Question: who drives the market

[Original-Soultrader]

Hi folks, just started with sports markets and playing around at the mo, made about 5% so far on my initial account in 4 days so slow and steady is my approach.

My background in trading is financial, specifically forex.

So, i ask myself this question - who actually drives the markets? In forex it tends to be the dealer using their order book. - which of the following is truth:

1) people placing bets in bookmakers or at the track?

2) people using the exchange like you and I?

3) the bookmakers who decide what to offer at what odds?

It may be that this changes from pre-off to in play etc but i'd like to know the facts. NOTE: i'm not interested in opinion i'm interested in fact - maybe Peter has this information in his big data.

Thanks all, I look forward to getting involved in the forum

[LinusP]

I think you are missing a few from your list but that’s an opinion so I won’t go on, your going to struggle asking for just facts.

[ruthlessimon]

I think you are missing a few from your list but that’s an opinion so I won’t go on, your going to struggle asking for just facts.

For a start, he's missed out SHR

[Original-Soultrader]

intruigued... educate me.

ps, i'm just talking the gee gees

[Derek27]

Hi folks, just started with sports markets and playing around at the mo, made about 5% so far on my initial account in 4 days so slow and steady is my approach.

My background in trading is financial, specifically forex.

So, i ask myself this question - who actually drives the markets? In forex it tends to be the dealer using their order book. - which of the following is truth:

1) people placing bets in bookmakers or at the track?

2) people using the exchange like you and I?

3) the bookmakers who decide what to offer at what odds?

It may be that this changes from pre-off to in play etc but i'd like to know the facts. NOTE: i'm not interested in opinion i'm interested in fact - maybe Peter has this information in his big data.

Thanks all, I look forward to getting involved in the forum

Hi Original-Soultrader, welcome to the forum.

I'm going to give you my opinion because your question, "who actually drives the markets", has no definitive answer and is only a matter of opinion.

Bookies have absolutely no say in exchange prices - it's the other way round. Bookies follow the exchange. I've made a fair amount of money arbing between bookies and the exchange because they're a bit slow to change their prices, but I've never landed a single bet with Ladbrokes. If a horse moves from 5>4 on the exchange, Ladbrokes knocks down the price in five seconds, or they might even be hard-wired to the exchange.

Nothing drives the markets, it is all interrelated. People like us betting/trading directly with the exchange market will immediately affect it; people placing bets on racecourses or betting shops will also have a delayed effect as bookies trade their liabilities on the exchange.

[ShaunWhite]

Hi folks, just started with sports markets and playing around at the mo, made about 5% so far on my initial account in 4 days so slow and steady is my approach.

My background in trading is financial, specifically forex.

It may be that this changes from pre-off to in play etc but i'd like to know the facts. NOTE: i'm not interested in opinion i'm interested in fact

I'd be wary of measuring your performance in terms of days. You might have done 4 trades or 4,000. When you traded forex was it on your own account or for a investment house? If it was the latter you'll already know that 4 days' results won't guarantee you a Ferrari in your Christmas bonus.

I'm afraid I don't agree at all that the forex markets are driven by dealers orders. Forex is driven by macro economics and geopolitics. Did dealers drive the recent moves on sterling? If they did then what are the rooms full of analysts doing?

Who's driving the sports exchanges ? Who drives a game tug-of-war? Sports markets, like the forex markets are underpinned by fundamentals. Horse X won't reach 1.01 or 1000 no matter how many orders someone throws in.

If you read some of the posts about market efficiency you'll see that the markets behave like a stick balanced on your fingertip with vertical being its true value.

Sorry for the lack of fact and questioning your views.... Welcome to the forum.

[Original-Soultrader]

I'd be wary of measuring your performance in terms of days. You might have done 4 trades or 4,000. When you traded forex was it on your own account or for a investment house? If it was the latter you'll already know that 4 days' results won't guarantee you a Ferrari in your Christmas bonus.

I'm afraid I don't agree at all that the forex markets are driven by dealers orders. Forex is driven by macro economics and geopolitics. Did dealers drive the recent moves on sterling? If they did then what are the rooms full of analysts doing?

Who's driving the sports exchanges ? Who drives a game tug-of-war? Sports markets, like the forex markets are underpinned by fundamentals. Horse X won't reach 1.01 or 1000 no matter how many orders someone throws in.

If you read some of the posts about market efficiency you'll see that the markets behave like a stick balanced on your fingertip with vertical being its true value.

Sorry for the lack of fact and questioning your views.... Welcome to the forum.

Hi Shaun, thanks for the welcome.

I've traded my own forex account for around 20 years, i also traded for an NYC fund for about a year.

I do of course realise that one swallow doesn't make a summer - just that usually when i get into something i lose until i get the hang of it - so far i'm not losing but not winning either - kinda break even. i've traded around 60 markets so far.

World economics come into forex of course but that's over the long term. I've been in many a dealing room in the city and i know that it's the dealers that decide where to place a bias in the market and where they want to push it. I'm talking over the short term as in daytrading. the horse markets are very similar in the way that they move but the advantage is the short time span with which you have to operate. Forex is moved by WOM - where are the biggest orders - that's where it gets pushed to.

What i'm trying to get at is where is the big money - generally speaking it's the big money that moves forex - the banks and institutions - the goldman sachs or JP Morgans'for example. are you saying that this is the only market where there is no manipulation by big players?

[ShaunWhite]

I do of course realise that one swallow doesn't make a summer - just that usually when i get into something i lose until i get the hang of it - so far i'm not losing but not winning either - kinda break even. i've traded around 60 markets so far.

I was just suggesting you should be mindful of that 'one swallow' thing which I now see you're obviously aware of. It's quite often the case that new traders make money quite quickly, the big bump of reality comes in month 2 and beyond. That's usually because of the psychology around a bad run they're experiencing for the first time, but with your experience hopefully you've got a head start on that obstacle.

I've been in many a dealing room in the city and i know that it's the dealers that decide where to place a bias in the market and where they want to push it.

My experience was in managed funds, mostly pensions and private wealth (85-05) so our experiences will vary. The dealers I worked with were holding positions for months and years rather than minutes and hours. I'll bow to what you say on what happens in the world of market making.

What i'm trying to get at is where is the big money - generally speaking it's the big money that moves forex - the banks and institutions - the goldman sachs or JP Morgans'for example. are you saying that this is the only market where there is no manipulation by big players?

Manipulation in the very short term, yes. But not sustained.

With the overall market efficiency at SP being what it is, then it would seem that the main check on the market that prevents manipulation are the value seekers and to do so their combined pockets must be deep. They're also competing against each other in what's effectivly a dutch auction in a very small market, so there'll be plenty who are prepared to pull the trigger before the price has become too outrageous or you've moved the price to where you want. Even if you did move it, it certainly couldn't be held there.

Then there are the group of traders using elements of FA rather than just TA, they have a good idea of where dominant 'value seekers' will eventually drag the SP. They're also competing for deviations due to what's obviously manipulation, safe in the knowledge that with peak volume being near the off, they can close their positions when common sense has prevailed. Take a look at the time/price/vol graphs. Experienced traders become very good at recognising manipulation.

And....The thing to bear in mind here is that it's not just short term investment, it's a world where everything you hold will expire. If you've used your might to drag the market off piste for some reason, there might not be the liquidity for you to get out. You don't want to be the one left holding the baby. If you do want to be the one left holding the baby, then you're in the value seeking scrum too.

Sports markets are a fascinating different world, there's going to be plenty to keep your mind ticking over.

[Original-Soultrader]

yeah, lots to think about Shaun. and really appreciating this banter from you.

I've finally ditched forex. I made a lot of money from it in 2002 - 2008 but the credit crunch killed off the HNW investors and the advent of algorithmic trading has killed the market, it's just not do-able anymore to find 100 pip days every day like we did back then.

Since forex I made a lot of money in t-shirts (7 figures) so money isn't as important anymore. However having a challenge is - i've kinda stepped down from work and i have foreign staff that run the shirt business now. but now a new challenge has come along, and it's not betfair, it's cancer.

On the 16th i go in for a major op and for the next year i'm gonna be sat on my arse doing very little but getting better - the challenge is to learn all this horse racing back and lay stuff. Basically i might be calling on your advice for some while to come