Betfair volume spikes are usually caused by a big bet matched in the market. This bet is matched far away from a current price and it makes look the market like it jumped from one place to another. For example – there is a current price @4.00 and someone submits a £10,000 bet @3.00. On an average meeting, this would cause a huge spike down.
Betfair Volume Spikes
These spikes have many possible explanations. First of all, it may be a “Fat Finger” error made by someone who accidentally misplaced his bet. For example – someone wanted to place a £100 bet but accidentally placed a £1000 bet instead. This may happen and it happened to me few times as well. Second, i can be some mad gambler who is waging his wage. Or it can be someone who has information that others don’t have. For example – there may be a person who knows the horse has much better chance to win than the current price is indicating. Let’s say he knows the horse has 50% chance of winning which equals to the price @2.00. If the current price is @2.50, he may Back everything down to the evens.
There are many possible scenarios why these spikes occur in the market but one characteristic is the same for almost all of them. The market has almost always tendency to correct itself. Very often to the price where it was trading before the spike. If something shoots up 20 ticks, there usually is a lot of value in it. And people grab this value while they can so the market sooner or later goes back.
Of course – there are also scenarios where the market doesn’t come back. And if possible you have to recognize these scenarios in order to eliminate your potential loss. Everyday practice will give you the most experience in recognizing these. However, I would say a following rule which works most of the time: “Spike is followed by correction.”