How Liquidity Works on DarkHorse Odds
This guide explains what liquidity is and how DarkHorse Odds incorporates the available liquidity on exchanges and prediction markets into all the tools and features we offer. Before starting, you should be comfortable with these concepts:
Key Takeaways
- Liquidity is the money available at a given price. It determines how much you can actually bet before the odds move against you.
- Browse Odds and the Browse Odds Table give you a detailed view of available liquidity.
- Bet Finders have "Liquidity Mode" which lets you choose between a single full-stake result or smaller stakes that lower bet size but increase conversion rate.
- In Fair Odds calculations, the Required Market Size setting prevents low-liquidity lines from distorting the results.
- When EV bets lack sufficient top-level liquidity, the Bet Finders dip into lower levels so you can evaluate the tradeoffs between larger bet sizes and ROI.
What Liquidity Is and Why It Matters
Liquidity is the amount of money available to bet at a particular price (odds). Liquidity applies to betting exchanges and prediction markets, and it is determined by the amount of money and odds other bettors have requested on the opposite side of a wager. Once you wager all of the money available at a certain price, the next dollar you bet has to be matched at a worse price.
This matters because a line with excellent odds might have close to no value if only a few dollars are available at that price. If the best line available on an exchange results in a 80% Bonus Bet conversion, it does not help you if there is only $1 available, but you need to wager $100. DarkHorse Odds reads liquidity for every line, meaning every calculation reflects what you can actually bet, not just the headline price.
There is also a second, subtler use for liquidity. The amount of money sitting on the other side of a line is a signal of how confident the market is in that price. A large amount of money posted against a line is a vote of confidence in it. The EV Bet Finder allows you to take this into consideration when determining fair odds.
In the example below on Kalshi, there is $12,750 in liquidity available at -131.2. This means that there is $9,718 requested at +131.2.
If you bet $12,750 or less, your odds will be -131.2. If you wager more than $12,750 than every dollar wagered over $12,750 is at odds of -136.6, which lowers your aggregate odds. This continues through every level of liquidity. Continuing with the same example, if you wagered over $166,460, every dollar wagered over that amount would be at odds of -142.3. The table below shows what your odds would be on a $200,000 wager.
Liquidity in Browse Odds
Browse Odds and Browse Odds Table allow you to see liquidity at a glance. Each line shows the available liquidity at the top price, so you can scan and immediately gauge market size.
To see more details, click into any line. The expanded view shows liquidity depth: how much is available at the best price, and how much sits at each price level beneath it. When looking at liquidity depth, you can toggle "Stacked" view on or off. Stacked shows liquidity depth increasing cumulatively.
When liquidity depth is in the stacked view, each price will have a green bar with two different shades. The lighter green shows how much liquidity is available at that price, and the darker green signifies how much cumulative liquidity is available at better prices.
When liquidity depth is not stacked, each price has a green bar showing how much is available at that price, and does not factor in liquidity at any other price.
Bet Finder Liquidity Mode
By default the Bet Finders will blend through liquidity levels to reach the required hedge amount. This can leave out smaller bets that have higher conversions. Liquidity mode solves this problem.
What is Liquidity Mode
Bet Finders takes available liquidity into consideration when determining results. Bet Finders offer a "Liquidity Mode" setting that controls the Bet Finder results. There are two possibilities for Liquidity Mode:
Full Bet Size Only: show a single result, blended through liquidity depth if needed.
Smaller Bets: also show smaller bet sizes (top liquidity level + deeper levels) so you can pick the EV/ROI trade-off. Each additional level blended into will worsen your odds.
Smaller Bets will show reduced bet sizes at better odds. For promotional Bet Finders, only use this if your promotion can be split into multiple bets. Liquidity Mode is not available for Profit Boost, Second Chance Bets, and Qualifying Bet (Loss Back and Winnings), because those promotions are tied to a single promotional bet and cannot be split across multiple bets.
Liquidity Warnings and Icons
Smaller-bet warning
When Smaller Bets is on and the suggested bet is smaller than the amount you entered in the Bet Finder, the Bet Slip shows a warning. This is a reminder to verify that your promotion can be split into multiple bets.
Liquidity icons
Two icons indicate when liquidity has shaped a bet. Each tells you how the bet's odds were arrived at.
- Top Liquidity Only: For better odds, this result's bet amounts were reduced to stay within the top liquidity level.
- Blended Odds: This result's odds were blended down through multiple liquidity levels. This applies to results in all the Bet Finders, as well as determining fair odds.
Deciding Which Liquidity Mode to Use
When should you choose Full Bet Size Only vs Smaller Bets? Both settings have their pros and cons.
Full Bet Size: Full bet size will always give you a single result per hedge. This result blends through as many liquidity levels as needed until your bet is fully hedged.
Pros:
- Simple, you do not have to worry about breaking up your bet.
- Faster, you are only placing one primary and one hedge bet.
Cons:
- Odds may be blended across multiple liquidity levels, resulting in worse odds and lower conversions.
Smaller Bets: gives you a single result per hedge, one per liquidity level, until your bet is fully hedged. This is only useful if your promotional (or primary) bet can be split into smaller amounts. For example, FanDuel allows you to break up Bonus Bets, but DraftKings does not. Meaning that for a FanDuel Bonus Bet, Smaller Bets is viable, but it is not for a DraftKings Bonus Bet.
Pros:
- The top conversions will have higher conversions/ROI than odds blended across multiple levels.
Cons:
- More complex, you need to determine which EV/ROI tradeoff to accept based on available results.
- More time consuming, you need to place more bets if you break your promotion into small chunks.
In the screenshot below, notice that the Bonus Bet Amount is set to $100, but the top result is only a $40 Bonus Bet. This is because Liquidity Mode is set to Smaller Bets. The top result is a 68% conversion, but it is limited by the available liquidity on NoVig. FanDuel allows users to break up their Bonus bet into smaller amounts, so you can capitalize on the 68% conversion.
Clicking the alt. bet sizes button shows the impact of continuing through various liquidity levels. In order to fully hedge the $100 Bonus Bet, you need the first two levels of liquidity from NoVig, which results in aggregate odds of -650, and a 61% conversion.
You have multiple options available:
- Convert $40 of the $100 Bonus Bet at 68% (Chandler vs Ruffy), and convert the remaining $60 at 65% (Lewis vs Hokit). This involves placing two matched bets, for a total of 4 bets. Total profit $66.26.
- Convert all $100 at 65% (Lewis vs Hokit). Total profit $65.10.
This is where you need to decide whether you want to break your FanDuel Bonus Bet into multiple bets to get the highest possible conversion. Or take a lower conversion, but reduce the number of bets you place.
Outcome Explanation
From the Outcome Explanation, you can see how much liquidity you are using across how many levels, and the impact to your odds.
Clicking on the liquidity information above gives you a visual breakdown of the liquidity being used.
Minimum Smaller Bet Size
For Arbitrage, Low Holds, and Middles, Liquidity Mode: Smaller Bets can lead to very small bet sizes. You might consider some of those bets too small to be worth your time. The Minimum Smaller Bet Size setting lets you hide bets below a threshold you set. It applies to Arbitrage, Middles, and Low Holds when Smaller Bets is selected. Two points to keep in mind:
- Your entered bet amount is never filtered out. The setting only hides the smaller bets. For example, if your bet amount is $50 as the primary bet amount, a $50 bet will be shown even if your minimum smaller bet size is set to $100.
- Setting Min Bet to $0 turns off the filter, so every bet is shown.
In the example above bets under $100 will be filtered out from the Arbitrage, Low Holds, and Middles Bet Finders if Liquidity Mode is set to Smaller Bets.
Required Market Size in the EV Bet Finder
Before proceeding be sure to have an understanding of +EV Betting.
The +EV Bet Finder determines fair odds for a line by devigging: it removes the sportsbook margin from the available prices to estimate the true probability of an outcome. The accuracy of that estimate depends on the quality of the lines feeding into it. A price with only a few dollars behind it is not a reliable input and can skew your fair odds calculation.
Required Market Size is the EV setting that controls this. It sets a minimum market size (measured by win amount, not available liquidity) that a line must have before the EV Bet Finder will use it for devigging. Lines that do not meet your Required Market Size are blended until your minimum market size is met. This ensures that unreliable prices do not distort your fair odds and ultimately your +EV estimate.
Win Amount vs Bet Amount
For determining fair odds, DarkHorse Odds uses how much you can win, not how much you can bet. Win amount is used because win amount measures how much risk the opposing side is willing to take, which correlates with the market's confidence in the line.
Example: Consider two lines that each have $1,000 in liquidity available, one at -500 and one at +500.
- $1,000 at -500: You are risking $1,000 to win $200. This means the opposing party is only risking $200.
- $1,000 at +500: You are risking $1,000 to win $5,000. This means the opposing side is risking $5,000.
Both lines have the same $1,000 in liquidity available, but they differ significantly. In the first instance, $1,000 at -500, the opposing party is only risking $200 and is likely not very confident in their odds. In the second instance, the opposing party is risking $5,000, implying significantly more confidence in their line. This increased confidence makes it more likely to be an accurate input to determine fair odds.
In your +EV setting, you can adjust the Required Market Size.
When viewing the fair odds breakdown on DarkHorse Odds, you can see how many levels of liquidity were required to reach your Required market Size.
Clicking the market above gives you a breakdown of available liquidity and shows how much was used to determine fair odds based on your required market size. Liquidity can be viewed as win amount (used for determining fair odds) or liquidity available to wager.
The same market as above, but displayed as liquidity available to wager, instead of win amount.
Splitting EV Across Multiple Liquidity Pools
Sometimes the top liquidity level holds less money than Kelly Criterion would have you bet. When that happens, the EV Bet Finder does not simply cap you at the thin top level. It blends deeper liquidity pools to build a larger position and shows you the EV and ROI at each step, so you can choose the size that works for you, balancing a larger bet amount vs a higher EV%.
Each liquidity level comes at a worse price, so the pattern is consistent: as the bet size grows, the EV in dollars can rise while the ROI percentage falls. The +EV Bet Finder lays this out as a set of alternate bet sizes, so the trade-off is clear.
Example
Below is an example +EV bet where the recommended bet amount, based on your +EV settings, is greater than the liquidity available in the top bucket. Notice that several things happen as the bet amount increases.
- Bet amount increases: $202, $303, $337
- Odds get worse: +111, +109.7, +109.3
- Effective Kelly increases: 0.098, 0.147, 0.164
- EV in dollars fluctuates: $4.63, $5.00, $4.99
- EV percentage decreases: 2.28%, 1.65%, 1.48%
In the Outcome Explanation, you can see a detailed breakdown of the liquidity levels you are using. The screenshot below is for if you only bet the top level.
Looking at the same bet, here is an example Outcome Explanation if you bet through multiple liquidity levels.
The example above shows the primary result is a small stake at the best price with the highest ROI. Each alternate increases the stake by blending in a deeper pool. The dollar EV climbs from the primary result into the alternates while the ROI percentage declines, because the blended odds get slightly worse at every level. The effective Kelly fraction shown next to each size tells you how aggressive that stake is relative to your bankroll.
Fixed Contract Size
Some exchanges, like BroThrow, trade in fixed contract sizes, and each offering can have a different contract size. DarkHorse Odds respects these fixed sizes. If the math on a hedge calls for a stake of $22.50 but the only contract available is $25, the Bet Finders use the actual $25 contract and adjusts the potential outcomes accordingly.
The practical effect is that bet amounts are rounded to whole contracts, and the profit/conversion/+EV figures shown already account for contract sizes. You are never shown a stake you cannot place.
Outcome Explanation showing how many contracts and at which price(s) you need for your wager.
A breakdown of how much liquidity you are using.
Clicking on a liquidity level (above) gives a detailed breakdown of all the available contracts at that price (below).
If you edit the odds or bet amount via the bet slip, we assume you have a manual quote available and that bets will not be restricted to the available contract sizes.
