring to the XM engine and how it determines which selection to XM against should two or more runners be trading at the same price.

The OP never mentioned cross-matching (even if he had it in mind) and only referred to "it", questioning which horse will "drift". The title of the thread didn't give any clues either!

[deansaccount]

It all depends how they are travelling. They could both drift, one could stay the same and the other drifts, or both stay the same and other horses drift.

When you ask would "it" take into account, make "it's" decision, who or what is it?

The Betfair prices are not controlled by Betfair or any computer software, they're controlled by me, you, and everybody else placing bets. The prices are simply bets placed on the exchange that haven't been taken.

They are referring to the XM engine and how it determines which selection to XM against should two or more runners be trading at the same price.

The OP never mentioned cross-matching (even if he had it in mind) and only referred to "it", questioning which horse will "drift". The title of the thread didn't give any clues either!

OP may not have known about cross matching, hence not mentioning it in the post. Looks like spreadbetting had the answer.