There’s ~25% chance of ETH touching $500 before Nov 27, or almost 4X odds.

How are live odds calculated for different price moves?

Odds are based on the potential payoffs of trades that can be made in the global markets. Markets are all connected.

Let’s discuss in a thread.

Live odds represent the potential payoff of a trade or position you can take in the market at a point in time – the chances of a particular outcome, according to the prices you can actually buy and sell in the options and futures markets. Those market prices hold valuable info.

The “market” is a continuously updating stream of tradeable prices that reflect where participants are willing to transact – Buy orders and sell orders that you can trade across options, futures, and spot markets.

All updating and moving in real-time, around the clock.

The smartest, most technologically advanced, and best-capitalized trading firms on the planet are interacting with as many markets on as many venues/exchanges as they can, at all times, to touch as much order flow as possible.

Why do the biggest traders (often liquidity providers or market makers) strive to touch as much order flow as possible?

There are a number of reasons. Here’s a couple of them...

Advanced trading models are updating in real-time to detect which buy and sell orders have the best chances of being immediately profitable if traded against.

The traders touching the most markets can best take advantage of the most “immediately profitable” order flow.

How is a trade immediately profitable?

One way is pure arbitrage – offset the trade with the same contract at a slightly better price (including fees, costs, etc.), whether on the same exchange or a different one.

For market-making models, a trade can be deemed immediately profitable if the risk can be fully hedged with a similar instrument at a slightly better price, locking in a theoretical profit.

This is often called “edge” in options trading.

The goal for the most advanced trading desks is to trade as much profitable order flow as possible, millions of transactions per day, to aggregate as many fractions of pennies as possible, across as many markets as possible - options, futures, spot, and OTC markets.

Traders also touch as much order flow as possible, to gain as much real-time info as possible. This allows the models to better predict the probabilities of impending price movement and trade activity.

This helps profitably manage risk, and signal when to go on the offensive.

In theory, the nonstop buying and selling, from all of the competing professional trading firms, creates tighter and deeper markets.

This improves liquidity for the other participants to more quickly and efficiently execute their orders with greater and greater size.

No one, not even the best and most sophisticated model, knows the REAL odds of these various price outcomes in the future.

They can only make advanced, educated guesses, based on all the data points available from the past and present.

But, we DO know the live odds, based on the actual prices we can trade across the different instruments.

These tradeable prices, across all markets (spot, derivatives, OTC) tell us the live odds/probabilities of different price moves for different time intervals.

Hxro looks at markets differently.

TixWix makes live odds tradeable.

Users take positions based on the live odds of the market. It's a more simplistic way to competitively trade and visualize the market’s risk surface.

...And it’s only the beginning.

http://Hxro.io 

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