Liquidity in pre-race markets

[kamil2402]

Thank you for the great insight, it's really appreciated. Would you therefore suggest that instead of a significant decline, the pre-race markets are seeing more of a stall?

[Derek27]

Andy Fuller mentioned on the Cheltenham thread that 60% PC halted his Betfair trading. There must be many others and as they will be some of the bigger traders you'd expect a significant drop in turnover from the time it was introduced.

[ODPaul82]

I've got some like for like numbers, but they don't look as steep a fall as these. Not sure what that data captures, but it may be capturing other data as well?

Hi Peter,
It's the data from https://promo.betfair.com/betfairsp/prices/

Have a spreadsheet that downloads files based on from/to range, loops through and pops into Access DB
Shouldn't be anything other than GB & IRE in there, that's not to say it's perfect (or my processing is right).
Not looked at the volume levels, purpose was for identifying LTF, %IR changes, etc, etc.

[napshnap]

I've got some like for like numbers, but they don't look as steep a fall as these. Not sure what that data captures, but it may be capturing other data as well?

Yes, Peter, I don't use standard method (total traded/#ofrunners), I use my own method where I calc traded liability for every price (up to price of 100, to get rid of those ridiculous liabilities like todays 'Cavalry Scout' 237 at 1000), then sum them and then divide by #of runners. and then divide by 1000 to get more readable humanfriendly numbers.
This, I believe, helps me to get rid of strange situations when some low-grade stakes race with superfav priced like 1.05-1.1 has much more total traded than some good quality handicap without such short priced fav.

Also numbers posted above are for PRE only.

[ShaunWhite]

Betfair's own data shows the entire exchange stalling after the introduction of the higher rate PC.

The trading population no doubt changed but how has the punters' money changed over the years? Have they disclosed that split? Afterall what we need are punters and losing traders, if the volume is down because a few big winners left then the reality isn't as bleak as the numbers suggest. A smaller pie but more fewer people taking oversized slices?

The thing we all need most though is an economic upturn so Joe Public has a few more quid to spend.

[Kai]

I'd imagine that the introduction of PC and then PC2 scared off potential customers as well which probably had an impact on the overall liquidity, besides the loss of the existing bigger players, even of the vast majority would never realistically reach those levels.

Can understand why OP is worried despite his irrational fears, I too was worried about the longevity of the exchange model before committing to trading, people don't want to get into something that might soon die out.

[Jukebox]

How much of the 'volume' on the exchange is really volume anyway?
If I put £1000 into a race and take out £1030 and it gets recorded as £4060 meanwhile my automation 'churns' away to make sure I pay as little as possible on the £30

[Derek27]

How much of the 'volume' on the exchange is really volume anyway?
If I put £1000 into a race and take out £1030 and it gets recorded as £4060 meanwhile my automation 'churns' away to make sure I pay as little as possible on the £30

However the volume is calculated, the change in the figures can be indicative.

[ruthlessimon]

Edges die faster than the exchange ever will!! Since mid 2019, I've had to completely reinvent myself - & I constantly fear having to do it again; or not having the ability to do so.

Imho, inefficiency > liquidity

No good having a liquid (but unpredictable/efficient) market

[Kai]

Edges die faster than the exchange ever will!! Since mid 2019, I've had to completely reinvent myself - & I constantly fear having to do it again; or not having the ability to do so.

Imho, inefficiency > liquidity

No good having a liquid (but unpredictable/efficient) market

Fear of losing an edge is, however, a very real fear, there's nothing irrational about that. Lost maybe a dozen myself over the last 5 years, edges that at first seemed future-proof but later realized they weren't really big/scalable to begin with. In reality it was only a couple of edges that were applied across several sports/markets, while some were just too seasonal for my liking. Fortunately I didn't really have to reinvent myself, it was more a case of realizing the type of skill set that I had developed and then applying it to the most suitable markets, if that makes sense, because for the most part it was being wasted on trading markets that weren't suitable for it.

But it really depends what type of edges you're looking for, maybe you're only looking for minor edges that can die out soon as the markets have a minor shift etc. Not sure what exactly constitutes an edge for others but some edges should be timeless, the basic ability of reading order flow should be a good enough edge in itself that can be applied to good effect on a lot of "speculative" markets, if you develop that ability it's not really something you can lose imho. I also agree that less liquidity doesn't necessarily mean less opportunity in general, it may be the other way around depending on your approach.

[ShaunWhite]

I agree kai, edges can be skill based and viable wherever money is traded, or techincal and that usually means continual reinterpretation. But the concern from the OP is not having a meaningful market to trade at all which would be game over.

I think the exchange could contract a lot more and still be tradable although there'd obviously be less money to go around us all. I'd be interested to see the turnover figures from 2000-2010, afterall there's been traders since the day 1.

[ShaunWhite]

No good having a liquid (but unpredictable/efficient) market

The only market you can't trade is a static one and in sports that's never going to happen. And while humans are involved that will have a degree of predictability too. There's also predictability at short timescales due to supply and demand present in every type of market from eBay to equities. I don't think you need to worry about a hypothetical untradable market, there's never been one and never can be. It's just a matter of finding the right way to unlock it.

[Euler]

There are anomalies in the traded amounts as Betfair stopped counting self matched money, which was included in earlier figures. But when and what impact this had is difficult to know.

[SweetLyrics]

Edges die faster than the exchange ever will!!

How do you know this?

Since mid 2019, I've had to completely reinvent myself - & I constantly fear having to do it again; or not having the ability to do so.

Why is that?

Imho, inefficiency > liquidity

I'm not sure I understand what this means.

[SweetLyrics]

+1

One day, humans might stop gambling.

They might also stop having sex one day too...

However, I wouldn't worry unduly about the extinction of market irrationality or the human species.

The only market you can't trade is a static one and in sports that's never going to happen. And while humans are involved that will have a degree of predictability too. There's also predictability at short timescales due to supply and demand present in every type of market from eBay to equities. I don't think you need to worry about a hypothetical untradable market, there's never been one and never can be. It's just a matter of finding the right way to unlock it.