The liquidity issue

“What are the advantages and disadvantages associated with liquidity?” [secures]

“Take the following logic:

More players in a game = more liquidity, we conclude that liquidity also helps on how quickly your bet is corresponded.” [almeida]

Thanks for the help almeida.

As you say: more players (betters) = more liquidity.

In a simple explanation, a game with liquidity is a game where there is a lot of money matched (corresponded bets) and also a lot of money on bets waiting to be corresponded.

Liquidity is a measure of how easily you can convert an asset into cash (which is the most liquid asset that exists). For example, a mobile phone is more liquid than a house because you sell it more easily.

Imagine that you have two cars that cost exactly the same, one is a BMW bought in Portugal and the other is a BMW bought in England (with right wheel drive), and you have both in Portugal to sell. Which one do you think is worth more?

The Portuguese is more valuable because you will easily find a buyer in Portugal. The England BMW, though it costs the same, is worth less because you have to get lucky and find someone who wants to buy a BMW with right wheel drive in Portugal.

In bets it’s the same. A bet at 2.00 odd has the same prize in a game with or without liquidity, however, the bet of the game with more liquidity is worth more because you can sell it (meaning if you bought a Back bet you can buy a Lay bet, or in the reverse if you bought a Lay bet you can buy a Back bet easily).

For those who do trading, liquidity is essential for two reasons:

1) First because it ensures that you can buy and sell at a better price;

2) Second because it ensures that you can do these transactions fast.

Additionally, for professional traders who move large amounts of money, it is important to have liquidity to absorb that large amount of transactions.

If a game permit you work with stakes of 5 000 €, worth 100 times more than a game that only allows you to work with stakes of 50 €.

PR