Reading The Market Part 2

In part 1 of Reading a Market I discussed how a book is balanced, and detailed what causes odds to move.
This is a short addition to this. The video highlights how slack in the book can be taken and how much there actually can be. This is a typical market, although the favourite is very short.
If you want the spreadsheet I am playing around with in the video, drop me an email at and I’ll send it you. My intention is to put together a couple more trading videos to show exactly how this information can be used to good effect.

You may have heard me talk about the “ebb and flow” of a market. This is the “science” behind ebb and flow. Quite often traders will see a horse move 2 or 3 ticks against their position and they take a loss, only to see it come right back to where they started a few seconds later. This should help you to understand why this happens. Watch the video and see if it makes any sense. If you need any clarification give me a shout in comments. Although I welcome your emails, I am sure that if you are asking the question there are many others that would benefit from the answer. It also helps me to tailor my content to what I need to explain better.

29 thoughts on “Reading The Market Part 2

  1. Thanks for this MG that has filled another void in my knowledge and now that I think of it it makes absolute sense!

    Keep up the great videos I love em!!



  2. Thanks MG for a great video. It’s still new to me and the concept of a book is difficult to grasp but these 2 videos are making it a lot clearer. One thing I am not sure about is this…if the book had to be balanced, then who balances it? If prices move because punters put bets on, say an out sider, then who is to say someone will then back the favourite in order to balance the book? If you know what I mean! (not sure I do !)

    • This is a good question Chris. Fortunately it has an easy answer. Betfair balance the book. It is called cross matching. Basically they manipulate the prices to offer a price that is not really there by taking other runners. It’s complex! The way a book works is if you can bring the total % of the BACK book UNDER 100% you can back every runner in the race (with different stakes obviously) to win whatever the result. If the book is 99%, you can pay £99 and get £100 back. Betfair do this themselves and create the new prices. So it can never go under round or over round. If you ever see the % go green it spells danger as a horse is about to be withdrawn. Previous to the cross matching the natural order was always quickly restored due to savvy punters taking the value. Hope this explains it MG

      • Thanks MG, that is very clear now. I could not work out how a price moved since if you back a horse you would want it to move out to get a better price!…so this makes it nice and clear now, thanks!…so if a horse moved in from say 90 – 1 to 5 – 1 then the others would have to move out quite a lot.

        • That’s it Chris, The shorter the price the more it influences the book. This is in the most simplistic terms. I wanted to show you guys that there is sometimes room for movement before a trend is properly reversed. The habit of jumping out of a trade just because it has moved 2 ticks against you is an expensive one.We need to understand who significant 2 ticks at any given price are. This is also a signal for entry. I have mentioned this quite a few times in my trading videos. If other horses are moving in and the fav stays where it is, this is ripe for a steam. The movement of the other horses is a combination of the outsiders drifting and the slack in the book being taken. I am going to make a dedicated video to show this soon. MG

          • Hi Steve, I know it’s been quite a while since you posted this, but did you make that video? If so, could you please direct me to it? I’d be very interested to watch it.

  3. Hi mg,
    despite my difficulties with the language, it seemed to understand that the higher the proportion of a horse more ticks it takes to influence those of the other horses.
    Right? But I could not figure out how to exploit this information.
    I am always grateful, as all your fans, for your great and educational job.


    • Hi Leo. I plan to make some more videos to show how this info can be used. The point of it is that if other horses are moving in price, it does not always effect the odds of the horse you are trading. The whole market is like a giant set of scales that balances. We are managing that balance. Have you read my article “Reading The Market” ? This may help you. See it HERE Cheers MG

  4. Hi MG:
    Im very eager to learn and am a fast learner but maths is not my strong point.
    The question might not be crucial to trading but I would benefit from knowing the answer as it would help me understand things please.
    In your video called slack in the book you have the back % @ 100.7 lay @ 99.6 then from that you said you get 0.1%.
    Im baffled as to what math is done to arrive @ 0.1%. Would it be back round subtracted from lay or divided by?
    Would love to know the answer please.

    Cheers Maurig.

    • The calc I was doing (roughly) was 100.7 and 99.8
      100.7 -100 (the book cannot go below 100) is 0.7. The other side cannot go above 100. So it’s 100 -99.6 = 0.4
      So if we add 0.7 and 0.4 =1.1. I said point 1 or 1%. Remember I’m doing this on the fly 🙂 and my maths is shit too.
      In effect the gap equates to a 1% gap.

      Don’t get hung up by this – it’s a minor thing that goes toward a bigger picture.

      Let me see if I can explain further in easier terms.

      If the lay side is very close to 100 – in this case 99.6 The fav could not move in more than 2 ticks without the book moving to over the 100% – assuming no other price changes.
      What I am trying to show is how to understand ebb and flow. How far prices can move without any movement in others. This is effective in volatile markets. It is common to see odds drift 5 or 6 ticks. If you watch the other runners and spot no move to counter act this it is often a big signal that the price will bounce straight back. 5 easy ticks. It’s another small piece in a big jigsaw.
      Hope this answers your question – Cheers MG

  5. Its much appreciated you taking so much of your time to help people like me with no advantage to yourself apart from the satisfaction of having helped somebody.

    Star man.

    Thanks very much.

  6. Great! Thanks. Glad I came across your page its difficult to find good information on trading (i have just started).

    I think I understand the concept of shorter priced favorites have a bigger weighting on the book %. So therefore if the favourite/lower priced horses move, it has a bigger affect on the others? Where as a larger horse moving in price may not affect any other horse unless it moves significantly (right?)

    Now, I have been staring at every single race, greyhound and football match I can this week (i literally learnt about trading a week ago). I have traded on and off for penny stakes to get the jist and so far broke even because I dont know what I am doing but Its helping me get a good feel for the market and how it flows.

    Given the concepts you have shown, my issue is that you can see the favourite or other horses drifting or coming in. But surely as this is happening, other horses are adjusting in real-time, so effectively they have already adjusted by the time you have placed your bets. Therefore it cannot benefit us.

    Or are we saying it can take time for the market to catch up?

    My apologies if there are other videos on the subjects, im going to continue reading through the site 🙂

    • Hi Ash,
      Regarding the book percentage. You have that spot on,
      The way the book is made up is one of the more complex trading questions. Most traders do not even consider it. I believe this to be a mistake.
      The Book is made up of odds which are converted to the percentage chase of success. So a runner trading at 2 has a 50% chance of success (100/2). betfair has an algorithm running that cross matches prices. Effective they book cannot occupy more than 100%. There are 2 sides to the book. The back side and the Lay side. These odds are concurrent, but at different tick rates. You will have noticed that the odds change in tick size at certain points. The main ones are 2,3,4, 6 and 10. Take the prices around 3. It goes 2.96, 2.98. 3.0 so a 0.02 increment change. After 3 it’s 3.05. 3.10. 3.15 etc, So a 0.05 change. 4 is 0.10, 6 is 0.2 and 10 0.5. These “gaps” create natural between the 2 books. It is quite normal to see a horse race to have a gap of 3% between the books, and in some cases even in 1 side of the book.
      Lets take the lay side of a book with a 2% gap. The book adds up to 98%. This means the prices can move 2% without any influence of any other price, A runner trading at 6.8 occupies 14.71% of the book. The next price up at 7 occupies 14.29%. A difference of 0.42%. This means that this runner would be able to move 4 ticks without having any need to influence any other price. This is what I call “Slack in the book”. It is a way of understanding the ebb and flow of odds movement.
      It’s this slack in the book that allows the prices to move. I have loads of stuff about this and cover it comprehensively in my mentorship program.

      Hope this makes sense

  7. Hi,
    Very interesting,thank you.

    One question,, is it possible to trade the two sides of the book percentage eg. Back 103% Lay 96.4% and make a profit?
    How would I do this trade and could I automate it?

    • Hi Mandy,
      To be perfectly honest I have no idea. Using the book percentage to identify the direction of a trade isn’t what I use t for. I use it purely an indicator to show how much movement is within the book. Sorry I cannot help here. Cheers Steve

    • Remember that prices are constantly moving. So if the gap is closed the market will react (other runners will move) The book slack isn’t a way to identify where the market will move. It demonstrates why it does and hopefully helps to understand it’s constraints

  8. Hello Steve,

    So I have this right in my own way of thinking, the wider the percentage on the overround the more room for error on the favourite (could go either way, north or south), when the book (the overround) is tight (heading to / or is at 100% ) then this means less margin for error, the book (& market) is at it’s truest & at it’s most efficient so if the favourite is steaming or drifting then the move is more than likely to continue?

    • Hi Andy, A wider % in the book gives odds room to move before they affect other odds. So at 103% and a fav at 2 it could move several ticks, and nothing else need move. If the book was 100.5% then pretty much any move out would cause something else to drift. In my opinion using this info to trade or guess direction in impossible. The reason to understand how this works is help managing a trade. Why close a trade when you don’t have to? It may be just a slack book.

        • This is complicated – But in all honesty something for when you have cracked the basics. I try to make everything very simple. Have a structure, a plan and a way to find out what the market will do. It’s a case of executing the plan when the criteria is met. It really isn’t complex at all. It becomes complex when the final 5-10% of what makes the trade perfect kicks in. Mostly that doesn’t matter

  9. been on a BA course & I’m still scratching my head sometimes, I’ll try & catch one of your courses later in the year, thanks again, appreciate it

  10. Good explanation and nice video to go with it. wondered if there is any chance of you sending the spreadsheet, interested to have a look at it?

    • I have had a big clear out of videos I feel are not of the quality I now can achieve, so deleted many. Unfortunately, this one may have got mixed up with those. I will try and find a copy Sorry about that, Steve

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