Ever thought the market is deliberately pushing against your every move or felt like your trades are being watched?
We’ve all been there, haven’t we. Being paranoid is a natural human emotion, but what if someone is watching your trading positions. How would you even know? they could be copying your best strategies, front-running your trades or even pushing against you in an attempt to force your financial submission.
It’d be like playing poker whilst your opponent watches your hand…
Who Can See Your Trades?
In the past, other professional traders have shared their concerns about these issues. Supposedly it’s the reason that some have not developed trading software for Matchbook. For those who don’t know; Matthew Behnam has strong links there.
Taking a look at the inner workings of a betting exchange could be a large advantage. Although given his track record, I seriously doubt he cares for traders throwing around a couple of grand here and there. More likely it was the only way to get his massive stakes on. Plus, we have to remember the legal ramifications that would come alongside running an exchange. Much like Betfair, I suspect only the very top tier employees have access to customer accounts. Allowing anything less would lead to insider trading and potential litigation.
But what about smaller 3rd parties?
Typically the third parties that allow you to place bets on the exchange are developed by nerds. For example, the app that I use is developed by two Geeks who have no interest in trading themselves. Having met them both, neither are driven by money, or have the inclination to sift through previous data to unpick strategy. I believe several successful traders have moved to using GT for this reason alone.
Side note: people sometimes assume GT is mine – it’s not at all. I’m just a successful user that Betfair featured using it.
Knowing Other Traders Positions?
It’s said that around 70% of exchange money is traders liquidity. I’ve no idea how accurate that is, although it stands to reason that the majority of liquidity is indeed traders. So, knowing where the market sentiment lies is a big deal. If you haven’t seen yesterdays manipulation post check it out here.
I mention this as a quick update because yesterday, the large scale manipulation was back in force. Check out these charts from the 12:30 Carlisle race.
Several of you on the socials have asked what’s going on here, so I’ll share a few thoughts…
Take a quick look at the charts above there, see how the historic prices have been knocked back and forth?
This is only half of the picture though. We can only see the money that was matched and at which price. The other half is the unmatched money and what was happening in the betting market at the time of the bet matches. In this case, someone was probably triggering early market automation to get filled at favourable prices. Once they’re on, they either attempt to do it in the alternate direction (or let it run in its true direction). This is just one of the reasons that the weight of money is a poor indicator.
Manipulation can also be facilitated by the removal of many unmatched orders in one go too…
This happens all the time, and in the live shows too. However, as I said to one person on Twitter, it’s not the only way manipulation can happen. Manipulation happens whilst matching money too, which is probably where you have felt it the most. Large traders sometimes push and hold the markets with their trading balance. Some time ago, a well-known trader boasted to others on Skype about doing this before hundreds of thousands worth of lay bets were removed from the favourite in a horse race causing a price avalanche
…not quite the saint they make out to be. God only knows what else they are doing!