Be Careful When Placing ‘Early’ Bets With Low Market Liquidity

I’ve noticed that many punters are accustomed to backing multiple selections in one sitting e.g. the night before a race. For practicality reasons it makes sense; not everyone is able to bet when they’re at work or on-the-move. However, there’s several weaknesses in restricting yourself to early selections rather than checking in on the markets periodically.

 

1. It Isn’t Necessarily Better Value

It’s reasonable to theorise that there should be more inaccuracies in odds the earlier you bet. The problem is that it’s a restrictive approach for sports like horse racing with little market activity until the raceday.

I discuss the Wisdom of Crowds theory in another post, which explains that the market naturally forms a strong “aggregation of diverse opinions” and a “wise” and (generally) accurate representation of the probabilities for sports events.

But early prices in illiquid markets are hardly “diverse” or “wise”. In other words they’re not accurate yet. This seemingly presents a great opportunity for punters to find value. Yet it’s a mixed bag.

Many punters swear that they pick off early value odds and correct the lines. This may well be true for some. However, I personally have no evidence to support that the early odds for horse racing are any more effective at beating the SP than odds identified on the raceday. So why is this?

I don’t have a definitive answer! I believe that it’s probably due to the fact that a lot of professionals operate bots on the betting exchanges from the earliest point possible. They market-make, set the prices where they want them, and capitalise if keen punters come in and take the available face-value odds. With such low liquidity, the bots have less competition from other traders, and a reasonable chance of being accepted at their odds. This isn’t good news for the early punter.

Now for the Bookmakers. Well, with low liquidity on the betting exchange Bookies have little intelligence to go by. So as a result they’re often cagey with their pricing. For example, a selection which should have long odds might be severely under-priced. Again, in this scenario the value isn’t there early on.

When the betting markets are active on the raceday the Bookmakers have the public’s “wise” and “diverse” opinion as a basis for their prices. With that reassurance, they may offer a little more value than they previously did the night before.


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2. Stake Sizes Are Likely To Be Limited

Low market liquidity on the betting exchange prevents traders from placing large stakes. Bookmakers are somewhat dependent on information gathered from the exchange — so they’re likely to limit maximum stakes on the same markets, too.

On race days Bookies have the ability to monitor various factors on the exchange — such as the total betting volumes on each horse (so far) and the currently available money. These can be used independently, or in conjunction with their bookmaking methods, to determine precisely what stake volumes they’re willing to accept. With increased confidence and clarity, the Bookmakers are most likely to allow large stakes on the day of the race.

Read more about Bookmaking from my post: How Do Bookmakers Earn? How Big Is Their Edge?

 

3. Market Trends Are Non-existent

On the lead up to a sports event there’s always a flurry of market activity.

The Weight of Money (WoM), the volumes backed on each selection, the drifters & steamers — even the estimated SP price — may contribute to a your decision to Back or Lay an outcome. You could, for example, decide to discard some of your proposed selections if the market suggests the odds will move against you.

But if you’re only placing early bets then you won’t have the ability to monitor market trends as a way to strengthen your betting selections. There isn’t enough movement the day before a race. No movement means no insight.


The market techniques mentioned here mark the distinction between a regular bettor and trader.

 

4. It Puts Convenience Before Value

Many punters turn to Tipsters in the expectation of earning some quick & easy cash.

A lot of Tipster followers believe they’re being fed ‘inside knowledge’ or ‘dead certs’. Generally speaking, these aren’t the types of bettors to be conscientious of the value in their selections.

Tipsters usually release tips to their eager clients in batches. Or all at once (on a daily or weekly basis), as part of their subscription service. But think about it: what are the chances that the prices all have value odds at the time of release?

It’s highly unlikely.

Therefore I’m inclined to think that the “all at once” Tipster format prioritises convenience over value.

For more on this subject read the posts:

 

5. You WOn’t Benefit From Market Volatility

Backing early odds (especially at the Bookies) doesn’t help punters to capitalise on the volatility of the sports betting markets.

The worst scenario is if you back several horses in one specific race, at one time. As the odds drift (rise) on one selection, then odds naturally shorten (fall) on other selections.


Inevitably multiple (related) selections you make at one phase in time will have some “winners” and some “losers”. This can be determined by the odds that fall and rise by the SP, as opposed to what actually wins or loses the race. To fully appreciate this concept, check out my detailed guide to Beating the Start Price.


A much better approach is to back horses individually at different stages — whenever their prices represent value.

The successful Betfair trader aims to use volatility to:

  • Back at good value odds i.e. those which are above their ‘fair’ estimate for a selection.
  • Lay selections which have shortened too much.
  • Trade in and out of selections as they rise and fall throughout the day.

By monitoring the prices on the raceday traders have more scope, and greater ability to capitalise on volatile price fluctuations. So avoid locking yourself down to those early prices.

A Betfair trading tool or Betfair Bot can help to capitalise on prices at the precise moment they reach a predetermined value. This is a smarter, more advanced approach to placing bets all in one hit.


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Further Reading:

Wisdom Of Crowds Theory & The Betting Exchange

A Punter’s Guide To Beating The SP

Using The Weight Of Money For Market Prediction

My Experience With A Well-Known ‘Professional’ Sports Tipping Service

The Best Betfair Trading Tools

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Jesus D. Melton
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Jesus D. Melton

Yeah… everyone piling into the same selections at the same time isn’t smart. Probably better to lay a tipsters bets considering everyone’s backing it!

Toby
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I actually tried doing that once. The wide spreads meant that I wasn’t able to get low enough odds to profit from laying the tips.Take a look at this post: http://punter2pro.com/well-known-professional-sports-tipping-service/