Newbie Trader needs opinions on Binary bets

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Old Jul 5, 2007, 11:26am   #21
 
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thanks for info
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Old Jul 5, 2007, 12:05pm   #22
 
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Yeah it is tricky - I won't be MMing in the last 30 seconds on Betfair (possibly last 60 seconds)
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Old Jul 5, 2007, 3:50pm   #23
 
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I read that IG index make markets on the betting exchanges.
No sure if Betfair are one of those exhanges.
Youll have some serious competition.
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Old Jul 5, 2007, 4:20pm   #24
 
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Yeah they may well be MMing on sports markets on Betfair, but there is currently no MM on the financial markets on Betfair (and there hasn't ever been a MM which has lasted for more than 1-2 weeks)
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Old Jul 5, 2007, 5:40pm   #25
 
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Originally Posted by jules101 View Post
Yeah they may well be MMing on sports markets on Betfair, but there is currently no MM on the financial markets on Betfair (and there hasn't ever been a MM which has lasted for more than 1-2 weeks)
They claim to make over 100K a month, MMing on the exchanges.
Seems like a licence to print money..
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Old Jul 5, 2007, 5:49pm   #26
 
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Hopefully I can make a similar amount MMing on the financial markets
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Old Jul 5, 2007, 6:25pm   #27
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My feeling is that MM'ing is very hard with binary bets. There are several reasons for this. One is obviously the fast moving nature of the quotes especially during the last 10 minutes of binary when within a few ticks of the strike (mid point or opening price). Secondly is knowing which variables to input into your model prior to opening your market. Can I ask which markets in particular you will be focusing on (or atleast starting with) - I guess the daily bets will be the best start?

Some months ago I got chatting with the Head of the Binary desk at one of the bigger Co's in London. He was telling me how labour intensive running binary bets was. Of course, one thing which the spreadbetting Co's have on their side is the ability to delay or stall the dealing ability of clients. I think that all the Binary Bet providers (apart from Fins in which case you must 'request' a quote once you specify your size of bet) retain the ability to reject a bet order because they do not always fill instantly especially in the case of clients who come onto their radars as regular winners or scalpers. My point is that if you make a market on Betfair then you'll have no right of refusal, if a client hits your price then it is filled and you are an instant counterparty - you get no right of consideration. This in my opinion is where the spreadbetting companies make a considerable amount of their income - the slight delay and manual dealing processes allows considerable hindsight on the high delta products like binary bets. It is widely known that more successful clients start getting much higher percentages of bet refusals from the spreadbetting Co's due to being placed on manual. Therefore I would consider that the danger of MM'ing on Betfair would be that you might start to attract the more successful clients who become annoyed with the firms who quote binaries but then disrupt timely execution.

Interestingly you might also find yourself trading against a spreadbetting firm if your model doesnt match theirs. If the bid and ask 'cross beams' as it were then you'll fill each other. It would then come down to how much volume / liquidity each party would be prepared to offer at their quoted price. That could be quite scary if IG or one of the other big boys got involved. You could of course just stick to making a slightly more efficent market ie just program your system to stick inside the spread of say IG / Binary Bet . Com.
In my opinion, if you launch out on your own on hourly bets then you could get really turned over big time. Short term options price is absolutely not an exact science. This is what that guy was saying from the binary desk at that London firm. They know that they have clients who 'think outside the box' and only trade when there is a chance that the binary model is flawed in its pricing. There are some simple methods and of course some more complicated methods but the upshot is that these firms watch / monitor / disrupt their own markets in a very precise fashion for a very good reason and that is because, if they didnt, they'd lose a lot of money very quickly.

Steve.
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Old Jul 5, 2007, 6:50pm   #28
 
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Quote:
Originally Posted by stevespray View Post
My feeling is that MM'ing is very hard with binary bets. There are several reasons for this. One is obviously the fast moving nature of the quotes especially during the last 10 minutes of binary when within a few ticks of the strike (mid point or opening price). Secondly is knowing which variables to input into your model prior to opening your market. Can I ask which markets in particular you will be focusing on (or atleast starting with) - I guess the daily bets will be the best start?
Most of the action is on the hourly FTSE intras on Betfair so that will be the priority, although I will also be MMing on the FTSE Midday/Daily, Dow 6pm/Daily and I will push Betfair to reintroduce the Dow hourly markets (they were removed around 6 months ago due to lack of liquidity - a MMer was never present on those markets).

Quote:
Originally Posted by stevespray View Post
Some months ago I got chatting with the Head of the Binary desk at one of the bigger Co's in London. He was telling me how labour intensive running binary bets was. Of course, one thing which the spreadbetting Co's have on their side is the ability to delay or stall the dealing ability of clients. I think that all the Binary Bet providers (apart from Fins in which case you must 'request' a quote once you specify your size of bet) retain the ability to reject a bet order because they do not always fill instantly especially in the case of clients who come onto their radars as regular winners or scalpers. My point is that if you make a market on Betfair then you'll have no right of refusal, if a client hits your price then it is filled and you are an instant counterparty - you get no right of consideration. This in my opinion is where the spreadbetting companies make a considerable amount of their income - the slight delay and manual dealing processes allows considerable hindsight on the high delta products like binary bets. It is widely known that more successful clients start getting much higher percentages of bet refusals from the spreadbetting Co's due to being placed on manual. Therefore I would consider that the danger of MM'ing on Betfair would be that you might start to attract the more successful clients who become annoyed with the firms who quote binaries but then disrupt timely execution.
Some good points here - the fact that on Betfair there are no bet rejections is probably one of the reasons why all the MMers who have tried so far have failed. I will be using lightning-fast futures feeds (and several other tricks) to protect myself from sharp swings in the futures.

Quote:
Originally Posted by stevespray View Post
Interestingly you might also find yourself trading against a spreadbetting firm if your model doesnt match theirs. If the bid and ask 'cross beams' as it were then you'll fill each other. It would then come down to how much volume / liquidity each party would be prepared to offer at their quoted price. That could be quite scary if IG or one of the other big boys got involved. You could of course just stick to making a slightly more efficent market ie just program your system to stick inside the spread of say IG / Binary Bet . Com.
Another good point - I will be biasing my prices according to my net position (plus several other factors) to make sure that this doesn't happen to a large extent.

Quote:
Originally Posted by stevespray View Post
In my opinion, if you launch out on your own on hourly bets then you could get really turned over big time. Short term options price is absolutely not an exact science. This is what that guy was saying from the binary desk at that London firm. They know that they have clients who 'think outside the box' and only trade when there is a chance that the binary model is flawed in its pricing. There are some simple methods and of course some more complicated methods but the upshot is that these firms watch / monitor / disrupt their own markets in a very precise fashion for a very good reason and that is because, if they didnt, they'd lose a lot of money very quickly
I think this is what has happened to all the MMers who have tried and failed on Betfair so far - they have launched themselves into the hourly markets without adequate preparation and got burned big time. I've been trading binary bets on the indices for a while now and have noticed lots of patterns in the betting on Betfair. I'm also developing several strategies/algorithms in order to try and get both sides of my spread filled as often as possible, plus I'll start out with small amounts and gradually increase the stakes as I tune my pricing model
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Old Jul 5, 2007, 6:58pm   #29
 
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Quote:
Originally Posted by stevespray View Post
Some months ago I got chatting with the Head of the Binary desk at one of the bigger Co's in London.
Steve.
Steve,
In your chat with this person. Did he mention anything about them eventually 'banning' clients ie even if after putting a punter on manual and rejecting some bets the punter still makes good money do they resort to shuting down the account?
Or is that with so many rejections the punter just gives up?

Last edited by donaldduke; Jul 5, 2007 at 7:46pm.
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Old Jul 5, 2007, 7:00pm   #30
 
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Jules really hope you pull it off. There is so much potential for the product. What is this super duper futures feed youve got. How much quicker than esignal is it
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