Difference between "trading" and "gambling"

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Derek27
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Kafkaesque wrote:
Wed Oct 11, 2017 2:19 pm
As far as I know, there's been several studies showing that the Pinnacle closing prices are extremely close to a fair price, so I'd say, you're off on that one. Call it wisdom of the crowd (with sharpies being a more significant part of said crowd) or whatever, but there does seem to be a fair price. Otherwise Pinnacle's business model wouldn't work imo.
Kafkaesque, I think you may be confusing fair price as in close to 100% overround and fair price as in true chance of winning. In any case, I never said there wasn't a fair price, I said it's not relevant to where a gambler enters the market: if he wants to bet at 2.5 he will bet at 2.5 regardless of what a fair price is.

It's mathematically not possible to calculate the true chance of a horse. You can prove that on average for a collection of runners that they are fair prices, but if the overround is close to 100%, you know this anyway.
ruthlessimon wrote:
Wed Oct 11, 2017 2:30 pm
(tangent incoming) I define fair value as simply the price which facilitates the most trade. Markets are complex & as new information gets priced in, fair value shifts around. But I'm sure there's almost a 100% correlation between fair value & highest volume. All of my trades revolve around this price point 1 way or another
I was referring to fair value as the horses true chance of winning, so there may have been a slight misunderstanding.
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Euler
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I can prove the market is efficient and inefficient at the same time, it just depends on how you look at it and how you measure it or what you want to prove. Racing is full of biases most of them psychological, I suggest.

Essentially, traders sell volatility and that's where your edge should be. While punters are trying to work what the price is traders don't particularly care, generally, as long as somebody else takes their positions.
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ruthlessimon
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I was thinking about that the other day, as more traders enter the game (get wise & profitable). That 'should' mean volatility decreases year on year, as the markets become more efficient. But it just doesn't seem to be happening. Although this would be an ultra slow process - something like climate change probably would be a good analogy
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Dallas
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ruthlessimon wrote:
Wed Oct 11, 2017 3:04 pm
I was thinking about that the other day, as more traders enter the game (get wise & profitable). That 'should' mean volatility decreases year on year, as the markets become more efficient. But it just doesn't seem to be happening. Although this would be an ultra slow process - something like climate change probably would be a good analogy
Its the steady stream of new ppl entering the market replacing those that have given up (traders and punters) that keeps the volatility and opportunities there
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Derek27
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ruthlessimon wrote:
Wed Oct 11, 2017 3:04 pm
I was thinking about that the other day, as more traders enter the game (get wise & profitable). That 'should' mean volatility decreases year on year, as the markets become more efficient. But it just doesn't seem to be happening. Although this would be an ultra slow process - something like climate change probably would be a good analogy
As more traders get wise and more profitable, is it possible that they get hit by a 40-60% premium charge, decide to find another way of making money, and then get replace by new traders who don't know what their doing ? ;)
Korattt
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those that have given up


think that'll be me before long, although I have had some success I'm starting to feel as if this was all just a pipe dream
Last edited by Korattt on Wed Oct 11, 2017 3:19 pm, edited 1 time in total.
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ruthlessimon
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Misread that, I thought Dallas was retiring for a moment!
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Dallas
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ruthlessimon wrote:
Wed Oct 11, 2017 3:18 pm
Misread that, I thought Dallas was retiring for a moment!
Plenty of years left in me yet - i hope ;)
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ruthlessimon
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Derek27 wrote:
Wed Oct 11, 2017 3:14 pm
As more traders get wise and more profitable, is it possible that they get hit by a 40-60% premium charge, decide to find another way of making money, and then get replace by new traders who don't know what their doing ? ;)
Possibly yes. Once a trader gets too "fat" makes sense to move onto more liquid markets - as they will be properly capitalised. But the BF markets are so frequent they cannot be ignored - even if you hit 40%+. Plus BF will argue it's a necessity, as the fish need to be brought in to feed the traders - without it the markets could lose there "spark". Although they have a massive conflict of interest, & would prefer punters to go straight to the sportsbook.
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ShaunWhite
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ruthlessimon wrote:
Wed Oct 11, 2017 2:30 pm
(tangent incoming) I define fair value as simply the price which facilitates the most trade. Markets are complex & as new information gets priced in, fair value shifts around. But I'm sure there's almost a 100% correlation between fair value & highest volume. All of my trades revolve around this price point 1 way or another
mmm I'm not so sure

Stepping away from number crunching and recognising that people affect the markets, I've always found it hard to accept this volume/fair price correlation holds true for favourites. Yes a lot of punters deliberately select horses & target prices (wisom of crowd blah blah blah), but there's a whole load of high street punters who just choose 'Favourite'. So does the favourite attract more money than it should ?

It's a long time since I used to spend afternoons in the bookies, but a lot of those old guys are just socialising and keeping warm and aren't that serious about selection. 'Fav' is a more popular bet than you might think...and those 2's and 5's add up across the country. Granted, what the bookies do with those fivers and how/where they arrive in the market is another story.
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ruthlessimon
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ShaunWhite wrote:
Wed Oct 11, 2017 3:57 pm
I've always found it hard to accept this volume/fair price correlation holds true for favourites. Yes a lot of punters deliberately select horses & target prices (wisom of crowd blah blah blah), but there's a whole load of high street punters who just choose 'Favourite'. So does the favourite attract more money than it should ?
It'll be dead easy to test with a spreadsheet - although I suck with spreadsheets ;). I still believe it'll be very close to 100% - even with the backing bias
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Euler
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The volume on the favourite is nowhere near it's true chance, it's very rare that it is. There is always too much money on the favourite.
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Euler
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ruthlessimon wrote:
Wed Oct 11, 2017 3:04 pm
I was thinking about that the other day, as more traders enter the game (get wise & profitable). That 'should' mean volatility decreases year on year, as the markets become more efficient. But it just doesn't seem to be happening. Although this would be an ultra slow process - something like climate change probably would be a good analogy
Volatility is actually increasing year on year so it's odd to see that. But volumes are not really growing that amazingly so increased volatility is probably partly down to that.
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ruthlessimon
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ShaunWhite wrote:
Wed Oct 11, 2017 3:57 pm
mmm I'm not so sure
Lets take the 16:35, steamed, but formed a VPOC @ 1.49 - I believe this price really is close to the true probability of the horse. The backing bias is there, but an "in the know" layer sat there & soaked it

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Derek27
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The exchange price for the favourite may be closer to its true price, it's nearly always to short with the bookies. That's why bookies lay the favourite to make a loss - it's always backed disproportionately to its chance and becomes the bookies main source of turnover.
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