Me and My (Betting) Shadow

I saw a question on Twitter that I often see being asked. The question was, "When I put a big bet on @Betfair_Aus why does a small bet for $14 almost always suddenly appear one tick better than me?"

The answer lies in automated (aka program) trading. As I argue in my book, Betfair Trading Techniques, all sports trading and betting is, in one form or another, arbitrage.

In the case of the questioner, a bot has been tasked with forcing the questioner to move his position until a pure or statistical arbitrage is offered to the bot. (again, see Betfair Trading Techniques)

In early, pre-race trading, a syndicate with inside information is going to have a better idea of fair odds than the average punter. A bot can then look out for naïve positions and tempt them to move the spread in favour of those "in the know".

If you find yourself being marched up and down a trading ladder in third-party trading software then you are most likely trading with a negative edge and you must re-evaluate your strategy.

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