Scalping is short term trading. It is a form of sports arbitrage betting. A scalping trader looks to make lots of small profits, which in time add up. Scalping relies on lots of active participants in the market. Scalping on Betfair on UK horse racing is the best place for this type of sports arbitrage betting. This is because you have lots of liquidity in these markets, in particular just before the start of the race, because you get a surge of money coming into the market.
The concept is simple, if you back a price you must lay at a lower price, or, if you lay a price you must back a higher price to make a profit. Whatever happens your profit is guaranteed and is equal to the difference or spread between the back and lay price. The Betfair betting exchange is an ideal place to trade in this way.
You can scalp any betting market. However, you must have enough people participating in the market or enough liquidity. The UK horse racing market on Betfair lends its self to scalping because of the amount of participants and volume of money entering the market. When we talk about scalping here we will be referring to UK horse racing for the reasons mentioned.
Scalping on Betfair involves pre race scalping rather than trading prices when a horse race is in play. The pre race market is not susceptible to out side events like ‘in play’ markets, reducing the risk.
Scalping a pre race market involves popping in an out of the market taking quick small profits. These are called scratch trades. With the pre race market there is no danger that the price is going to shoot off in one direction, for example, if a rider falls of the horse.
Scalping this pre race market on Betfair is good because the race hasn’t actually started. There are no physical events happening that are moving the market. But, the price still moves around enough to make money. This movement in the price is really just noise (random movement in odds). Scalping this market with larger stakes is less risky because there is no excessive volatility. Scalping on Betfair with larger stakes is where profits can really pick up.
The Betfair betting exchange is good for scalping because you can back and lay the favourite horse quickly.
If you would like an account with the Betfair betting exchange we suggest you look at our Betfair free bet page so you can get a free bet when you sign up.
Scalping opportunities are presented with every UK horse racing event that is covered on the Betfair betting exchange.
Not keeping to timescale’s
Remember scalping on Betfair involves only a short timescale. You can’t let your opinion of whether or not a horse might actually win effect your judgment. Sometimes the odds movement of a horse can give the impression it might win. For example, if the odds shorten continuously this is an indication the sentiment has dramatically improved for the horse. A horse with odds like this is called a steamer. Never back a horse who looks like it might win because this is plain gambling not trading.
Not getting out quickly
Scalping on Betfair really does have to be short term. We have no idea where the price will go. If the trade becomes unprofitable, you have to assume that the loss will get worse and get out quickly. If you let a price continue to move to far you can wipe out all your profits for that session. The key is to scalp your profits quickly and and cut losses even quicker. Set an acceptable level of profit you expect possibly 2 to 3 ticks. If it moves again you cut your losses at 1 or 2 ticks. Each scalping scratch trade should have a time scale of 10 to 20 seconds at most.
Not appreciating the benefits of a scratch trade
Scratch trades are a form of scalping when the trader enters and exits the trade very quickly. This form of scalping is all about money management and involves cutting loses from loosing scalping trades quickly. Some people don’t like scratch trades because the odds can continue to move in a profitable direction after exiting the trade. This can be annoying because the trader has missed out on a profit. But, a scratch trade will get the trader out if the prices moves in the wrong direction. Trading psychology matters. A missed profit has a different effect on some people than a saved loss.
If you don’t do a lot of scratch trades losses would mount. It’s no fun spending all the time regaining losses.
It is better to not lose and not win than it is to lose then win.
Don’t let a losing trade ride as a bet
Successful traders expect to take profits and loses of about the same size. The frequency of profits should outweigh that of losses. Traders don’t want losses to get out of hand other wise you are on an up hill struggle to regain them. The worst thing you can do is hang onto a bet because it’s losing and let it play out as the race commences. This is not the way and is simply gambling.
You can lose your entire profits by doing this. So it is not advisable.
Betfair.com opened up their website to software programmers allowing third party providers to offer tools to aid Betfair traders. There are a range of software providers with systems that make scalping a lot easier. Below Adam Tod explains scalping on Betfair using his specialist software BetTrader. Adam explains the importance of exiting trades quickly known as making scratch trades.
Using scratch trades
Scratching trades may end up costing few profits but it will also save lots of losses. Many people dwell on the times when they scratch and, as soon as they did so, the trade went in the right direction and they could have made a few ticks profit if only they hadn’t scratched so quickly.
As a result they stop doing quick scratch trades. Missing that profit causes them to either forget how many times the scratch trade saves them from a loss, or they give up on the scratch trade way too soon before realizing this.
The following exercises will demonstrate how often the scratch trade can save you from losing, and will also get you into the habit of doing them. Many people don’t realize just how quickly they should scratch a trade because they feel stupid getting out of a trade so soon after getting into it, especially at the same price and so soon after getting into the position.
Remember, at this stage you are not trying to make money. Whether a trade ends up winning, losing or breaking even at this point is irrelevant.
Log into BetTrader about 10 minutes before the first UK horse race is about to start and open that race in the main display window, selecting the Ladder interface.
Select the £2 stake button, this will be the biggest bet that you will place today. There is no point in doing trades any larger than £2 bets at this stage. A good way to learn is to make as many mistakes as you can and not be afraid of getting it wrong in order to have a go. If you’re placing large trades then you will be trying to get everything right from the very start and missing out on one of your best ways of learning; to mess up a few trades!
So, with the stake button set at 2 pounds (or currency equivalent), submit a Lay bet by clicking in the pink box on the left side of the ladder next to the price you want to Lay. Remember, you are not trying to make money so whether you think that the price is going to go up or down is irrelevant. You have no opinion and do not care if you win or lose this trade.
What is important is that you get matched, so choose the price 1 tick below what the Last Traded Price was and wait to see if you get matched.
As you are waiting to get matched keep the mouse hand hovering over the blue back box on the right side of the ladder directly opposite your Lay bid.
If the price moves up then move your Lay bid up by clicking and dragging it up the next box above it. Then hover the mouse hand over the Back box opposite the new price on the right side of that same price.
As soon as your Lay bet gets matched it will disappear from the unmatched bet column and your position will display above the ladder as a green number 2. Now click your mouse so that a 2 pound Back bet gets placed at the same price at which you just Layed. The time between getting matched with your Lay bet and submitting your Back bet to get out at the same price should be less than 5 seconds.
Here are a few possible scenarios:
1. You Lay 2 @ 1.71 and as soon as you are matched you place a Back bet of 2 @ 1.71 which is matched instantly. You could see that your Back bet would be matched instantly at 1.71 because 1.71 was still strongly bid in the pink column when you submitted it. 1.72 trades out and the market goes up to 1.72/1.73.
2. You Lay 2 @ 1.71 and as soon as you are matched you place a Back bet of 2 @ 1.71 which is matched instantly. You hoped that your Back bet would be matched instantly at 1.71 because you could see that the 1.71 bid in the pink column was reducing in size as Backers were hitting it and almost immediately 1.71 trades out and the market goes down to 1.70/1.71.
3. You Lay 2 @ 1.71 and as soon as you are matched you place a Back bet of 2 @ 1.71 which is not matched instantly and remains as an unmatched bet. This is because the 1.71 bid which you were a part of got taken in full and the market went immediately to 1.70/1.71 when you got matched on your Lay. However, because you placed your Back [email protected] 1.71 quickly you were very close to the front of the queue and your Back bet at 1.71 gets matched. Then 1.70 trades out and the market goes down to 1.69/1.70.
4. You Lay 2 @ 1.71 and as soon as you are matched you place a Back bet of 2 @ 1.71 which is not matched instantly and remains as an unmatched bet. This is because the 1.71 bid which you were a part of got taken in full and the market went immediately to 1.70/1.71 when you got matched on your Lay. Your Back bet doesn’t’t get matched and the market goes down to 1.69/1.70.
If done in normal trading conditions where the trader is trying to make money, Scenario 1 is often their last scratch trade! They scratch and immediately lose out on a profit. The memory of Scenario 1 stays with someone much stronger than scenarios 2 and 3 which are often forgotten about. But this shouldn’t’t be the case.
Scenarios 2 and 3 are the classic scratch trade. In both cases you have gotten out of the market quickly just as it has started to turn against you. Remember what happens immediately after you have scratched, often you will see the price move down several more ticks and if you hadn’t’t scratched when you had you would have taken a several tick loss.
Scenario 4 can be used as practice for getting out of a losing position. You are trying to Back in a falling market, experiment with how large your losses are in relation to how long you keep the position. You will find over time that the less time you are in a losing trade, the less you lose, but test this out for yourself.
Don’t take losses personally, in these scratch trade exercises we are not even trying to make a profit. And besides, the losses are tiny, each one is well worth the few pence it costs you. There’s no such thing as a free lesson, but at least the lessons are very cheap!
Your definition of success at this stage is not how much money you make but instead how many trades you manage to do in each race.
When learning to trade, trying to avoid making mistakes from the very start is the biggest obstacle to success because your attachment to the money restrains you from pressing all the buttons and seeing what happens when you try stuff.
Take advantage of being able to trade so cheap and trade, trade, trade for the next month. You’ll be amazed at how much more comfortable and knowledgeable about price movements you’ll be once you stop trying to make money and instead do loads of trades. Then you’ll be ready to start trying to make money.
For scalping on Betfair you will need a Betfair account. You will also get a free bet which you’ll be able to use to start scalping. Software from Bet Trader makes scalping horse races on Betfair easier to learn.