Efficiency of Horse Racing Markets on Betfair

The sport of kings.
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Derek27
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ShaunWhite wrote:
Sat Jan 27, 2018 5:12 am

Thanks for pointing out that prices can move a long way in 5 minutes. But rather than assuming i'm some sort of idiot, it could have been that you didn't understand my reply or that I didn't understand your question.
Sorry, I mentioned 5 minutes in the previous post.
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to75ne
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Euler wrote:
Sat Jan 27, 2018 12:55 pm
When people talk about efficient markets, I ask..... Is the earth round or flat?
your day to day perspective and instinct would say flat, but your eduction and intelligence would overide your day to day experience and state round.
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Derek27
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Ferru123 wrote:
Sat Jan 27, 2018 11:37 am
Hi Derek

I am no statistician, but I was pretty sure that was wrong, so I tested it.

The results of laying at BSP to a risk of 1 point per horse with zero commission for all runners in 2017 are as follows:

Risk 122409
P/L 1.093162656
ROI 8.93041E-06

The results when you assign each horse a random percentage chance between 1% and 99% are as follows:

Risk 122409
P/L: 451222.3991
ROI: 368.62%

I would therefore conclude that BSP beats randomness. :)
I think you may have applied the wrong test.

Did you apply random percentages adding up to 100% for each race?

If not, what was the overrounds, 500% ? That would explain the massive profit if you're backing.
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Euler
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Only 536 people have actually been high enough above the earth to see it as a globe, perhaps, unless that is a conspiracy. But 7bn people live on it, I'm plumping for flat.
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Derek27
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Look at it this way, toss a coin 1000 times and offer 4/5 heads and 5/4 tails. That's an inefficient market without question, but back both of them or back them at random and you'll break even.
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Derek27
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Euler wrote:
Sat Jan 27, 2018 1:14 pm
Only 536 people have actually been high enough above the earth to see it as a globe, perhaps, unless that is a conspiracy. But 7bn people live on it, I'm plumping for flat.
It's been a while since I've been at 40,000 feet, but I thought you could just about see the curvature of the earth from that height ?
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Euler
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Whether the earth is round or flat depends on your perspective and where you observing from. If you argue heavily for one or the other you can be both right and wrong at the same time.
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to75ne
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Derek27 wrote:
Sat Jan 27, 2018 1:18 pm
Euler wrote:
Sat Jan 27, 2018 1:14 pm
Only 536 people have actually been high enough above the earth to see it as a globe, perhaps, unless that is a conspiracy. But 7bn people live on it, I'm plumping for flat.

i dont believe for a minute your an idiot flat earther, so i can only assume this is part of your contrarian approach to trading (going against the crowd).
It's been a while since I've been at 40,000 feet, but I thought you could just about see the curvature of the earth from that height ?
i think you need a lot higher 15 to 20 miles
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Derek27
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Could have been imagining it or seeing what I'm expecting.

(I don't know what we're all doing discussing the shape of the world early Saturday afternoon). :lol:
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to75ne
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[quote=Derek27 post_id=143222 time=1517059788 user_id=19806

(I don't know what we're all doing discussing the shape of the world early Saturday afternoon). :lol:
[/quote]

:)
spreadbetting
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LinusP wrote:
Sat Jan 27, 2018 12:44 pm


One thing I have started doing recently is analysing the 'edge' my bets get against SP (as a function of amount staked) this is helping me pinpoint when the market at 'x' was wrong. Of course looking at individual races its almost pointless but over just 1 day you tend to get a value which holds true long term. Would love to see how this value (edge) varies from manual trader to trader and if it has any relevance to their pnl.
I do similar things to look for inefficiencies within these supposedly 'efficient' markets. The only way we profit from the markets as traders or punters is if we're getting value prices on a consistent basis.

A simple exercise for traders to find where they're obtaining most value is to download their betting history and simply sum the total of their back bets and the total of their lay bets. In an ideal world both figures should be positive otherwise, for various reasons, they're throwing away value when either opening or closing bets especially if they continually open from a fixed angle of backing or laying.
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Derek27
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spreadbetting wrote:
Sat Jan 27, 2018 1:34 pm
LinusP wrote:
Sat Jan 27, 2018 12:44 pm


One thing I have started doing recently is analysing the 'edge' my bets get against SP (as a function of amount staked) this is helping me pinpoint when the market at 'x' was wrong. Of course looking at individual races its almost pointless but over just 1 day you tend to get a value which holds true long term. Would love to see how this value (edge) varies from manual trader to trader and if it has any relevance to their pnl.
I do similar things to look for inefficiencies within these supposedly 'efficient' markets. The only way we profit from the markets as traders or punters is if we're getting value prices on a consistent basis.

A simple exercise for traders to find where they're obtaining most value is to download their betting history and simply sum the total of their back bets and the total of their lay bets. In an ideal world both figures should be positive otherwise, for various reasons, they're throwing away value when either opening or closing bets especially if they continually open from a fixed angle of backing or laying.
I can see where you're both coming from and the potential benefits of it, but I don't think it would help me much if I applied it to my trading history.

If I scalp a horse several times between 6.2 - 6.4, that horse could end up at 9 or 10. Such analysis would suggest the back bet was poor value and the lay bet was good, but it doesn't really matter where the horse ends up. Cold trading is largely about being safe and securing a profit without undue risk.
spreadbetting
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Derek27 wrote:
Sat Jan 27, 2018 2:03 pm
I can see where you're both coming from and the potential benefits of it, but I don't think it would help me much if I applied it to my trading history.

If I scalp a horse several times between 6.2 - 6.4, that horse could end up at 9 or 10. Such analysis would suggest the back bet was poor value and the lay bet was good, but it doesn't really matter where the horse ends up. Cold trading is largely about being safe and securing a profit without undue risk.

Simply adding up your backs and lays has no relation with the final price of the horse if we assume your scalping could be equally split between drifters/steamers , it will just simply show if you're trading efficiently backing/laying and not throwing away value unnecessarily. If however you're continually laying drifters and closing early then it's something you should consider amending to increase your profits. I just assessed my last 3 months bets on my greyhound bot and the profit was more or less split equally over 55,852 bets so hard to see how I can tweak it. It actually surprised me just how close they were over a long period. Over the last month 19000 bets it a 75/25 split Back/Lay
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ShaunWhite
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Euler wrote:
Sat Jan 27, 2018 9:28 am
The market is efficient or not depending on how you measure it. I make money from inefficient markets but can also prove they are completely efficient.
+1 Exactly.
Iron
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Hi Derek

No, I didn't, but I don't think it makes a difference.

I think I can see where you might be coming from.

Let's say we had a million 5 horse races and assigned each horse odds of 5.0, from horses that should be odds on to ones that should be starting at 1000. By laying all of the horses at 5.0, then you would more or less break even (if you didn't have commission to pay). The overall picture would be one of extreme efficiency, but that would be misleading.

Similarly, if every time a market has a 15% chance horse goes off at 30% it makes an equal mistake in the opposite direction, you might expect the long-term picture to be one of extreme efficiency.

However, despite there being mistakes in individual markets, if we were to look at 10,000 horses that went off at 3.0, you would expect near as dammit a third of them to have won, which shows that, on aggregate, the market is extremely efficient (even though it might be wrong on individual races, possibly most of the time). That suggests to me that a hell of a lot of information is being accurately assimilated into the market.

Jeff
Derek27 wrote:
Sat Jan 27, 2018 1:13 pm

I think you may have applied the wrong test.

Did you apply random percentages adding up to 100% for each race?
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