When I've studied traders who don't know where their edge is or think it's mindset that is doing the trick, I've found out that what is actually happening is they are recognising patterns in the market that are generally positive.
I already know what these patterns are, but a lot of these traders don't go to that depth. I think this explains why some previously succesful traders eventually fall out of the market, they can't adapt when the market changes.
Scalping and coin tossing
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CaerMyrddin
- Posts: 1271
- Joined: Mon Sep 07, 2009 10:47 am
That's interesting, as if they were set to recognize certain patterns that they learnt but were unable to learn new ones?
Maybe it's an ageing problem or maybe they were taught to trade, but never learnt by theirselves?
I don't know about you guys, but relying on a given edge isn't problem proof too. Since I started trading I lost 2 edges I'd found, so they simply don't last forever. There is always a chance of being outrun by someone smarter, faster or whatever and lose your edge. As someone would say, adapt and survive
Maybe it's an ageing problem or maybe they were taught to trade, but never learnt by theirselves?
I don't know about you guys, but relying on a given edge isn't problem proof too. Since I started trading I lost 2 edges I'd found, so they simply don't last forever. There is always a chance of being outrun by someone smarter, faster or whatever and lose your edge. As someone would say, adapt and survive
I think that the fundamental psychological dynamics behind markets will never change. People have studied 19th century markets, and found the same patterns that you see today. People have always blindly followed the crowd, for example, and probably always will.
With Betfair, however, I think that changes in the racing industry may affect what happens on Betfair. For example, if the bookies take less money from the punter, they will hedge less money on Betfair, which may affect the types of market that develop.
What do you guys think?
Jeff
With Betfair, however, I think that changes in the racing industry may affect what happens on Betfair. For example, if the bookies take less money from the punter, they will hedge less money on Betfair, which may affect the types of market that develop.
What do you guys think?
Jeff
CaerMyrddin wrote:Since I started trading I lost 2 edges I'd found, so they simply don't last forever.
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enzabella2009
- Posts: 747
- Joined: Tue Nov 03, 2009 3:58 pm
I bet that those 2 edges you have lost can still be applied under specific circustances. I don`t usually analyze markets that last only 5 minutes. Perhaps I have placed a bet on that same market in the morning but, not for scalping. I almost certain to analyze only bets I have placed many hours earlier, all the rest are just fast oppurtunitys to take or lose.CaerMyrddin wrote:That's interesting, as if they were set to recognize certain patterns that they learnt but were unable to learn new ones?
Maybe it's an ageing problem or maybe they were taught to trade, but never learnt by theirselves?
I don't know about you guys, but relying on a given edge isn't problem proof too. Since I started trading I lost 2 edges I'd found, so they simply don't last forever. There is always a chance of being outrun by someone smarter, faster or whatever and lose your edge. As someone would say, adapt and survive
Wow!Euler wrote:Jeff, As well as messing around on Betfair and Betdaq on Saturday I also scalped with £5 stakes. I did 22 races like this and won on 18 (78%) netting £21.98 in total.
Hopefully you'll be able to show me how you weave that kind of magic when I come and see you (although I'm not expecting that kind of performance from a £5 stake right away!
).Do you know off hand how many trades you made in total to achieve that amount?
Jeff
The interesting thing about this method is it's broadly similar to where I started 11 years ago, I've just refined it a bit over the years and got better at doing it. I just do it on auto pilot now. It works well at lower stake levels but starts to get harder when the stakes go up. But that's only to be expected as your money starts to influence the markets when stakes rise.
You must be placing a large amount of trades for returns like that!Euler wrote:Jeff, As well as messing around on Betfair and Betdaq on Saturday I also scalped with £5 stakes. I did 22 races like this and won on 18 (78%) netting £21.98 in total.
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Bradbiggs2012
- Posts: 1
- Joined: Tue Nov 22, 2011 3:55 pm
I am trying to learn how to scalp but in the one click menu when i back and lay a bet on a horse the profit margin will be in red and the profit and loss will be in green and all the other horses lines will be in red some one please explain to me what numbers should i be looking at thanks for all your help in advance
Did the original 'biased coin flip problem' get answered on this thread? I calculated that it's a negative expectation proposition of 0.84 i.e. you will lose 16% of your stake over the long run.
Calculated as:
(0.7)*(1.2) = 0.84
Where:
(0.7) is your win rate with the biased coin
(1.2) is your decimal odds (1/5 converted to decimal)
...as you are risking an average loss of 5 euro for every 1 euro you win)
In trading terms you can think of this as a win rate of 70% where you profit one tick but lose 5 ticks when you lose. Anyone else get this?
Calculated as:
(0.7)*(1.2) = 0.84
Where:
(0.7) is your win rate with the biased coin
(1.2) is your decimal odds (1/5 converted to decimal)
...as you are risking an average loss of 5 euro for every 1 euro you win)
In trading terms you can think of this as a win rate of 70% where you profit one tick but lose 5 ticks when you lose. Anyone else get this?
Hi Goran
If you have a 5 tick stoploss and a 1 tick offset, then I'd have thought your strike rate will be way above 70%.
The maths that proves scalping works is highly advanced. Have a look at this paper, which addresses the maths of market making (which is essentially what reverse book scalping is): http://www.cis.upenn.edu/~tanmoy/papers/CK11.pdf
I won't pretend to understand even 1% of the paper, but my guess is that the following basically means 'don't worry about spikes':
'The contribution of events where a price jump larger than Ct occurs to the expected profit is negligible'.
Interesting, the article also says the following, which sounds like another way of saying 'range trading works':
"Pure market making strategies have no view or opinion on which direction the price 'should' move. Indeed, as we shall show, the most profitable scenario for a market maker is one in which there is virtually no overall directional movement of the stock, but rather a large amount of non-directional volatility.
...
Market making is protable when there is a large amount of local price movement, but only a small net
change in the price.”
Jeff
If you have a 5 tick stoploss and a 1 tick offset, then I'd have thought your strike rate will be way above 70%.
The maths that proves scalping works is highly advanced. Have a look at this paper, which addresses the maths of market making (which is essentially what reverse book scalping is): http://www.cis.upenn.edu/~tanmoy/papers/CK11.pdf
I won't pretend to understand even 1% of the paper, but my guess is that the following basically means 'don't worry about spikes':
'The contribution of events where a price jump larger than Ct occurs to the expected profit is negligible'.
Interesting, the article also says the following, which sounds like another way of saying 'range trading works':
"Pure market making strategies have no view or opinion on which direction the price 'should' move. Indeed, as we shall show, the most profitable scenario for a market maker is one in which there is virtually no overall directional movement of the stock, but rather a large amount of non-directional volatility.
...
Market making is protable when there is a large amount of local price movement, but only a small net
change in the price.”
Jeff