How does Betfair maintain a near to a 100% book value?

[Hortic07]

Hello all

Im a newbie here and have been trading the wieght of money pre off on various horse races with some limited success. However one thing i still dont understand is how betfair maintains near to a 100% book value. Whats to stop for example a favourite being backed in so heavily that it distorts the book value. Why is it that another selection will begin to drift in this scenario? I'm struggling to get my head around this so please help, obviously understanding this means that i will better be able to trade the market movements.

[Dallas]

In short Cross-matching
viewtopic.php?f=15&t=11066

[weemac]

Why is it that another selection will begin to drift in this scenario?

Because if the percentage remained below 100% (i.e. nothing drifted) there would be a guaranteed profit by laying every horse in the race. Marketplaces don't like giving away free money.

[Hortic07]

In short Cross-matching
viewtopic.php?f=15&t=11066

Wow thats some complex algorithm. So in a 12 runner horse race if i back the Fav i could infact be laying the other 11 runners, sort of blown my mind a little. Thank you very much.

[Hortic07]

Why is it that another selection will begin to drift in this scenario?

Because if the percentage remained below 100% (i.e. nothing drifted) there would be a guaranteed profit by laying every horse in the race. Marketplaces don't like giving away free money.

Thank you, i appericate the point its just the mechanics which i couldnt understand but has been answered above.

[weemac]

However few, or many, horses you back in a race produces exactly the same outcome as laying everything else. And vice versa, of course.

[Euler]

In short Cross-matching
viewtopic.php?f=15&t=11066

Wow thats some complex algorithm. So in a 12 runner horse race if i back the Fav i could infact be laying the other 11 runners, sort of blown my mind a little. Thank you very much.

You can see it action here: -

https://youtu.be/PMB0VV1HiPg

You can switch it on and off in Bet Angel.

[Hortic07]

On the point of the 100% book value

if i was scalping a 2 way market and only one part of my bet/lay was matched, surely even if the price moved significantly against me, my loss would only be limited to the overround percentage of the book. As the prices are inversley correlated. I.e i could dutch/bookmake my way out of my losing position (which i think is done automatically by betfair anyway) rather than taking a much inferior price on my selection.

As i write that i am aware that this dosent seem to happen for me in real life and i cant understand why.

[jamesedwards]

On the point of the 100% book value

if i was scalping a 2 way market and only one part of my bet/lay was matched, surely even if the price moved significantly against me, my loss would only be limited to the overround percentage of the book. As the prices are inversley correlated. I.e i could dutch/bookmake my way out of my losing position (which i think is done automatically by betfair anyway) rather than taking a much inferior price on my selection.

As i write that i am aware that this dosent seem to happen for me in real life and i cant understand why.

If your price moves against you then the other one will move to compensate. So the book% may stay nicely tight but leave you with a big red.

eg:
2.02 and 1.99 would be book% of 100.24%. You back at 2.02 and price moves out to 3.02. 3.02 and 1.49 would be book% of 100.23%, but you'd be left with a big red if you traded out by laying at 3.02.