Do you understand the basic principle of betting market balance? Applicable to all betting markets.
Now worries! This snappy blog is here to explain everything you need to know, in laymans terms. If you’re a new trader or long-time better it’s worth a couple of minutes of your time.
A Simple Explanation of Market Balance
Market balance is a core ‘truth’ that runs through all exchange betting, much like gravity does to the physical world. Betfair’s cross matching algorythim enforces this balance, although, if they didn’t – somebody else would. The reason is simple; it’s based upon maths.
Being able to see the balance is important, it’s why my Market Overview chart is next to the ladders, as shown below:
Statistical software shown above is Infogol. See it on desktop or smart-phone App for free here: infogol.net.
Do you see how the red and green lines mirror each other above?
This is of course because there are two outcomes in the Over/Under 2.5 goals market. If one goes up, the other must come down.
However, this understanding is often lost when there are many more potential outcomes in a betting market. In a 16 runner horse race, it’s a lot more confusing (but it’s still there).
3 Way Balance:
Here’s another example of inverse proportionatlity at play…
The favourite’s price of 2.34 (Arsenal) is a direct reflection of the ousider and draw price combined (excluding the tick’s spread).
So, backing Arsenal (favourite @ 2.32) is equal to laying Leicester (second favourite @ 3.4) and the Draw (3.65) at stakes proportionate to pricing.
This is why one or more prices have to drift when there is a contraction elsewhere in the market.
Core Market Dynamics…
Being aware of market balance and the relationships between different outcomes is just one of the fundamental market dynamics. This is why we have an entire module dedicated to market dynamics in the pre-race video pack course. You can check out the details on the link below.
Alternatively, if you would rather take the long path alone, here are a few extra things to think about.
- Natural resistance points
- Market timing and genuine money
- External market influence
- Wisdom of crowds
- Trader manipulation
- Matched volumes variation
All of these are must-know essentials for would-be traders!