Firstly, "scalping" is relatively low-risk, but don't expect to get rich quickly!
Scalping involves making lots of "micro-trades", backing and laying quickly.
Secondly, using the Betfair interface for scalping is too cumbersome. Trading software - and in particular using a "ladder view" with one-click order placing is a must for successful trading.
There are quite a few different trading platforms available online, with a baffling array of options, making each quite difficult to use for the novice trader. One piece of software that did simplify things quite nicely was "Traderline".
But with simplicity comes a cost - the software is not exactly stable! It has a tendency to freeze and become unresponsive, just as you're looking to cash in a profit (or, in a worst case scenario, get out of a losing bet!). So a big must for trading is robust, reliable software. (sadly, Traderline is not solid enough to use seriously - which is a shame as it was about the only one we could understand well enough to actually try trading in the first place).
The screenshot above shows some scenarios we all discussed and formed theories about.
Firstly, its a football game and we're only trading the three possible outcomes - a home win, away win or the draw.
For scalping, you need a market with a lot of liquidity. i.e. one with a lot of money. To make lots of little, fast, trades, you also need there to be a lot of volitility. The prices need to be fluctuating (so you can get in at the top and out at the bottom if backing-then-laying, or in at the bottom and out at the top of the swing if you're laying-before-backing).
We all found that when this game entered half-time, the prices stabilised for about 15 minutes. Normally - for matched betting - that's great news; but for scalping, it's a right pain!
As the image above shows, we have one massive favourite to win the game, one massive underdog, and the chance of a draw relatively low (high odds).
When scalping the favourite, taking a single-tick profit means sneaking 0.01 (or 1%) each time. With a stake of £50, this means a 50p profit each time. If you look at the centre column, you can see when the market shifts, it jumps a massive 0.5 at a time. That means that a single tick swing can earn a lot more profit. But it also means that it takes longer for the market to move 0.5 points (instead of just 0.01). In this example, we've had our bet at 15.5 taken, and we're waiting for the market to move up to 16.0 (to earn us £3.13 profit, instead of the measly 36p-per-tick on the favourite).
However, we only need a single tick swing in the wrong direction, and we're a massive £3.33 down!
The yellow block in the centre column shows that we've got our "back" bet set to 16.0. If that bet gets taken, we'll be £3.13 in profit. The red block in the centre column shows that if the odds fall as low as 14.5, the trading software will automatically place a back bet at 14.5 and accept a loss of £6.90.
In trading, there will always be profitable bets and losing bets.
The trick is to trade sufficient volume that the number of profitable bets is more than the number of losing bets (or if not more in volume, the sum total of the profitable bets needs to be higher than the sum value of the losing bets!)
The problem with trading at such high odds is that each trade takes longer to complete.
And it only takes one or two "bad" trades in the centre column to wipe out twenty or more successful trades on the favourite.
So we all, independently, came to the conclusion that trading on a market that was "evenly balanced" gave more opportunities than one with a massive favourite.
In summary - trade only markets with:
- Few/limited outcomes (head-to-head games or win/draw/lose only)
- Lots of money in them
- Movement in the odds over short periods of time (seconds not minutes)
- Small difference (0.1 or 0.2) between back and lay odds.
Also, keep an eye on the clock:
- As the event comes close to half time, activity slows down
- Towards the end of a game, betting can get erratic, especially on the losing outcomes; avoid these!
- In football, if the game is tied (or sometimes if the non-favourite has a single goal lead) the odds on a draw will shorten (get less) between half-time and full-time. This can be useful for backing at one set of odds, and laying off just a minute or so later at a tick or two lower. The general trend for the draw result, from half-time towards full-time (especially if the teams are already tied) heads downwards. If the favourite has the lead, this may not hold true.
There are also "trading patterns" to look out for.
The most common one is actually created by traders on the market, and not on the actual sport being played! It's better explained with an example, so here goes....
QPR are trading at around 2.10
In the middle of the game, when not much is actually happening, their price starts to move upwards to around 2.12. A few traders watching this price (note, watching the price, not the game) reckon it's it's likely to keep rising, and so start "laying" QPR (betting they won't win). Sure enough, this becomes a self-fulfilling prophecy - if enough people lay QPR (indicate that they don't think they can win) the back price goes up.
Now, at a price of around 2.16, the price levels off. Traders watching the "trend" have noticed that it's stopped rising and so don't want to risk "laying" QPR,, in case the price starts to come back down. Once again, it's a self-fulfilling prophecy. Once traders stop laying the team, the price stops rising. Once the price stops rising, traders look to cash in their profit and start backing the team to win (remember,lay at a low price, back at a higher price = profit).
As traders start to back the team, the price starts to drop (as the market suggests they're more likely to win, and so the odds on them winning shorten). Other traders watching this price drop now realise that their profits are at risk, and so they also back QPR(at higher odds than they laid the team off) and the price is driven lower.
All this happens without QPR actually doing anything on the football field!
Eventually the price returns to roughly where it started as the traders have either cashed in on their trades to take a bit of profit, or recognise that they've "missed the boat" and decide to leave the team alone. Either way, the end result is a price that yo-yos between two prices.
It's these trades that we're going to focus on in the future....