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d13phe
26 Dec 09 18:40
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Date Joined: 18 Jul 03
| Topic/replies: 22,897 | Blogger: d13phe's blog
I have often wondered this and it has bugged me recently with all this business of the draw trading

How much information is included in cricket markets odds (match odds) and in particular the draw?

And is this different between the three different outcomes (excluding the tie ;) ?

Put another way :

Lets take the England South Africa Tes as an example.

Is the draw price actually reflecting the current chances of a draw or merely representing what is likely to happen in the next day/two days/three day ( information)

I personally think the draw result has much more information in its price than the other two results included in its price making this market and cricket match odds markets in the main inefficient at the start of test matches IMO
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Report marychain1 December 26, 2009 6:42 PM GMT
wow you need a quantum theorist to answer that, not a punter
Report fundamentalist December 26, 2009 7:14 PM GMT
how does one price have more information in it when the prices are dependent on each other?
Report bigpoppapump December 26, 2009 7:16 PM GMT
draw's too short. the rest is just hot air.
Report d13phe December 26, 2009 7:20 PM GMT
i think the draw price mainly dictates the other two prices fundy
Report fundamentalist December 26, 2009 7:20 PM GMT
i dont disagree which surely means the information in the draw price is in the other 2 prices?
Report d13phe December 26, 2009 7:21 PM GMT
not neccesarily fundy

thats assuming an efficient market
Report fundamentalist December 26, 2009 7:22 PM GMT
if its in the draw price, then its in the result price (albeit the ratio between the 2 results could be wrong), unless youre talking about mkts that arent close to 100% which we rarely see these days
Report bigpoppapump December 26, 2009 7:22 PM GMT
100%
Report bigpoppapump December 26, 2009 7:23 PM GMT
it's inefficient but it's 100%
Report d13phe December 26, 2009 7:24 PM GMT
different type of inefficiency bpp

im tnot talking 100% book efficieny etc..
Report fundamentalist December 26, 2009 7:24 PM GMT
sure but if its 100% the info cant be in the draw price but not in the results prices, if its inefficient its inefficient across at least 2 prices if not all 3
Report bigpoppapump December 26, 2009 7:24 PM GMT
there's no more "information" in any one price in the same market.

a price cannot have info independent of other prices in the same market. basics. the prices are interdependent.
Report bigpoppapump December 26, 2009 7:25 PM GMT
all 3 fundy
Report d13phe December 26, 2009 7:26 PM GMT
go back to my original question

time horizon is important for me

is the draw price respresenting what people perceive as the chances of an ACTUAL draw or is this price dictated by a certain time horizon (i.e. people looking to the next day)
Report fundamentalist December 26, 2009 7:26 PM GMT
technically poss for 2 to be inefficient and 1 be efficient pops but agree its normally all 3
Report bigpoppapump December 26, 2009 7:27 PM GMT
none can be operating with diff info than the others
Report bigpoppapump December 26, 2009 7:27 PM GMT
all info is known or not known to all prices
Report fundamentalist December 26, 2009 7:27 PM GMT
all prices, not just the draw are at times skewed to a shorter term time outlook than the ultimate result
Report bigpoppapump December 26, 2009 7:27 PM GMT
wrong/right prices are just opinion.
Report d13phe December 26, 2009 7:28 PM GMT
thats true bpp
Report fundamentalist December 26, 2009 7:28 PM GMT
sorry, mixed message, yes all info is known to all 3, possible for one price to be efficient and the other 2 to be inefficient tho imo (ie draw price efficient and ratio of results to be inefficient)
Report bigpoppapump December 26, 2009 7:28 PM GMT
is the draw price respresenting what people perceive as the chances of an ACTUAL draw or is this price dictated by a certain time horizon (i.e. people looking to the next day)

the answer's always the same.
Report d13phe December 26, 2009 7:29 PM GMT
all info is known but more deemed more relative to one outcome rather than another

this is possible
Report d13phe December 26, 2009 7:30 PM GMT
explain please bpp
Report fundamentalist December 26, 2009 7:30 PM GMT
the prices arent independent tho d13, if the info shortens the draw it lengthens one or both of the results
Report bigpoppapump December 26, 2009 7:30 PM GMT
it depends!
Report d13phe December 26, 2009 7:31 PM GMT
correct fundy

but doesnt that suggest inefficiency

the draw is more sensityive to information than the other two in general
Report bigpoppapump December 26, 2009 7:35 PM GMT
it always depends mofo

there's no theoretical holy grail that you can learn/understand and make more money. all that will ever make you money is situational understanding and all the theoretical understranding in the world wont do you any good unless you can apply it, and many years on these threads has led me to the conclusion that many can make money with no theoretical understanding. appreciation of what the "long run" really means is uselss and probably counterproductive [you dont really want to know how hard this game really is cos you'd just give up]. best to be unconsciously competent. ;)
Report bigpoppapump December 26, 2009 7:36 PM GMT
the draw is more sensityive to information than the other two in general

this is incorrect.
Report d13phe December 26, 2009 7:36 PM GMT
why bpp?
Report fundamentalist December 26, 2009 7:37 PM GMT
all are as sensitive as each other, youre just perceiving the draw as more sensitive (i expect as its often the price people talk about)
Report bigpoppapump December 26, 2009 7:37 PM GMT
because all info applies to all prices.
Report d13phe December 26, 2009 7:38 PM GMT
i dont think it does though

thats assuming an efficient market

thats what i am harping on about
Report bigpoppapump December 26, 2009 7:38 PM GMT
at different times in different games the different prices will react to info in subtly different ways but they all react or dont react on the same [known] info. the market is efficient - ie it adds up to 100
Report fundamentalist December 26, 2009 7:39 PM GMT
how can info affect one price but not the other when the3 prices are co-dependant???
Report bigpoppapump December 26, 2009 7:39 PM GMT
the market always adds up to 100. quad erat demonstrandum all info is known to all prices
Report d13phe December 26, 2009 7:39 PM GMT
take this for example

if it rained what price would be affected first?
Report bigpoppapump December 26, 2009 7:40 PM GMT
starting to worry about you de13

:(
Report fundamentalist December 26, 2009 7:40 PM GMT
theyd all be affected at the same time
Report Lix December 26, 2009 7:40 PM GMT
Not sure the draw is more sensitive to information than other prices. (not sure that makes sense anyway)

I'd say the draw is often seen as the safe haven option if there's weather fears (much like gold or other currencies in times of uncertainty) and is driven lower by these fears.
Report bigpoppapump December 26, 2009 7:40 PM GMT
if it rained what price would be affected first?

all of them
Report Lix December 26, 2009 7:42 PM GMT
you might get more people hammering the 'back draw' button rather than the 'lay team A' button but the effect is the same.
Report d13phe December 26, 2009 7:43 PM GMT
the weather forecast is poor for durban and nearly 75% has been traded on the draw

this is only a small example but this makes this outcome more sensitive/dependent on information than the other two imo

the other two are merely a follow on to the draw in this case.

the draw price dictates the other two prices in this case but this doesnt mean its efficient
Report d13phe December 26, 2009 7:44 PM GMT
information being the weather in this case
Report fundamentalist December 26, 2009 7:45 PM GMT
the info makes the draw more likely and the rsults less likely as soon as the info is known, you are mistaking that most people compute the effect of "info" as its effect on draw price first as its the logical link, that doesnt mean it doesnt affect them all simultaneously
Report bigpoppapump December 26, 2009 7:47 PM GMT
the weather forecast here just appears more important thn normal. but when there's no rain/bad light forecast it's absence is of equal importance across the whole market as its presence here. the info is not more important here and the draw is not more of a player now [at 55%] than it is when it represents 33%. it's always the same.
Report bigpoppapump December 26, 2009 7:48 PM GMT
weather info is weather info.

rain is waether info
no rain is weather info

understand?
Report bigpoppapump December 26, 2009 7:49 PM GMT
you think no rain is not weather info. and it is.
Report d13phe December 26, 2009 7:49 PM GMT
never said that bpp

and your right it is

im only using a small example
Report bigpoppapump December 26, 2009 7:50 PM GMT
you never said it, but you appear to think it.
Report bigpoppapump December 26, 2009 7:52 PM GMT
if you wanna trade the draw, the worst single thing you can do is use the current price as info.
Report d13phe December 26, 2009 7:52 PM GMT
i dont bpp

im not arguing with your logic either as it is sound as is fundys

i am merely questioning the way these markets work as i believe they are unique.
Report bigpoppapump December 26, 2009 7:54 PM GMT
if you colud "poll" people in the draw market about beliefs [what they expected of an ultimate match outcome versus future price point] then I'm sure you'd reveal some interesting data. but it's always useless.
Report d13phe December 26, 2009 7:55 PM GMT
the point i am really driving at is that the draw prices seems to reflect a shorter term horizon than the other two outcomes

this has been my observation over the past couple of years

obv dependent on circumstances
Report bigpoppapump December 26, 2009 7:55 PM GMT
yeah. you're right. but so what?
Report bigpoppapump December 26, 2009 7:56 PM GMT
**the draw cannot have a shorter term horizon than the other two. they all operate interdependently.
Report d13phe December 26, 2009 7:58 PM GMT
i still don't agree with that

one outcome (usually the most liquid) can and does dictate the other prices
Report bigpoppapump December 26, 2009 7:58 PM GMT
that's a different thing.
Report d13phe December 26, 2009 7:59 PM GMT
why?
Report d13phe December 26, 2009 7:59 PM GMT
the aus test is a perfect example of this imo
Report bigpoppapump December 26, 2009 8:02 PM GMT
because if the draw drives the other two then they all operate immediately interdependently.

a market can be skewed by short termism but a price within a market cannot [dpendently of the other prices in that market. because they always all add up to 100]
Report bigpoppapump December 26, 2009 8:04 PM GMT
why? what's happening in the melbourne Test?
Report d13phe December 26, 2009 8:06 PM GMT
the aus price has been static from the morning and the draw price has been steadily moving in (due to the slow scoring rate) at the expense of the pak price.

the draw price is a short term trade whereas the aus price is sat there for the long term un budged.
Report bigpoppapump December 26, 2009 8:08 PM GMT
your view is skewed.
Report VardonVoo. December 27, 2009 12:48 PM GMT
It's entirely possible that the info contained within the draw price is incorrectly
reflected in the relationship between the other two prices - whether you deem
that "inefficient" is another matter.

But it's also possible that a change in the info (and therfore the draw price)
affects the relationship between the other two prices in a non-linear way.

For example, when the draw is about evens the two outcomes may be Team A
2-1 and Team B 5-1 (roughly), making Team A twice as likely to eek out a win
as Team B, but if the draw suddenly shortens to 1.33, then Team A's odds
may drift to 5-1 and Team B 11-1, preserving the ratio of likelihoods of a win
for each, yet it may be that in a short-draw scenario Team B are hopeless
at finding a way to win and their true odds ought to fly out to 30+ and Team A
to only 11-2.

In practice, based on anecdotal evidence and from memory I think the markets
tend to do the latter, i.e. lengthen the outsider more than the preferred team.

Maybe if the true case was that the shorter team became less likely to win in a
short draw scenario you could argue that the new info was inefficiently priced
in if the ratio remained the same, but if the market drifted the outsider, like it
normally does, would that be "inefficient" in our fictitious example, or just plain
wrong?
Report beetle December 27, 2009 2:06 PM GMT
There is no information in the draw price or any other - only opinion.

EVERYONE takes an opinion and backfits information around the opinion to justify it.

Some people use historical information to form a starting opinion but that information provides barely a sketch.

One price is dominant and drives the other prices. The dominant price is not always the shortest price and the dominant price changes througout a match.

All you need to do is spot the dominant price before it becomes dominant.
Report fundamentalist December 27, 2009 2:09 PM GMT
of course theres information. So youre telling me the WI announce they are playing a severely weakened side over a pay dispute, their price doubles, yet their is no info only opinion in the price?
Report beetle December 27, 2009 2:13 PM GMT
ok so tell me which way that brain process works
Report fundamentalist December 27, 2009 2:17 PM GMT
WI fielding weakened team, they have less chance to win, price increases
Report VardonVoo. December 27, 2009 2:25 PM GMT
Price decreases, you mean.

Odds increasing means the price of a given win amount decreases.
Like a rise in an exchange rate is a decrease in that currency's value
against the reference currency.
Report beetle December 27, 2009 2:25 PM GMT
In your opinion they have less chance to win. There is nothing empircal about that.

If you said that it had been shown (to a given level of statistical significance) that they perform less well with a weaken team then you would have been using the information - more so if you were able to use the information to calculate probability.

Instead you used the information to form an opinion and then justified the opinion with the information.

Everyone does that.
Report beetle December 27, 2009 2:30 PM GMT
And the example was an extreme one ... in more evenly balanced situations, the the whole thing becomes more peverse
Report fundamentalist December 27, 2009 3:22 PM GMT
i dont disagree most of the time it is opinion, and the amount a price moves is solely opinion, but some of it is based on information ie team news, an injury etc
Report VardonVoo. December 27, 2009 3:43 PM GMT
Opinion is based on information anyway.

If a company releases shock bad results the market opinion of that stock
changes to assume it will underperform in the longer term and the price
falls dramatically. That's due to the opinion people have on the new information.

The two are inseparable.
Report beetle December 27, 2009 4:36 PM GMT
The two two things are completely seperate :)

Information influences opinion but it is only opinion that influences odds, not the information. If it were the information alone, the odds would be static.

The odds vary based on peoples different interpretation of the information.

If the two things were inseperable there would be no market, just a fixed price.
Report oitoitoi December 27, 2009 11:44 PM GMT
well as this is a betting exchange isn't it all dependent on an individual's interpretation of what the prices mean?

considering I've got an economics degree I should probably be able to give you a better answer, but there are so many unmeasurables, also the market consists of a variety of demographics which makes things even more complicated.

In reality all the prices probably include an equal amount of information, apart from when one team doesn't have a chance in hell and it's odds skyrocket, and the market generally loses interest in that particular bet. Can't really see why the draw would include more info.
Report oitoitoi December 27, 2009 11:48 PM GMT
thinking about this, different punters bet different ways, for example traders are betting and laying on what's going to happen in the generally short term future with the intention of selling their stake, but an average high street punter is going to bet on the result. the prices should reflect this, however I have no idea as to the composition of punters, could be very interesting if betfair collected and published some data on the subject.
Report oitoitoi December 27, 2009 11:48 PM GMT
*composition of punters in a particular market that is
Report VardonVoo. December 28, 2009 2:10 PM GMT
I guess there's an argument to say that the market with the most liquidity is most
sensitive to a change in information.

In a thin market there could be a balance of opinion at a particular price but one
punter with a big wallet and unshaking loyalty to his favoured team could shift
the odds away from that consensus level even without new info.

Like someone else just said, the rank outsider with almost no chance has highly
variable odds because the market loses interest in it, so it is just the result of a
few punters' trades.
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