{"id":6830,"date":"2012-08-29T10:08:21","date_gmt":"2012-08-29T09:08:21","guid":{"rendered":"http:\/\/www.betangel.com\/blog_wp\/?p=6830"},"modified":"2012-09-07T14:14:09","modified_gmt":"2012-09-07T13:14:09","slug":"trading-tennis-some-stats-on-efficient-pricing","status":"publish","type":"post","link":"https:\/\/www.betfairtradingblog.com\/blog_wp\/2012\/08\/29\/trading-tennis-some-stats-on-efficient-pricing\/","title":{"rendered":"Trading tennis – Some stats on efficient pricing"},"content":{"rendered":"

Caroline Wozniakci crashed out of the US Open last night after starting at odds of 1.10, or a 91% chance of winning. I am the only one thinking that perhaps McIlroy’s should be banned from seeing Caroline at major tournaments?!?!<\/p>\n

This is being heralded as a ‘shock exit’. But how much of a shock is it? I looked at all the results from the first round of action at Flushing meadows and it reveals a wonderful thing about the market. Just how efficient a pricing mechanism it is.<\/p>\n

We utilise this fact in Tennis trader<\/a> where the tool can pinpoint surprisingly accurate forecasts for game and set odds just from the starting price of match.<\/p>\n

I tend to analyse this sort of stuff in arrears but thought I would have a look at it real time this year. In all the first round matches so far I looked at the starting odds of all the favourites and converted them into implied chance. Say somebody started at odds of 2.00 then I would do the calculation 1\/2.00 = 0.50 or 50% chance of a win.<\/p>\n

I then added up and averaged all these starting odds, that came to 73.5%. In other words the market was saying that, on average, 73.5% of favourites would win in the first round.<\/p>\n

I then added up and averaged how many favourites did actually win in the first round. The answer, 74.3%! Isn’t the market a beautiful pricing mechanism!<\/p>\n

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Caroline Wozniakci crashed out of the US Open last night after starting at odds of 1.10, or a 91% chance of winning. I am the only one thinking that perhaps McIlroy’s should be banned from seeing Caroline at major tournaments?!?! This is being heralded as a ‘shock exit’. But how much of a shock is […]<\/p>\n

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