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oSP & Settlement



How to trade on Oddsfutures in 6 easy steps (or click here for video!).
From the market view page:
  1. Select an event
  2. Check the market rules
  3. Select Horse(s)
  4. Select Buy or Sell

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  5. On the 'Trade' tab, validate your odds and stake(s) and execute your trade(s)


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  6. Click on the 'My Trades' tab


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Notes
  • To know more about the Oddsfutures Settlement Price (oSP) and settlement calculations, visit oSP & Settlement
  • Oddsfutures uses decimal odds instead of the traditional fractional odds. Using decimal odds is a much easier way to know which odds you are really getting, and to compare odds. For example, odds of 4/5 are equivalent to 1.80 in decimal odds.

oSP & Settlement

On Oddsfutures, you are trying to predict the direction of odds movements from the moment you offer or match a trade until the start of a race. If your prediction is correct, you make a profit, if it is not, you make a loss. All fairly simple!

But how does Oddsfutures determine if you prediction was correct or not? This is where the oSP (Oddsfutures Settlement Price) comes into play.

The decimal based odds prices you offer, match and settle against is the oSP, which is a zero overround1 (100%) version of the bookmakers index (the official Jockey Club odds you can see on TV live shows leading up the off). Odds are also adjusted for favourite long shot bias2 in real time.

So in simple terms the index settled against by Oddsfutures is derived from the officially returned SP or "live shows" odds adjusted for these two factors. In short it is effectively an index of the wholesale price of bookmakers risk which they would use if they were operating at 100% competitiveness.

Most crucially, it is independent from the trades taking place on Oddsfutures. Your trades and the ones of your fellow traders execute on Oddsfutures can not influence the oSP. Only volumes of action taking place in the bookmakers marketplaces can determine what it will be, which makes the Oddsfutures Settlement Price exogenous and unlike any other “exchange” SP in that it is very difficult to manipulate.

Until official prices are available (roughly 10 minutes before the off), we display a "Projected oSP". This is a guide price, which effectively reflects the trading activity on Oddsfutures. We then switch to the oSP. We start publishing the moving oSP’s roughly 10 minutes before the off, when official prices become available. We then constantly recalculate it according to the changes of the official odds.

Once a race starts, it can take up to 10/15 minutes before we receive the final official starting price (weigh in), and can then settle your trades.

To help you understand better how it works, here are a few examples from this year’s Cheltenham festival.


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In this race, the bookmakers overround was 17%, and the higher the odds, the greater the associated bias correction. Below are 2 other examples, one with a large number of horses and a number of horses with very long odds, the other one with a more ‘balanced’ competitive race.


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Settlement

So how do we determine how much you earn or lose?

First, we calculate you settlement according to the following formula:

=STAKE*(Contract Price/MIN(MAX(Contract Price/2,Settlement Price),2*Contract Price)-1)

For example: You buy a horse with a stake €100 at odds (Contract price) of 10. The oSP at the off is 6.

=100*(10/MIN(MAX(10 / 2, 6), 2 * 10)-1)

=66.67

Your profit is €66.67

Second, we apply the Oddsfutures' Counter-party stop loss mechanism to your trades.

For example:

You buy a €100 stake at a 10.0 contract price. You expect the price to decrease.

  • If the oSP price goes down to 6.0, then your payout is €66.67
  • If the oSP price goes down to 5.0 or below, your payout is €100
  • If the oSP price goes up to 15.0, then your loss is €33.33
  • If the oSP price goes up to 20.0 or higher, your loss is capped to €50

You sell a €100 stake at a 10.0 contract price. You expect the price to increase.

  • If the oSP price goes down to 6.0, then your loss is €66.67
  • If the oSP price goes down to 5.0 or below, your loss is €100
  • If the oSP price goes up to 15.0, then your payout is €33.33
  • If the oSP price goes up to 20.0 or higher, your payout is capped to €50

1Understanding the Over-round

In a five horse race, a bookmaker may choose to price up each horse at odds of 5.0. In such a scenario, were he to take an equal amount of money on each runner, he would break even, as each horse would have a 20% chance of winning. In that the five runners have combined implied "probabilities" of winning of 100%, we are dealing with a "round" book. If however, he were to price up each runner at 4.0, the implied probability of each runner winning will change to 25% from 20%. If he were again to take an equal amount on each runner, he would receive five units and pay out four. The profitable extra unit amounts to 25% and 25% x 5 = 125%. His book would be 25% "over-round".


2Understanding the longshot bias and why it’s removed

The favourite longshot bias is an observed phenomenon where on average, bookmakers tend (because of Risk) to offer less generous prices on "long shots" and (relatively) more generous prices on favourites.

That is, in a horse race where one horse is given odds of 3/1 by bookmakers , and another 100/1, the true odds might for example be 1.5 and 300 respectively. Oddsfutures corrects this bias, and the correction is reflected in the oSP which Oddsfutures contracts are paid out on.