Scalping - Momentum, Reinforcement and Speed

[Iron]

Jaybee

You write in your blog that:

'The price on a horse exhibits Brownian motion as it moves randomly. Occasionally, the herding of bettors may create short-term movements but that is only through large numbers of speculators jumping on a bandwagon with nobody steering it.'

Could this Brownian motion not explain why scalping works, i.e. that price may jump around randomly within a range, which could allow you to profit if you offer money to the queue whilst in remains range-bound?

Here's another argument that may explain why scalping works.

Market Wizard Bill Eckhardt once said:

"If you assume that the true theoretical price is somewhere between the bid and the offer, then if you buy on the bid, you're buying the market for a little less than it's worth. Similarly, if you sell on the offer, you're selling it for a little more than it's worth. Consequently, on balance, my trades had a positive expected return, regardless of my strategy. That fact alone could very well have represented 100 percent of my success."

Could that same principle not also explain the success of scalping on Betfair?

Jeff

[Euler]

Can you therefore describe what a scalp is and how you would scalp because it seems to be different to a lot of peoples definition?

[PeterLe]

you know; the more i read this thread, the more apparent it shows why some people reach PC2 and why some dont and never will
Regards
Peter

I agree.."you can lead a horse to water..."..and equally, "if you do what you've always done, you'll get what you've always got"
you really do have to throw away all preconceived ideas until you have proved them yourself (and Jeff you will never find the answer to that from information in the public domain, no matter how plausible or well intended their view points are)

[Iron]

(and Jeff you will never find the answer to that from information in the public domain, no matter how plausible or well intended their view points are)

I don't expect to find a precise recipe for Betfair success in the public domain, but one can stand on the shoulders of giants and learn from their mistakes.

it shows why some people reach PC2 and why some don't and never will

You don't know that.

I'm sure you mean well, but I think you are putting people down needlessly. I welcome constructive criticism, but telling someone they are doomed to failure isn't constructive.

Jeff

[JollyGreen]

Yawns, laughs inwardly and gets on with more important things like scalping for a profit!

[Iron]

I just saw this cartoon and thought of this thread for some reason: https://www.facebook.com/photo.php?fbid ... =1&theater

[switesh]

you know; the more i read this thread, the more apparent it shows why some people reach PC2 and why some dont and never will
Regards
Peter

you really do have to throw away all preconceived ideas until you have proved them yourself

well said PeterLe. Amen!

[PeterLe]

I'm sure you mean well, but I think you are putting people down needlessly. I welcome constructive criticism, but telling someone they are doomed to failure isn't constructive.

I don't expect to find a precise recipe for Betfair success in the public domain, but one can stand on the shoulders of giants and learn from their mistakes.
Jeff

Jeff
Im not putting people down; what I am trying to say is that looking in the wrong place will lead them down the wrong path. Ive been down many of those paths in the last 7 years too. They are cul-de-sacs

You will never find that precise recipe Jeff. (You've said on lots of occasions that you would never put your money into a market until you can frame it exactly and define your edge). Its a paradox, but you will only start profiting when you have have lost a little and learn from those mistakes. Wash; Rinse, refine and do it again and again cutting out the weaknesses. Peter has said on many blog entries, start at random, and build out from there.
I dont pretend Im the most profitable trader on here, but that approach has worked for me many times over
Regards
Peter

[LeTiss]

With regards to Archangel Professional status, which I fully agree is a nonsense, and very misleading to newbies, perhaps there should be a facility where forum members can give a green thumbs up to good comments and a red thumbs down to absolute drivel. People's Archangel status could then be based on their number of positive responses from other members, highlighting to newbies how helpful their advice usually is

[Euler]

With regards to Archangel Professional status, which I fully agree is a nonsense, and very misleading to newbies, perhaps there should be a facility where forum members can give a green thumbs up to good comments and a red thumbs down to absolute drivel. People's Archangel status could then be based on their number of positive responses from other members, highlighting to newbies how helpful their advice usually is

I'll review this and see what we can do.

[Iron]

Switesh

I don't know if you wrote that to be provocative, but if you listen to your videos, which are full of generalisations about the market, and read your anti-empiricism comments in this thread, you'll see the irony of your 'Amen' comment.

But as you don't appear interested in the views of anyone who isn't a pro, there isn't much point in me carrying on this conversation with you.

Jeff

you really do have to throw away all preconceived ideas until you have proved them yourself

well said PeterLe. Amen!

[switesh]

no Jeff.

I was just supporting PeterLe's point about removing preconceived ideas. He's right in saying that a lot of traders fall back because they latch on to some idea instead of trying and opening up.

I'm not that better than most traders, but I'm being more positive about how I think and practise trading.

[switesh]

My focus at the moment is just trying to minimize mistakes and keeping myself positively motivated. That's all.

So even if the market throws me a profit by "fluke" - I say Thank You indeed, please drop by again!

[Iron]

Jeff
Im not putting people down; what I am trying to say is that looking in the wrong place will lead them down the wrong path.

I agree that it will, although with greatest respect you are preaching to the converted. I don't dispute that theories need to be tested in the marketplace.

Sorry if my earlier message appeared a bit hostile; I guess this thread was getting a bit heated.

You will never find that precise recipe Jeff.

I don't believe that there is a single recipe for success; there are many formulas that work. However, I do believe that one can frame one's approach in terms of 'when x happens, I will do y', and test that approach rigorously.

You probably wouldn't employ an engineer who, instead of recording the outcome every idea he tested, tried a few things out without making notes, and gave you his general impressions of what did and didn't work. I'm not sure trading based on your gut on Betfair is much different. If you can make it work, great, but I prefer a systematic and rigorous approach (although I don't always apply such an approach!).

Anyway, like you I'm just providing feedback that might benefit newbies, and I hope there are no bad feelings.

Jeff

[Iron]

I was just supporting PeterLe's point about removing preconceived ideas.

I'm actually a big fan of operating with minimal assumptions. The more I learn about the market, the more I realise it's largely unknowable, except with hindsight.

I'm not that better than most traders, but I'm being more positive about how I think and practise trading.

Just remember that there is a fine line between positive thinking - which is great - and self-delusion. It's very easy to cross that line. One must hope for the best but prepare for the worst.

Jeff