The weight of money statistic tends to be ignored by many punters, but doing so is a mistake, as behind those somewhat obscure numbers lies some handy information.
Most of the people who ignore it do so because they don’t fully understand it, so let’s put that right. We will explain what it means and how you can use it to improve your trading strategy.
What is the weight of money?
If you were to be pedantic, then a better description of this valuable statistic might be “balance of money” as it indicates the balance between the current back and lay offers. Usually, we shorten the weight of money to WoM.
WoM concerns just the best 3 lay prices and the best 3 back prices on either side of the book. It is the balance between these and provides a real-time view of the amount of money waiting to be matched on both the lay and bet sides of the book.
It is essential to realise that the measure concerns just unmatched money; matched bets are irrelevant to WoM.
How is WoM calculated?
The calculation used is:
WoM = (unmatched money on best 3 lay prices) / ((unmatched money on best 3 lay prices) + (unmatched money on best 3 back prices))
Where can you find WoM on Betfair?
WoM indicators are clearly shown on the top of Betfair trading ladders.
What can you do with WoM?
Before we show how you can use it, we should point out some of its potential problems. The indicator may be manipulated by traders and should not be relied on. It can also be highly volatile and give a false impression of the market. That said, it can be beneficial indeed and can indicate the direction in which the odds are likely to change. For instance:
- – When the amount of unmatched money placed on back bets is roughly equivalent to the amount of money placed on lay bets the WoM will be in the order of 50% (1/2), We refer to this as a balanced market.
- – When there is more unmatched money on the lay side so that the WoM is significantly higher than 50%, then the odds on back bets are likely to increase
- – When there is more unmatched money on the back side so that the WoM is significantly less than 50%, then the odds on back bets are likely to decrease
When you trade on Betfair, keeping close attention on the odds is crucial. Even tiny changes can make a big difference overall to your profit and loss. WoM should provide a clear indication of whether odds are likely to lengthen or shorten.
Dangers to be aware of
There are, however, caveats. For instance, there needs to be enough liquidity in the market. If there isn’t, then WoM is likely to be highly volatile. Even small changes to the money supply can make significant changes to the WoM. Never take the WoM in isolation; it is just one of the indicators you can use to hone your marketing strategy,
The other important caveat is the possibility of manipulation by other traders, especially traders equipped with the latest tool sets. Such practices that are frowned on and illegal in financial markets are still not wholly outlawed in betting markets.
Without going into any details, it is surprisingly easy to manipulate the odds, and one way of doing so is to manipulate the WoM by placing false orders, thus forcing a change in the odds, then removing the orders. Profits are made from the changing odds.
WoM is an important statistic, but don’t rely on it. It is just an indicator, not an absolute predictor.