Questions tagged [betting]

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3 votes
2 answers

Determining bet sizes given odds

Recently, I was asked the following question in an interview with a prop trading firm. You are given the opportunity to make money by betting a total of 100 bucks on the outcome of two simultaneous ...
quantrader23's user avatar
0 votes
0 answers

Combination of bid ask of two instruments

You have 2 instruments: X in which you are quoting 35 @ 40 and product Y in which you are quoting 15 @ 30. We want to make a market on the product X+Y. What is the bid-ask spread you will quote? Got ...
Kai's user avatar
  • 53
0 votes
0 answers

Incorporating Market Prices into Betting Models

In betting models, the price offered by the market is often ignored until the end. However, it seems like the price is a valuable piece of information that cannot be overlooked. Consider a ...
T.J. Gaffney's user avatar
0 votes
0 answers

Bet sizing to actual orders

At chapter 10.2 in Advances in Financial Machine Learning it says: Suppose that one strategy produced a sequence of bet sizes $[m_{1,1}, m_{1,2}, m_{1,3}] = [.5, 1, 0]$, as the market price followed ...
amilkov's user avatar
1 vote
1 answer

To gamble or not to gamble! (solving a system of ODEs maybe?)

Assume we have some money. At every point in time $0\le t \le T$, we can take either action 1 that is to keep our money until $T$ say in a bank and have an expected return of $f(t)$ or take action 2 ...
user avatar
2 votes
1 answer

Kelly Criterion for Multiple Simultaneous Correlated Bets [closed]

I am looking for an equation for the optimal fractional bet sizing for N number of simultaneous correlated bets. I am looking specifically for an equation for binary bets, but an equation for bets ...
GotTheTrumpCard's user avatar
3 votes
2 answers

Kelly Criterion — maximize expected value and minimize the variance in card game with $x$ red and $y$ black cards

You have $x$ red cards and $y$ black cards. I flip them over one at a time. The probability of flipping a particular colour is proportional to the amount of those coloured cards left. You start with $...
Mining's user avatar
  • 165
1 vote
1 answer

Alternatives to Kelly Criterion

I am preparing for Quantitative Trading interviews and I know that they basically require you to solve problems on the probability of winning in a given game and then they would ask you: How much ...
Mining's user avatar
  • 165
1 vote
1 answer

Dice question - expected winnings of rolling dice $2$ times

Typical trading interviews consider gambling problems such as rolling a dice and winning its face value. The expected winnings are $\\\$3.5$, $\\\$4.25$, $\\\$\frac{14}{3}$ for one throw, two throws, ...
The One's user avatar
  • 113
-2 votes
1 answer

Trade anything?

I have a question after reading the post below. Question: I want to bet on a niche topic or asset or anything that ...
cowsource's user avatar
1 vote
0 answers

is the concept of skew observed in fixed odds betting markets?

Bear with me if this sounds a little flippant, but this has got me curious. I know "sports arbitrage" is an active economic activity, although the arbitrage arguments, I think, are not ...
Tom Weston's user avatar
1 vote
1 answer

What happens to the stake of a lay bettor on a betting exchange?

As an example, let’s say you want to lay a horse at 3.40. To win £10 your liability would be £24. In other words, you are offering odds of 3.40 to someone else who is backing the horse to win with a ...
Mac's user avatar
  • 13
1 vote
2 answers

How much shall we bet on head/tail with $1m bankroll?

I was asked this question in a trading interview: how much would you bet in a game where you win 300 on tail and loses your 100 on heads? how much will you bet if you can play game once or multiple ...
aallove's user avatar
  • 31
0 votes
1 answer

What's the expected value of a repeated game with 50% chance to win 0.5 and 50% to lose 0.5?

Assume we start with 1. In the first bet the expected value of remained balance is 1.5 * 0.5 + 0.5 * 0.5 = 1 For N times, is it still 1 according to E(XYZ)=E(X)E(Y)E(Z)? But 1.5^50 * 0.5^50 is not 1. ...
Chp's user avatar
  • 1
4 votes
2 answers

What is the priority of the waiting non-matched bets, when a match becomes available in Betfair?

Say the back price (odds) on a market is $2.5$. Then the following time sequence happens: Bettor $A$ places a back bet with price $2.6$, for $\$100$ (it will not match) Then bettor $B$ places a ...
g.pickardou's user avatar
5 votes
1 answer

How is the "probabilities sum to $1$" rule enforced in betting exchanges?

Suppose that I am interested in a market on a betting exchange for the outright winner of some event, with three competitors, $A, B$ and $C$ with corresponding probabilities of winning $a, b$ and $c$. ...
user avatar
3 votes
1 answer

Which sports are generally the best for trading on betting exchanges for a profit?

I am looking at trading bets on tennis, football and horse racing in particular as these appear to have the most liquidity. How much background research and how much trial and error is generally ...
Andrew WU's user avatar
8 votes
5 answers

Predicting price movements on a betting exchange

On a betting exchange the price (the odds that an event will happen expressed as a decimal, 1/(percentage chance event occurring) of a runner can experience a great deal of volatility before the event ...
Peter's user avatar
  • 181
23 votes
4 answers

The application of quantitative finance in sports betting

I notice that, on the surface, there are some similarities between quantitative sports betting and quantitative finance. Both have the concept of arbitraging, etc. What are the applications of ...
Graviton's user avatar
  • 1,251