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musings on betting markets, sources of information, and fragmented liquidity ( #ElectionNight
twist)
musings on betting markets, sources of information, and fragmented liquidity ( #ElectionNight
twist)
1 /
let's start with a premise: financially incentivized players yield more accurate information that pontificators
this is well trodden in academic literature, and is highly intuitive
so as a starting point, follow the money
let's start with a premise: financially incentivized players yield more accurate information that pontificators
this is well trodden in academic literature, and is highly intuitive
so as a starting point, follow the money
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we'll categorize highly informed players into 2 camps:
1. insiders: have material non public information
2. modelers: sophisticated data science style participants
at the margin, actions of these 2 groups are what enforces accuracy of marketable prices
we'll categorize highly informed players into 2 camps:
1. insiders: have material non public information
2. modelers: sophisticated data science style participants
at the margin, actions of these 2 groups are what enforces accuracy of marketable prices
3 /
if someone knows $AAPL earnings before they're announced, and stock is too cheap, they'll buy it (or rather, their cousin will)
if rentech's model says $SPY is mispriced by 10 bps, better believe they'll move millions $ in the right direction, correcting mispricing
if someone knows $AAPL earnings before they're announced, and stock is too cheap, they'll buy it (or rather, their cousin will)
if rentech's model says $SPY is mispriced by 10 bps, better believe they'll move millions $ in the right direction, correcting mispricing
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a fun property of political markets, specifically the #USElection2020, is that it's almost impossible for insiders to exist
everyone's sitting around waiting for the tally like the rest of us, even @realDonaldTrump
so the burden falls on modelers to show us the light
a fun property of political markets, specifically the #USElection2020, is that it's almost impossible for insiders to exist
everyone's sitting around waiting for the tally like the rest of us, even @realDonaldTrump
so the burden falls on modelers to show us the light
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and where do these modelers go to profit from their superior information?
wherever there's liquidity - they need to move SIZE to get paid for their work!
that's the crux of this thread...read on...
and where do these modelers go to profit from their superior information?
wherever there's liquidity - they need to move SIZE to get paid for their work!
that's the crux of this thread...read on...
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for the last (8?) years, we've writhed in pain as media continues to quote @PredictIt odds like they're the best barometer of political probability
my guess is that most journalists have (understandably) never traded, and don't truly understand what matters in markets
for the last (8?) years, we've writhed in pain as media continues to quote @PredictIt odds like they're the best barometer of political probability
my guess is that most journalists have (understandably) never traded, and don't truly understand what matters in markets
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for legal reasons, @PredictIt has a maximum bet size of $850
sure you could make multiple accounts, but it's a royal PIA
this miniscule bet cap immediately rules out likelihood of interest by sophisticated and well resourced players
for legal reasons, @PredictIt has a maximum bet size of $850
sure you could make multiple accounts, but it's a royal PIA
this miniscule bet cap immediately rules out likelihood of interest by sophisticated and well resourced players
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on the other hand, as of writing there's a total of $90mm matched, which is respectable in aggregate
on the other hand, as of writing there's a total of $90mm matched, which is respectable in aggregate
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the most liquid and likely most professional political market we're aware of is @BetfairExchange
the most liquid and likely most professional political market we're aware of is @BetfairExchange
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@Betfair has:
* market makers streaming 2-way prices, $0.01 wide, last 24 hrs. tight spreads!
* >US$500mm matched, which is 5x the traded volume of @PredictIt
* top of book liquidity (best bid and ask) routinely >$5k
one caveat is it's not available to US participants
@Betfair has:
* market makers streaming 2-way prices, $0.01 wide, last 24 hrs. tight spreads!
* >US$500mm matched, which is 5x the traded volume of @PredictIt
* top of book liquidity (best bid and ask) routinely >$5k
one caveat is it's not available to US participants
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my guess is journalists seldom quote @BetfairExchange because:
* they may not be aware of existence, or unable to operate a vpn
* they may be uncomfortable converting european odds to a probability (p = 1 / odds). spoon feed the people their 'x%' formatting!
my guess is journalists seldom quote @BetfairExchange because:
* they may not be aware of existence, or unable to operate a vpn
* they may be uncomfortable converting european odds to a probability (p = 1 / odds). spoon feed the people their 'x%' formatting!
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which brings us to an honorable mention, @FTX_Official
hot off the blocks for 2020, as of writing the $TRUMP market has matched $25mm
the layout is
! y-axis represents a simple probability, and x-axis makes it very clear how odds have evolved over time
elegant
which brings us to an honorable mention, @FTX_Official
hot off the blocks for 2020, as of writing the $TRUMP market has matched $25mm
the layout is
! y-axis represents a simple probability, and x-axis makes it very clear how odds have evolved over timeelegant
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liquidity varies, but at a few points last 24 hrs there were multi hundred thousand $ orders in the book
hurdles to access are:
* need to use crypto, and pass kyc...ruling out both hobbyists and infidels
* off-limits to almost every western country
liquidity varies, but at a few points last 24 hrs there were multi hundred thousand $ orders in the book
hurdles to access are:
* need to use crypto, and pass kyc...ruling out both hobbyists and infidels
* off-limits to almost every western country
14 /
can't wait to hear @Reuters quote @PredictIt #Election2024. let's see what mom's basement thinks with their weekly paycheck!
love if a more familiar player could let us know what the books look like on @BovadaOfficial or @Pinnacle, which often dwarf western betting markets
can't wait to hear @Reuters quote @PredictIt #Election2024. let's see what mom's basement thinks with their weekly paycheck!
love if a more familiar player could let us know what the books look like on @BovadaOfficial or @Pinnacle, which often dwarf western betting markets
