Unimpressive winner

Thursday, 9 June 2016, 17:28

Just a quick post as a couple of people asked me why the odds didn't move on that trade.

As the stats suggested, Lahti scored, and not far off their exact statistical average for 1st goal scored. Nice. But the price didn't move!

Well it did, but not much, and certainly nowhere near as much as 99% of games do after the home favourite scores. Normally the odds would have gone out to at least 7, probably more like 8.

But on this game it only went to mid 5s at best, then crawled down. Why did this happen?

rubbish odds on this trade

Here's why...

This game had very low liquidity (traded volume). It was borderline to even take the trade with volume that low (25-30k at KO i think). I usually want more like 50k minimum but 25k is often enough to just about scrape in with an entry trade and exit trade. Today's game was a good example of why low liquidity is risky to traders.

The more money matched on an event, the more eyes on the event too. With such low liquidity, there were not many people watching or even interested in the result.

It was a Finland game after all. So the draw price was decided by a long slow process of backs and lays for hours before the event, but when a goal is scored, you need lot of people involved and interested in betting on the match, to cause the odds to settle back at the 'correct' price, or at a price which reflects the probabilities.

In this game, clearly there were not enough people involved, but that doesn't fully explain why the odds stayed LOW instead of HIGH. The reason for this, I suspect anyway, is because this game was a classic LTD. The stats were good enough (only just) for LTD traders, and so there were probably a lot of people laying the draw in the game.

But when the goal was scored, they all want out, just like I did (and you Shane, Alistair and a few others I am sure!) To get out of a LTD we have to BACK the draw. More backers than layers forces the price down, unless there are just as many people looking to lay the draw, and there obviously weren't many of those in today's game.

There would have been very few, if any, bookies involved in the market, and very few gamblers too. Therefore I think this is a good example of a situation where TRADERS dominated the market, and it's a good reminder for us that we all must thank the gamblers out there for making markets stable for us most of the time even though they didn't today! I love gamblers. They make the betting exchanges work, and they make Betfair trading possible!

I tried to exit during HT (I was waiting for a second goal until then). But I had to take a LOSS to get my trade closed and I wasn't doing that, not in a hurry anyway. So I waited until 5 minutes into the second half and then there was enough volume for me to exit my trade and get a pathetic amount of green considering it was a perfectly successful trade!

A word of caution... if people do as I did, and wait for a second goal, that's up to them. But if you do it on a game with low liquidity like this one, it is very risky. Even more risky than normal.

If a goal had been scored by the away team to level the match, the odds could have plummeted a long way below our stop loss level, especially in this game as there were so few people involved.

The traders who would have wanted to trade out at 1-1 would have forced the market down and down to a ridiculously low level and we could have faced a much bigger loss than I would normally expect to see in a situation like that.

Hope that helps, and serves as a warning for the future for those who trade low liquidity games!

Thanks for reading, subscribe for updates at ukfootballtrading.com.

Leave a Reply

Your email address will not be published. Required fields are marked *