Stakes In BinarySoft BDI

Today, I was asked by a visitor to the chat room what level of stakes I was using. £20 - £100 was the reply though I promised to explain things in a blog post as things aren't as straight forward as that in BinarySoft BDI.

Conventional wisdom for those who use more traditional trading software would be to break their stake levels into 'price bands'. So for example, one might use the following stake levels between each breakpoint in tick size:

£500 for odds of 1.01 to 2.00
£250 for 2.02 to 3.00
£125 for 3.05 to 4.00
£75 for 4.10 to 6.00
£50 for 6.20 to 10.00
£25 for 10.50 and above.

With BinarySoft, staking is based on an £Amount/point and so the software automatically varies the stake whatever the odds are. This is best illustrated using the snapshot of a portion of the BDI ladder interface.

The BinarySoft ladder does not directly display odds. Instead, it represents odds by using the equivalent percentage probability figure. So, decimal odds of 4.00 is 25.000% and 50.000% is obviously equivalent to decimal odds of 2.00. Also, the money in the ladder is displayed in terms of £Amount/point of which more later.

This means that the BinarySoft ladder is inverted when compared to a ladder in conventional trading software. That is to say, as we go up the ladder, the probability of that runner winning increases. i.e. its odds go down. In other words, steamers go up the ladder, while drifters go down.

The ladder is defined in terms of percentage points and the staking as £Amount/point, so, if I was to back a runner at odds of 4.00 for £25, I would place a bet of £1/point as the percentage probability for odds of 4.00 is 25% or 25pts. Put another way, a £1/point bet placed at a 33.33% probability would result in a stake of £33.33 in conventional terms.

Looking at the illustration, we see that there is 55.07 sitting at 50.00%. Remember, this is £Amount/point which means there is £2753.5 on this runner sitting at odds of 2.00.

This might seem confusing to someone not familiar with this concept and who is more used to the way things are done in traditional software. However, I found it quite natural. Indeed, I tend not to think too much about my actual stake as it is automatically taken care of by the software. For any given £Amount/point the level of stake is automatically adjusted depending on what the odds are.

This mechanism also makes it easy for the software to automatically 'green up'. This is not a separate function. Assuming an opening trade for £1/point, the closing trade will also be for £1/point but the monetary value that is submitted as the stake would be different thereby creating a hedge for a guaranteed profit/loss.

Now, to answer the original question, I'm currently using a 'stake' of £2/point which means a stake of £20 when trading at odds of 10.0 and £133.33 when trading at odds of 1.50. The point being that my stake doesn't vary in terms of price bands as is the convention. Rather it varies for EVERY change in price.

Ultimately, once I am more proficient in the horse win markets, I may well introduce some sort of 'banding' in order to optimise my staking. For now, I'll carry on with £2/point, though I hope to be slowly increasing this over the coming weeks.

5 comments:

leonthefixer said...

Interesting post - but I must say it doesn't half seem to make things complicated.

Looking at the 'amounts' in your image I do not think it is very clear as to how much is there.

Also I wouldn't have thought it would be as easy to spot large rders coming in or spoofign the market, perhaps it is just because I am not used to it.

Have you spent time looking at the three other main pieces of software?

Gruss
Bet Angel
Bet Trader

Anonymous said...

Don't think I could get used to binary odds as most of the time I'd have to convert the figures to the bookie odds in my head for comparison.

Anonymous said...

I think Alistair uses Linux Leon, so not many options out there

Alistair said...

Hi Leon,

I'm sure familiarity helps though I have to say having trialled Bet Angel, Bet Trader and even BetIE in the past, I took to this way of doing things like a duck to water.

With regards to the amounts in the market, knowing the actual monetary value is irrelevant in my view. A large amount in the market is just as obvious either way and is relative to what's around it. As long as all monies are represented in the ladder in the same way, there's really no difference between the two.

I haven't tried Gruss, though I have tried the other two. The sad thing is, they are Windows only applications and will not run natively on my preferred platform.

Like I said though, it will appear strange to someone who is more familiar with BA or BT. I find it very intuitive, but then that's maybe just me.

Thanks for popping by.

Alistair

Alistair said...

Anonymous 1 - Although it is not evident from the screen shot, BinarySoft will display the decimal odds in a 'tooltip' when the mouse is placed over a probability figure. Getting the odds is easy of course as they are simply 100 divided by the probability.

One of the major benefits of BDI lies in binary markets (hence the name). If I back one tennis player say at odds of 2.00, but the lay odds on his opponent offer better value, the software will automatically place the lay rather than the back.

Anonymous 2 - I do indeed use Linux and BinarySoft is the only real option available to me.

I can trade on Betdaq using their software and Gruss have a Betdaq version based on Adobe AIR, but in all honesty, it is horrible.

Thanks for the comments

Alistair