What categories are sharps predominantly trading in - and in those categories, how much flow is sharp flow / which category has the sharpest flow?
We first segment traders by volume, then by volume-weighted immediate 1m, 10m, 1h, 2h, 1d line movements, and aggregate line movement-based PNL. Line movement is when you buy YES at 0.5 and in ten minutes it's 0.6, we count this (volume-weighted) as 0.1 in PNL.
Closing line value is considered (the difference between your odds and the odds when the market is closed) a barometer for sharp traders in trad sportsbooks, so we use this analogy.
If every time you buy, the price is better in the next 10 minutes, most likely you have good information!
Results:
Short-term, sharp traders who have a 1m line movement edge are predominantly trading sports and crypto. They are not trading mentions or weather markets!
This chart is “of the total volume done by top 100 makers by 1m line movement (volume weighted), where is their volume going?”
Compare this to say 1D line movement, and you can see why Polymarket added a taker bump to the 15m crypto price movement markets. There is significantly more trading volume on sports and politics for those who have an edge across a longer time horizon.
For each top 100 trader on any timeframe of positive line movement, sports, politics, and crypto take up 90%+ of all volume.
This is also true for total PNL. Most of it is in sports and politics, and while short-term traders have an edge in crypto, it isn’t a huge percentage of PNL.
Another interesting data point to then observe is - is this because there is significantly more volume in sports, or is sports (and crypto in the short term) the two categories that suffer from most sharp flow?
This graph tells us a couple of interesting things
The total category volume by the top 50 traders with top immediate-next line movement is 2.28% of crypto volume vs 0.65% of politics and 2% of sports. For crypto, only the 1m and immediate-next top traders dominate volume (unlike in sports). Fast-moving sharps dominate short-term crypto markets.
In sports, volume is dominated by smart handicappers - it has its fair share of sharps with short-term edge (with 1m, 10m, and immediate-next top 50 traders doing 2%+ category volume), but 1d edge makers still have the most volume.
Finance is interesting - there are some traders who are pushing insane volume in the top 200 by PNL. We can look further to see who it is and whether finance is a big part of their PNL or not.
Lessons
If you're making on short-term crypto or sports be careful, the big boys are here / coming (we know this)
There isn't a ton of edge in other markets yet
Note: all data is based on 10m lines of trading data in the 2 weeks of November. If you want more in-depth historical analysis, feel free to send me a better laptop or credits.
Originally posted on X.