Learning from Odds Moves
Level 3 - WAGMI
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Welcome Degen Gambler!
Today it’s time for an exhaustive overview of odds moves in betting markets & as you’ll notice along the way there’s *a lot* to say about them.
There’s somewhat of a division into two camps within the betting community: steam chasers [with the standard angle being: check odds at Pinnacle & look for/chase large deviations at soft books] & anti-steam chasers/’originators’.
Quick Explanation: “Chasing Steam” is a strategy where a bettor can move quickly to get down a wager at a slower sportsbook that has yet to change their line with the rest of the market.
Weird ideas prosper in both groups.
A subset of the steam chasers, especially the newer ones, think chasing steam is the only ‘mathematically sound’ way to make money from betting markets. If they can’t see clear value against the rest of the market, there cannot be +EV involved. Delusional.
On the other hand, the ‘originators’ [meme term since >80 % are just memorizing [either manually or by use of computers] what the market has revealed to them before, not much ‘originality’ in doing that] have transcended the steam chasing stage and instead transitioned into the art of dunking on the chasers. Strange phenomenon as they’d probably increase their profits quite a bit by paying more [automated] attention to what’s happening in the marketplace during game/racedays. Many cases where it makes sense to listen to what other ‘originators’ are trying to tell you.
The reality? As usual the whole is greater than the sum of its parts.
Tracking moves at sharp books/exchanges to beat soft books can be a clever way to increase volume early on in your ‘betting career’, but as you get thrown out by sportsbook after sportsbook the game changes & you’ll at some point have to build/come up with something more sophisticated.
On the other hand, efficient extraction of information by tracking market moves will always be an excellent complement to a fundamental model [if you disagree/are doubtful you’ve probably never *really* tried it out], so why not spend some time trying to figure this part of the game out as early as possible?
Note I: This isn’t going to be another *boring* ‘how to chase steam’-post. If you’re looking for that stuff please ask ChatGPT or visit any of the hundreds SEO-maxxing/affiliate gambling websites. We’ll try to keep our content on a somewhat more interesting level, heh.
Note II: A hidden advantage of tracking as much as possible in the marketplace is that you occasionally stumble upon fairly lucrative edges ‘by chance’. Relates to another concept: how to look for an edge in a given market. Don't just sit there & observe the market manually like a [redacted]. Track *all* the info within the marketplace for a few months, store it, then do some heavy analysis with a million plots & see what you find.
Reasons to track odds moves & things to be aware of
A couple of reasons for why it might make sense to track what’s happening to prices/liquidity/volume throughout a day.
Using a highly liquid ‘source’ to beat lower liquidity markets. Example: Using Betfair Horse Racing prices to take advantage of inefficient Quaddie Jackpot Pools in Australia. A quadrella bet, affectionately known as the quaddie, is a bet where your objective is to select the winner of four consecutive races. Exotic bets such as the Quaddie usually attract a decent amount of -EV bettors [small chance to win huge] & when pools are enlarged with ‘Jackpot’-money there are times where those exotics present opportunities with even negative track takes [no *need* for negative track takes, usually it lets you increase your sizing quite dramatically though]. Combine a positive sum game with a crowd of clueless gamblers & you know what that means.
Note: We don’t know anything about Quaddies & have never bet them so might not be as lucrative as indicated. However, speaking from similar experiences: we’d at least have a look!
What’s *very important* with this strategy of using highly liquid markets to beat less liquid/dumber ones is to verify that your source [Betfair in this case] really is a source:
It must have a significantly larger handle than any other platform [or combination of platforms] that’s making markets on the same events and/or [even more important] learning from the source. If the turnover in the Quaddie Pool is 10X the early Betfair Liquidity & every ‘+EV gambler’ is checking BF prices to come up with Quaddie bets, you should take a moment to think about the incentives this structure generates.
The source should learn continuously & react appropriately to/from the information it obtains from its market participants. For instance, if your source is a standard sportsbook it’s a great advantage if they’ve profiled their customers & adjust pricing not only on volume but on the pair (volume/size, customer ID).
Preferably limits are raised/increased to a ‘high enough’ level throughout the day. Otherwise you can have situations where a few sharp bettors lock in their max limits at open [often best +EV offered here] just to see a crowd of noisy gamblers do all kinds of weird things to the prices throughout the rest of the day [the sharps can’t correct anything since they’re ‘all in’/bet their limits already]. As long as you know that this is the case can still use ‘non-limit-increasing’ sources though [trust super early action, ignore the rest].
Identifying short time-frame bets/trades. Been talking about this from time to time on Twitter. There’s a ton of action that you won’t notice for one reason and one reason only: you’re not looking. How do you expect to see that “12 % of the pool”-bet that came in last second, if you didn’t log the price & volume before and after it came in? What about the weird orders that occasionally come in & eat the books ~25 minutes to post time for the UK dogs? Ah, you haven’t seen them? Of course you haven’t, they’re gone as fast as they come in. The alert trader knows that he must take them off the table before anyone notices, or he’ll gain competition. But he won’t trap us, right?
Learning how to optimally get your size on & understanding how other large punters are operating. Let’s say there are seven sportsbooks offering odds on your main market & each one of them takes ~$200 on an outcome [on average]. By tracking the bookmakers in parallel and placing a couple of large bets spread across all sites, you’ll soon realise that sportsbook 6 looks at/learns from sportsbook 3 which looks at sportsbook 1 & 2. However, sportsbook 1 & 2 is much larger than the rest so they don’t care too much about what’s happening at the other places. Then, what are you supposed to do with this information? Well:
Unless you’re happy taking lower prices, you’ll of course place your bets in the order (6) → (3) → (1 & 2). This way you’ll be safe from bookies noticing your money/information *before* you hit them.
Now that you know how *you* should operate, you also know how *other sharps* are [or at least should be] operating. Conclusion: you set up notifications for sharp drops at sportsbook 6 & join the movement.
Finding huge discrepancies & large deviations. Not much to say here, as obvious as it gets. If there’s a 40 % drop/drift in an outcome you’ll want to know this. If a $20 000 order/bet [insider info/rich owners or perhaps both? or a misclick/bot going crazy [yes, has happened several times]] comes in at the exchange/in the parimutuels, you want to get this information. If all bookies have 2.10 but the liquid one runs to 1.60, again you want to know this. Just. Track. It.
How to do it?
Generally two options on how to actually take your ‘odds tracking ideas’ from ideas to real world implementations.
Join existing software services. Example: Subscribe to a couple of information feeds & sign up for an odds screen service.
Advantages:
Efficient, doesn’t have to build anything & can get started tomorrow.
Disadvantages:
Can be pricey.
Miss out on the opportunity to learn [& stumble upon other things] while you’re building.
Restricted to the exact logic provided by the software vendor.
Effectively handing the software provider your data [assume everything is logged & analyzed] for free [or even at a huge cost depending on what you’re doing].
Build it yourself. [Recommended route, in particular for the many devs we have in our subscribers list].
Advantages:
Learning while doing.
Full generality, can choose to look at whatever you’d like to investigate.
Removes/reduces your dependency on other actors in the ecosystem.
Disadvantages:
Costs both time & money.
Note that ‘building it yourself’ doesn’t mean building it *yourself*. If you don’t enjoy/have time for hours & hours of coding, focus on properly designing everything and then outsource the actual construction to others.
has all you need to know for this, read his Substack & check his Twitter. Also if possible get yourself a partner [but make sure it’s a great partner].Related: Sincerely believe that you could run a profitable business in Australia only by tracking odds moves across horse racing bookies & hitting them at sites that are lagging. Shouldn't take long before you learn in what order the 'real' punters place their wagers [even without having to become one] which should help tremendously. Would definitely do this ourselves if we were AUS based. Exists a couple of similar services but the greatest EV when it comes to these things always lies in specialized software, i.e. software that's looking for specific setups, not just tracking everything & spending tons of time behind an odds screen trying to infer things [inefficient].
If you’re serious, happy to help with & discuss anything. Twitter DM’s or comments section below.
Final stretch
Not a single picture in today’s post… ;)
Been spending a decent amount of time at the intersection of horse racing & machine learning lately, hopefully ready to share some of that stuff soon. Have a couple of brutal racing autists reading this Blog & they need their fair share of content as well…
BetPicks US has now been launched. Don’t expect ROI’s on par with the UK/AUS Horse Racing versions but should get better & better for each update, and probably fairly good already [letting it run for a few weeks until we perform an analysis on the notifications posted in the Channel, to see if there are ways to make it sharper].
Finally, something to think about until next time:
Consider a very liquid order book.
What's more informative?
A: Price moving from 5.00 -> 4.00, traded volume is high.
B: Price moving from 5.00 -> 4.00, traded volume is low.
That’s all for today.
Until next time…
Disclaimer: None of this is to be deemed legal or financial advice of any kind. These are *opinions* written by an anonymous group of mathematicians who moved into betting.