Quote:
Originally Posted by Jay Edgar
The English is more than good enough. Thanks for posting.
I do suspect that the moves at CRIS of 1 point or more on NBA totals in the first 30 minutes are in the right direction 53-55% or so. But I have not checked it.
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With line movements, as in life, it's necessary to differentiate between predictive forecasting and descriptive modeling (or if you prefer, between a priori and a posteriori phenomena).
To wit, Counselor, one might claim that in the NFL a line movement off the 3-point and onto the 3½ implies (ceteris paribus) a 55% likelihood of fave winning by 3+. This is probably about as true as it is uninstructive. The movement off the 3 isn't implying value at the new price of 3½, but rather implying ex post that the
old price had value. You could certainly make consistent money off of this -- were you able to transact at stale prices.
Now this is what a professional steam bettor does all day-long. (Yes, Virginia, there are professional steam bettors -- in almost every market, in fact. In the NASDAQ market of the early-to-mid-90s these guys were less-than-affectionately known as "SOES Bandits". If you had ever had the opportunity to call a US equity market-maker back then, clearly heard over the din of Chinese food orders would be the grating yelp of traders, "F**K! I just got SOESed!" Ahh, good times.) A steam-bettor sees the market is moving at a "fast shop" and then quickly tries to bet the old number at a "slow shop". The successful steamer isn't assuming that because the line just moved it's gong to continue to do so, but rather he's taking advantage of the very boring fact that some books are just plain slower to move their lines than others.
It's important to realize that when considering a generic line movement, the movement is most likely
describing the past as opposed to
predicting the future. "The old line was a bit off," it's generally proclaiming, "The new line? It's probably about 50/50." This isn't meant to imply that psychological issues will never impact market micro-movements. They will. But at best (especially in more mature, relatively efficient markets such that for NFL spreads) these are exceptions that prove the rule. In general, line movements aren't radar detectors, but rather are speeding tickets already burning a hole in the passenger's seat.