Book%
I fielded a question from somebody recently about the book% and what information does that contain?
I’ve seen quite a few theories about what the book% can actually tell you, but here is what it tells me.
At it’s most basic level the book percentage is merely a broad measure of the market. A big number of selections will equate to a big book% and small field a small one. This is due to the spread between back and lay prices. For example two selections priced at 1.99 would create a book of 100.5% on the back side and 100% on the lay side. If you expanded the selections to ten runners priced at 10’s, the best book you could get on the lay side would be 95.2%.
Early on in a market the book% will be higher than near the start of an event and this contraction is caused by more and more competitive prices being offered to the market. This process produces a subtle drift in prices on the back side of the market.
Back in the early days the book% was higher than it is now. Overtime it has shrunk and that has meant that outright backing or laying strategies have become a lot more viable. But whatever you do, you can’t avoid giving something to the house in the form of commission. However, in highly variable markets its quite possible to get a back or lay price matched above or below the VWAP price. This makes backing or laying for value quite possible. A side effect of the shrinking of the book% over the years is that less money has been lost and this, I suspect, is one of the reasons that Betfair have felt uncomfortable with the lack of losers. But it’s an exchanges biggest USP as well.
From a trading perspective the book% doesn’t hold much value for me as it is a re-active measure. When the price on a highly liquid runner is shortening, this will increase the % and when it is drifting it will decrease it. You could argue it pinpoints the turn of a trend but that is very reliant on what is happening elsewhere in the book. You may as well look at a chart at that point!
Book% isn't an open book
