Well that was interesting.
It was clear for some time that this was going to be a huge market. Interestingly enough, the same guy I know that foresaw the financial crisis, also saw this development. I’m now his devout follower forever and would jump off a bridge if he told me it was appropriate 🙂
I started looking at this particular market back in 2004. Clinton was a democratic nominee back then as well and I’ve revisited each year since then.
How I look at the market
In the run up to the big vote the market tends to react to news flow. So trading in and out of that gives us a chance to profit from it, even though we don’t know what the next bit of news is. The battle ebbed and flows from both sides, so you tend to oppose the most recently news and as the other side come out with a new story the market will shift back in the other direction. That’s more or less how I traded it this year before the big day.
On the big day its like the event has gone ‘inplay’. It reverts to what is happening in the underlying event, i.e voting. So I went back and studied voting patterns and polls to get a clue as to how the market may react to news as it broke. The US is split into regions, which cover four time zones and that means the market tends to react as news rolls in.
It seems to have followed roughly the same pattern each time. I guess this is due to the number of factors included how votes are returned and counted and this in part is due to the geography of the US.
I’ve done a video on it and you can see the voting maps and progression. I’ll be uploading it this weekend to our You Tube channel.
It’s amazing to see how much politics has grown as a market. Have a look at the 2008 election when Obama was about to win.
Then wind forward to 2016 when this market became the biggest individual market ever on Betfair. It matched just short of £200m in the end. That’s pretty substantial growth and it broke the previous record of £114m, which was also a Political market. There is something curious going on with Political betting markets it seems! I’m not totally sure what the reason for this is. If you have any ideas then feel free to offer them up.
When the world new Clinton had lost
I’m a real stickler for accuracy and detail, so I collect a lot of data on each market I trade. The detail on this graph is probably too small to accurately asses so here is a quick overview.
Clinton drifted slightly as the first polls started to trickle in, but shortened to 1.08 at 01:04 in the morning UK time. A gentle drift ensued till 02:00 hours when the results were starting to show a bit of pressure. The price really started to move rapidly from there as we headed through the East Coast and into the Mid West. Forty minutes later Trump touched odds on and never really looked back. By 03:26 a complete reversal had taken place and Trump was now at Clintons price of a couple of hours earlier and the Democrats dream of not only the first African American president, but also a women in the white house, was in tatters. Things just got worse from there.
What a fascinating night and an unbelievable market.