Everything You Need To Know About Smart Money Signals

Being a profitable punter is all about information. The better information you have, the better decisions you can make. Over the last few years, there has been a new introduction into the betting landscape that has changed how we can get access to smart money signals - the proliferation of exchanges.

We all know Betfair which has been around for years. But with sports betting exploding in the US, there has been a rise of new exchanges that are offering sharp sports bettors new places to originate markets. The information we can get from these markets can show us where the sharp money is going. When you compare that to the betting markets in Australia, you are able to find value.

What are Smart Money Signals?

The smart money signals is reading live order books on betting exchanges and prediction markets and finds markets where there is a lot of liquidity on one site.

When someone posts size on an exchange, they aren't backing that selection, they're offering it. They're putting up a price hoping you'll take it, because they want the other side.

This two prices form an arbitrage. When there is an arbitrage, one of the sides has to be profitable. This is just a mathematical fact. We can be pretty confident that in most cases, the side offering the value will be the bet with the soft book, as opposed to the smart money on the exchanges.

Why sharp money now lives on exchanges

Most of the books you will bet on are known as soft books. They will limit winners. But if you have a genuine edge, you can go to these exchanges, set your own price and put down as much as you like.

Exchanges and prediction markets don't care who wins. They match bettors against each other and take a commission, so there's no reason to restrict a profitable player. That’s often the way they market their products, as if you are betting against your neighbour or friend. But for the most part, the counterparty on the other side is much more sophisticated.

So who are these sophisticated counterparties? There are really two types:

1. Professional betting syndicates

2. Quantitive trading firms

Both of these players are very sharp and we because order books are public, we can see their betting activity. So when a soft book is crossed with the exchange and the liquidity posted on the exchange is far above what normal punters play, we can be quite confident we are getting on at the same side of this sophisticated players.

How does the smart money signal work?

The tool is very simple:

1. Read the order flow. We pull the live order books from exchanges and prediction markets and look at what's actually resting there, not the last traded price, but the money sitting in the book waiting to be matched, and which selection it's sitting against.

2. Compare it to the bookmakers. That resting money implies a price. We take that number and put it side by side with what every recreational book in the market is offering on the same selection.

3. Find the crosses. Most of the time the bookmaker's price is worse than the exchange's, and there's nothing to do. Occasionally it will be better and the book is offering a selection at a bigger price than professionals were willing to pay for it. This market is now crossed and will go on the signal page.

Breakdown of a smart money signal

Interpreting the order book volume

Let’s take a look at this example: Joel Schwaerzler vs Gustavo Heide, ATP moneyline.

So first, let’s take a look at the order book

On Novig, $1,306 is resting against Gustavo Heide. Broken down by price:

That money is not backing Heide. It's laying him because it’s money posted by sophisticated players who are offering anyone who wants him at those prices. Somebody has put up $1,184 saying "you can have Gustavo Heide at $2.00, I'll take the other side."

And the other side of Heide is Schwaerzler.

So the message in that order book isn't "professionals like Heide." It's the exact opposite: professionals want Schwaerzler, and they're willing to put over a thousand dollars behind getting on him. The only reason they're quoting Heide at all is that laying Heide is how you buy Schwaerzler on an exchange.

So what does that imply? Exchange prices have no bookmaker margin in them (or very minimal which we can remove). If you can back Heide at $2.00, the market is saying he's a 50% chance, which makes Schwaerzler a 50% chance too, and his fair price $2.00.

That's the number in the Implied column: $2.00. It's what the sharp side of this market is prepared to pay for Schwaerzler.

Comparing order book volume to bookmaker odds

And what are the books offering? The best price is at $2.02.

You can see the bet is crossed with Dabble. The professionals said Schwaerzler is worth $2.00 - that is the price they want to bet at. But a bookmaker will sell him to you at $2.02. You're getting the exact selection the smart money is queuing up for, at a better price than the smart money was willing to pay.

Other variables included in the smart money signal

For every signal we also include:

• Liquidity - the money resting at or better than the implied price. That's the real size behind the signal.

• Pinn. limit / xLimit — What is the Pinnacle limit and how much more is the liquidity in the market than Pinnacle

• Score — this is our metric to evaluate the bet across numerous factors that we have backtested to indicate stronger signals

Liquidity

This is the money actually resting in the exchange order book against the opposite selection. Not volume traded.

More is better. But the amount of liquidity and what you can interpret from it depends on the market.

Main markets like moneylines and spreads are heavily traded by everyone, so it takes real size before you can say the money is informed rather than incidental. You want $2,000 to $5,000 before treating it as a genuine sharp angle.

For more niche markets like first-set moneylines, total games, player props there is far fewer participants, far less capital in circulation. $1,000 here is a strong signal.

Pinnacle limit and xLimit

Often the liquidity by itself can be quite noisy. Being able to compare to Pinnacle gives us a really solid reference point for bet sizing. The Pinnacle limit on a market is good measure of how confident they are in their price. It’s one of the sharpest, most generous books in the world, and its an indication of how much money they are willing to accept from anyone. That makes it a useful yardstick.

The xLimit is exchange liquidity divided by that limit. When the exchange liquidity is a multiple of Pinnacle's limit, someone is betting more than they could get on at the sharpest bookmaker in the world. That's a really strong signal and generally indicates a sign of smart money..

We can see this in the results in our data as well.

When in doubt, you always want to at least have a Pinnacle limit and at aiming for at least 2x Pinnacle limit.

Score

These signals are slightly different to a top-down betting strategy. We are not assigning an expected ROI but rather using a scoring metric to rank these signals. The Score ranks signal strength on a 0–100 scale.

The heaviest inputs are liquidity relative to Pinnacle's limit and the absolute size of that liquidity. The edge over the sharps' implied price also feeds in. We have also applied some custom weightings for the different types of markets to adjust where necessary.

Only events starting within 6 hours are scored. Order books firm up as an event approaches and information lands; anything further out doesn't have a reliable enough read to rank.

The weightings come from our own results data, how these signals have actually performed, by market type, rather than from theory.

Filters on the smart money tool

There are many filters on the smart money signals page

Exchanges — Narrow to venues you trust for the sport you're betting.

Sports / Leagues — Filter for specific sport or league

Bookmakers — Only see opportunities available at the bookmaker you want to bet on

Starts in — Set how far out you want to see events. A Score is only produced 6 hours out from an event and we would advise to only bet within a few hours of events.

Market Type — Select which type of market you want to see (match, player, totals)

Odds — Filter for what odds you want to see

Min liquidity — Filter for amount of liquidity posted on the exchange

Min ×Pinnacle — Filter for when liquidity is a multiple of Pinnacle limit

Pinnacle limit only — Toggle to restrict when there is a Pinnacle limit

How this differs from top-down EV

Top-down EV combines prices in the market to form a consensus and then identifies where there is an outlier.

Smart money signals comes from the other direction. We are using smart betting activity to find profitable edges. Often you will be betting into a market where all the books are very similar. There is no massive outlier.

The smart money tool will surface bets that you won’t find on any EV screen. Sometimes the bets will overlap, but there will be lots of new angles to explore with the smart money signals. We are not needing to snipe stale or incorrect prices.

Smart money signals can also exist where there is no consensus**.** We don’t need a bunch of references or a sharp bookmaker price reference.

What are the results of sharp money signals?

The results from this strategy are very promising.

There is a clear trend between the amount of liquidity and the ROI. We

We can also see much better results when there is a Pinnacle limit, and the liquidity is at least 1x the size of the Pinnacle limit.

How to bet these well

These are all smart money angles. The fact you are getting a crossed market with a soft book means you can feel confident you are on the right side of the bet. Further your bet is corroborated by a large amount of liquidity that suggest to you there is someone sophisticated on the other side of the bet.

Our value score takes into account a bunch of different factors and can be a very good way to evaluate which bets to take. Any number above 50 is a strong signal especially within 1 hour from the match starting.

Because there is no edge estimate, we recommend a flat staking strategy based on odds size. A safe range is always 1-2% of bankroll for odds under 3.00.

Reminder that on niche player markets, even $1000 of liquidity usually indicates a smart money signal. For more liquid markets be more discerning.