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My friend and I also did some 'arbitrage', we almost didn't do it because we were sure we had something wrong, I mean, aren't markets supposed to be efficient?
by Dn_Ab 14y ago
My friend and I also did some 'arbitrage', we almost didn't do it because we were sure we had something wrong, I mean, aren't markets supposed to be efficient? We even made a program that calculated optimal amounts and alerted us when the odds were aligned to a particular criteria taking into account exctraction fees, exchange rates, commission and stuff.
Our only explanation was that betfair (our other side) was mostly European while Intrade was mostly American so it is possible that lots of Intrade betters were buying into the media's attempt to try to make the race a lot closer than it was while the Europeans were not so biased. I don't know but it is a simpler explanation than someone purposely losing money because they think influencing a prediction market would affect the actual outcome?
- javert 14y agoaren't markets supposed to be efficient To a certain extent. Largely because of people doing arbitrage. So, if all arbitrageurs called it quits because they thought markets are automatically efficient, well, they wouldn't be. Did you make much money?
- zecho 14y agoThere's an economics joke as old as the hills: An economist and a non-economist are walking down the street when the non-economist notices something on the ground and says, "hey there's a $10 bill!" The economist replies, "Impossible. If there was a $10 bill on the ground, someone would have picked it up already."
- pja 14y agoOn my summer holiday this year I was walking along Hadrian's Wall & looked down to see a £5 note being blown along the path by the wind. Picked it up & was instantly reminded of this joke :)
- lincolnq 14y agoI had a friend who made $10,000 (off a $200k bankroll) in 2008 doing this exact form of arbitrage...
- bcoates 14y agoOne thing you have to watch out for on Intrade-Betfair arbitrage is the not insignificant risk of not doing the trades you think you're doing. I know Intrade has rules that various events will cause trades to be stopped and completed trades will be undone. Betfair might as well, but the two markets don't have any synchronization on when or why. Since you'll constantly have many times what you expect to gain in a day at risk on the markets, a single rollback event could put you very deep in the red.
- maxerickson 14y agoI think a greater number of U.S. participants on Intrade is one of the better explanations. I wouldn't be surprised if personal biases play a bigger factor than the media.