Punting on Politics – Betting patterns and Betfair trading on previous General elections

so it’s Christmas hey we can go out and
enjoy yourselves or not as the case may be this year because it’s a general
election what a fantastic combination lots of people arguing about politics at
Christmas and of course as soon as the elections over everybody’s going to be
arguing about it over the Christmas dinner table
what a fantastic Christmas 2019 is going to be however I have archives data on
previous general elections and I thought what I would to do this week ahead of
the big vote was give you some insight as to what has happened at previous
general elections if you’re interested in learning to trade on Betfair then
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as they’re released so how fantastic a general election at
Christmas everybody loves to talk about politics don’t they and it doesn’t cause
any tension or distress to the tude to different people so you know politicians
have ruined everything else why not ruin Christmas as well so yeah when they
announced it was gonna be generally prepare election and Christmas it was
like all no it’s like great fantastic how’s that convenient that’s really
gonna top off Christmas isn’t everybody’s gonna be arguing in the
run-up to the general election at the Christmas party and then when we get the
result of the general election everybody will be arguing over Christmas
as well what a fantastic starts to the next year anyhow it’s with us now so we
may as well get on with it and I’ve been following polit alittle markets on
Betfair for some time with the intention of just trying to understand what’s
going on some of the markets have been absolutely massive and the biggest
individual market overall on Betfair was the president u.s. presidential election
which turned over 200 million pounds and the EU referendum market I think was
about 100 so some of these markets can get
absolutely massive and so I’ve been interested in them for some time
try gather data understand what’s going on within the markets and what I wanted
to do with this video really was just give you some idea of what’s happened in
previous generations and the markets that I’ve been looking at and how you
know certain things have influenced those markets so I hope that this is
useful for you the first market I ever looked at on Betfair in politics was in
2004 and it was the u.s. presidential race but of course the first election
that I would have done therefore was in 2005 this was still in the Tony Blair
era and when I looked to the markets then when I look at the markets now I
sort of bring my focus onto like the most seeds markets and the overall
majority markets that there seems to be a lot of activity and liquidity there
and as a trader you need liquidity don’t confuse volume with liquidity because
volume is how much the markets turned over the liquidity is how much is
turning over right now so if you’re actively trading a market you want to be
to get out of a position fairly quickly and therefore if there’s lots of money
being matched at the current price at this current time that will allow you to
do that so when I say a liquid market that’s what I’m talking about the
ability to exit a position so I always search for high liquidity markets
because they’re the ones that means I can take your position even a
speculative one and if I change my mind I can just dump it and think okay you
know made a mistake there let’s move on if you’re in an illiquid market you
can’t do that if you’re going to get out it will be for a loss and you’ll end up
pushing the price against you in taking your your loss
so the two markets that I tend to look at on most of the seats and overall
majority they seem to be the most liquid and that those are the ones I’ve
gathered data on for a few years and looked at more intensely and actively
traded over the years so the first market that I actively traded was the
2005 general election that’s the one I gather data on studied dabbling and
having a good look around in and if we look at the no majority market there
there was about a 12 and a half percent chance of there being no majority in
that particular market so this was Tony Blair against Michael Howard and that
you know there was a reasonable charm of there being no overall majority but
typically it was going to be a Labour government no overall majority but as
the campaign went on and that chance increased so that decreased rather to
about two and a half percent so basically was looking less and less
likely that there was going to be no overall majority now as the results came
in basically that rallied but then eventually it just died out so it was
quite a dull election from a vetting perspective there was nothing amazing
going on within those particular markets but if we went forward to 2010 then all
of a sudden things look a little bit different this was the Cameron and
Miliband election and basically no it was it was looking a lot tighter in that
particular market I’ll talk about polling in a second because it’s
important to understand how polls influence the markets and how you would
align yourself in terms of the way that the markets work so we’re talking about
polling in a second but basically there was the no overall majority was 161 so
look it’s quite likely as the campaign went on it sort of drifted out a bit but
eventually it came sort of straight back in when it was clear that there was
going to be no overall majority and a coalition would have to be formed so the
interesting thing about this and this is why I just slipped in about polling was
that you tends to find that the two states of the market are dictated by two
different characteristics so if you think of the way you traded traditional
sports event what we’re talking about here is all of the polling that takes
place in the run-up to the day of the vote is effectively like the pre off
market in horse-racing every time a poll comes out the market will react to that
so every time a significant poll comes whether it’s favorable or less favorable
the market just shifts around in response to that so relatively short and
shallow moves and trends develop and patterns exhibit and you know they
become reasonably tradable now when we get to the day of the vote then it’s a
bit like turning the market in play because then you’re not looking at
people’s opinion or the opinion on people’s opinion which is what polling
is you’re looking actually at the results
that come in on that day and therefore the markets effectively in play and as a
results come in and then the market will start discounting that and we’ll talk
about something specific in a second so that you can understand what happens on
the night of an election because there is something significant that happens
that will influence what you do and if you hold a position or how you choose to
do it so yeah you know you tend to find that a lot of the moves take place in
the early hours of the morning sort of 2 or 3 o’clock in the morning when the
results are coming in but not always we talked about that in a second 2015
Camryn was going for a second term and it looked like it was going to be a
relatively tight race so when we actually looked at the market we were
sort of looking at a chart that went from about two and a half basically
indicating that there was going to be it may be a result that we would expect but
as the campaign went on and the polls converged then basically no overall
majority was getting stronger and stronger and stronger and eventually
traded at 105 but to everybody’s surprise in 2015 they did actually get a
majority so the interesting thing about this and everybody would have forgotten
this by now but in 2015 there was a big debate about why would the polls so
wrong how was everybody forecasting a hung parliament and then the
Conservatives ended up with a majority and this is one of the things that
you’ve noticed through all of the political markets is that unusual things
do seem to happen quite a lot so you know my tendency is to go for the
extremities really and look for opportunities to lay at low odds or to
back at big odds and to try and trade out from those particular scenarios so
the EU referendum was one of the biggest markets ever traded 120 million and got
matched at 106 I think it was US presidency market when Donald Trump was
elected traded 200 million and got matched at tiny odds as well so never
rule out and in 2015 basically the polls were wrong
everybody was forecasting a hung parliament and looked like that was
going to be the case and actually the Conservatives got a majority so one Ford
to 2017 we ended up with this situation where it
was expected that there would be a strong conservative win but the odds-on
basically a conservative win looked it looked very likely the the chance of
there being no overall majority looked incredibly unlikely but what we actually
saw during that particular campaign was that the odds on a conservative when
were just drifting gradually as time went on and the conservative majority
looked like it was almost certain and then it looked less and less certain as
the campaign went on and as a consequence we saw the price just
continually drift so I’m going to hold back some information on this for a
second to show you what happened next and why as we move on to polling
because what you tend to find it as I’ve just mentioned already is that you can
get polls for a long period of time for the entire term of Parliament I’m a
slight skeptic on polls because I think depending upon how you sample it whether
it’s over the internet the phone in person you’ll get different responses
because they’re different demographics you know some people will not use the
Internet to give an opinion and others will quite happily so it’s sort of skews
them according to different demographics but what you tend to find overall is
that polls tend to give you a feel for where things are going if not on the
exact day but in 2010 polls were converging and we ended up with a hung
parliament in 2015 they were converging as well but in fact the Conservatives
got a small majority in 2015 excuse me but that was a bit of a surprise but you
could see that there was a hung parliament likely because of the
converging polls and then in 2017 what we actually saw the polling was that
they were fairly consistent for a period of time until the election was called
and then there was a significant labor rally and then we ended up with this
situation where they can serve to send up with a minority government so yeah
there was no overall majority on that particular year but you could sort of
see it discounted in to the polling at that particular moment in time
so polls do 10 to give you a feel for what’s happening
within that particular campaign that’s that exact moment now the thing that
you’d need to bear in mind is as I mentioned before polling is sort of like
the pre off market and then the actual day of the results when the polls are
closed actually will then start to discount all of the information into the
market itself however the exit polls do have a significant impact as well so
when you look at the exit polls from 2010 2015 they sort of and AD 2017 as
well they tend to be pretty accurate according to what the end result was now
of course I was just saying that in 2015 we had this discrepancy in terms of why
would the polls different why did they not forecast a conservative majority
when a hung parliament was completely expected but typically the exit poll
will give you a good indication as to what’s going on so if there’s a very
short priced favorite somewhere or something at a very very large price and
an exit poll comes out and indicates something different I would tend to go
with the exit poll so it’s worth checking out the timing of the exit
polls and when they are going to be released because that would be an
opportunity for you to take a position to exit a position before the poll comes
out or to be the fastest finger to hit the button when the poll is released so
if you’ve got an open position you probably would want to close it before
the exit poll or you may want to open a speculative position just before the
exit poll is announced or you just compete with everybody else there’s no
implied delay on this market you can just basically jump on it as quickly as
you can when you see those exit polls come out and the reason for mentioning
this is when you look at 2017 it looked like the Conservatives were going to get
in majority but when the exit poll came out the number of seats that it
forecasts which were actually quite true to the final total completely set the
price rocketing out and you can see that illustrated beautifully on this graph so
you can see it looked like the Conservatives were going to get a
majority exit poll comes out price absolutely skyrockets at that particular
point in time and then as all of the other results came in then a bench
headed to its final destination as it were so yeah
polling in the lead-up to an election sort of gives you an indication as to
what’s going on the exit poll will tell you exactly what is going on but you’ve
got those two states within the market and once the exit polls out and the
results start coming in it’ll be the divergence between the two that indicate
how what the final result will be so you know I would tend to stick to the
majority markets or the NOAA overall majority markets and the most seats
because they tend to generate quite a bit of liquidity which is quite useful
as well but you’ve got three distinctive states within the market that will
indicate where your opportunity is or what will happen as those markets mature
into the night so yeah I’ve actually got to be away on the evening of the
election so I may not actually get the chance to trade it but I will definitely
be keeping a close eye on it if I can and I don’t think that I’ll have the
capacity to be able to trade because I’ll be with my daughter and this was
something that was arranged a long time ago and when they announced the date of
the election is like now thanks for that know any of you ruined Christmas you’re
gonna have me checking my phone every five minutes when I should be spending
some quality time with my daughter but anyhow I hope that you are able to do
something with that information I just thought it would be of interest to you
given that it’s a topical subject and I hope that the general election doesn’t
ruin your Christmas I’m sure it will ruin a few of them out there let’s just
hope that we don’t have to go to the polls again and repeatedly throughout
2020 but yeah best of luck whatever you’re doing you

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