Scalping - Momentum, Reinforcement and Speed

[switesh]

Now I find you asking questions about strategies, PL's and what not, and I wonder how did you get the title "Archangel Professional"?

By posting over 500 posts on the forum! That's it! You will automatically get that status when you have done so.
Jeff

I'll have to post less often and stop altogether when I reach 499, or request BA Admin to remove that title from being applicable to me. It can be so mis-leading!

[switesh]

Good idea LeTiss.

I think it's much better if we could see what level people are before accumulating advice from them.

I'm level 5 (working to get to level 4). Would be happy to wear this as my title. It's a true reflection of my trading abilities.

[Iron]

The 'averaging down' method works just fine for long-term swing trades, despite what Jeff says.

Let's just check that we're talking about the same thing.

You lay at 5.0, hoping that the price will rise. Instead, the price gradually drops to 4.4, but you still haven't closed your trade. Instead of acknowledging your mistake and closing your trade, you lay at 4.4, in the hope that mean reversion will soon kick in and save the day.

Have I understood your approach correctly? If so, it's a Martingale-type approach that I think should be avoided at all costs. To quote Paul Tudor Jones, one of the most successful financial traders of all time, 'losers average losers'.

Jeff

[Zenyatta]

The 'averaging down' method works just fine for long-term swing trades, despite what Jeff says.

Let's just check that we're talking about the same thing.

You lay at 5.0, hoping that the price will rise. Instead, the price gradually drops to 4.4, but you still haven't closed your trade. Instead of acknowledging your mistake and closing your trade, you lay at 4.4, in the hope that mean reversion will soon kick in and save the day.

Have I understood your approach correctly? If so, it's a Martingale-type approach I think should be avoided at all costs. To quote Paul Tudor Jones, one of the most successful financial traders of all time, 'losers average losers'.

Jeff

Yes we are talking about the same thing. The trade moves against you...put even more on. I tell you it works. If I visit the UK again I will come to the office and demonstrate it working time and again.

But it only works if you know where the value is and you are holding on for the long-term. I think Jones was probably giving his opinion from the perspective of a short-term trader.

I agree if you didn't know where the value was, it would be a disaster.

[Iron]

I think it's much better if we could see what level people are before accumulating advice from them.

I genuinely don't care what level someone is at. I will listen to what everyone has to say and weigh up the logic and the evidence behind what they say.

With respect, I think you are hoping that, by listening to pros, you will be able to gradually piece together the secrets of their trade, and replicate their success. To an extent, I've done that myself in the past (and recently, I bought some videos from a trader who makes about £40 a race, but that's another story!).

However, I genuinely feel that you are on a road to nowhere with that approach.

Rather than trying to piece together exactly what Peter or Adam does - something I suspect a lot of people have been doing for a long time, without success - why not do what the pros themselves did to get so good, and approach the market in an intelligent manner, making logical decisions and using small stakes initially, and learning from your mistakes?

Jeff

[PeterLe]

I do think the title "archangel" is misleading too. It shouldn't be based on the number of posts.
Once you have been on here for so long, you tend to know who to listen to and who not to listen to.
There are some very good posts and I have learned so much, but I sometime read things (by Archangel's) that I know isn't true (No doubt I have posted too where my logic is flaky, no one is right all the time).
There is an awful lot of conflicting messages posted, that may be appropriate in the financial world which dont apply well in sports trading. These are posted in good faith, but often sends the newbie off at tangents and in the wrong direction

[JayBee]

At the end of the day you can lead a horse to water, but you can't make it drink!

I'm sort of resigned to the fact that no matter what evidence or knowledge you have contrary to somebodies position, people rarely change their mind. Preferring to justify their position and anything that re-enforces it. But one thing I've learned, the hard way, is that you have to have an open mind all fronts.

If you know that somebody else is doing something that you think is impossible, what are they doing, have you got some fundamental element of your supposition wrong?

Jaybee says that the chance of a successful scalp is 50% because movements is random and unpredictable and therefore speed is of the essence. But if I plucked a complete novice off the street today I reckon I could get them a strike rate way above 50% with just some simple instructions.

So am I fibbing, or was that 50% strike rate not thought through?

If you re-read the article I say "IF a scalper is 50% successful".

My goal is not to say that scalping is impossible but to create a logical/mathematical basis for scalping so as to automate the process. For the academics, I want to "arbitrage out scalping from unfair markets". Read into that what you will.

Interesting thread, proving what you said is correct. When people believe something to be so then it is hard to disabuse them of it. Especially, in a forum that specialises in certain view. It's rather like living next to a dam.

Anyway, I've put a new article on my blog to hopefully crystallise my thoughts some more. No doubt the Cro Magnon's will take offense.

[JayBee]

Yes we are talking about the same thing. The trade moves against you...put even more on. I tell you it works. If I visit the UK again I will come to the office and demonstrate it working time and again.

But it only works if you know where the value is and you are holding on for the long-term. I think Jones was probably giving his opinion from the perspective of a short-term trader.

I agree if you didn't know where the value was, it would be a disaster.

That is indeed a Martingale or "Doubling-Down" as used in the financial markets (borrowed from Blackjack).

Doesn't work in roulette because you have a negative edge.

Does it work on the horses? If you know what the SP is going to be and I don't think you do.

Is there another metric? Yes.........

[Iron]

Once you have been on here for so long, you tend to know who to listen to and who not to listen to.

I listen to everyone, even people I disagree with.

Zenyatta and I disagree on many things, but I wouldn't presume I have nothing to learn from him. I'm sure that he has some very valid ideas and that there are some things he's very knowledgeable about.

As Euler says, one needs to keep an open mind.

Argument by authority is one of the weakest forms of argument in my opinion. I prefer to look first and foremost and what is said, not who said it...

sometime read things (by Archangel's) that I know isn't true

...

These are posted in good faith, but often sends the newbie off at tangents and in the wrong direction

Providing others point out that those things aren't true, I think that the ensuing discussion will generate ideas and enrich people's understanding of the markets.

Jeff

[Iron]

A rather cryptic comment!

Care to elaborate?

Jeff

Is there another metric? Yes.........

[Euler]

My goal is not to say that scalping is impossible but to create a logical/mathematical basis for scalping so as to automate the process.

It's already been done, but you won't be able to achieve the same unless you change your perception of how the market works or how people scalp it.

The trouble with your article is there are a number of a inaccuracies on it, but you are not willing to accept that your approach relies on assumptions that are inaccurate.

To quote a response you made: -

When the bookies and connections start lumping money into the market then price moves are chaotic and unpredictable. I would think your chance of success is 50/50 and you then have to guarantee win ticks out number your loss ticks.

Which more or less ties in to your view that the market is random and it's a 50/50 chance of you getting a scalp correct.

[JayBee]

My goal is not to say that scalping is impossible but to create a logical/mathematical basis for scalping so as to automate the process.

It's already been done, but you won't be able to achieve the same unless you change your perception of how the market works or how people scalp it.

The trouble with your article is there are a number of a inaccuracies on it, but you are not willing to accept that your approach relies on assumptions that are inaccurate.

To quote a response you made: -

When the bookies and connections start lumping money into the market then price moves are chaotic and unpredictable. I would think your chance of success is 50/50 and you then have to guarantee win ticks out number your loss ticks.

Which more or less ties in to your view that the market is random and it's a 50/50 chance of you getting a scalp correct.

And that's another problem with entering the lions den of a forum, people will ignore most of what you write and try to score points to show off to their peers by attempting to pick holes.

But it is good to hear that in a chaotic environment and backs and lays are being fired in at a rate that no human can apprehend that you have a super human ability to make sense of it. When, in reality, you are talking about a different time frame, when volume is less and you are momentum trading. Semantics dear boy. Semantics.

[maycontainnuts]

Jeff, he is saying that he looks for inside information being discounted into the market and follows it by swing trading.

[Euler]

You are bound to get stick if you patronise people who actually do what you say is impossible. Maybe you should rethink your assumptions?

Based upon people not understanding your original posts, why not post up, clearly, exactly what your beliefs are for people to debate?

I.e. do you, or do you not believe it's possible to scalp a market. Do you or do you not believe the market is completely random? Do you, or do you not believe that speed is the most important factor when scalping?

[JayBee]

You are bound to get stick if you patronise people who actually do what you say is impossible. Maybe you should rethink your assumptions?

Based upon people not understanding your original posts, why not post up, clearly, exactly what your beliefs are for people to debate?

I.e. do you, or do you not believe it's possible to scalp a market. Do you or do you not believe the market is completely random? Do you, or do you not believe that speed is the most important factor when scalping?

1) do you, or do you not believe it's possible to scalp a market

A) Yes, of course. But only if you have good technology and are first in and out of the trade.

Scalping false signals is a Ponzi Scheme whereby the first in can feed off the latecomers.

Trading momentum from true information is not scalping.

2) Do you or do you not believe the market is completely random?

A) I would like you to provide me with the SP for any of today's races afore noon today.

3) Do you, or do you not believe that speed is the most important factor when scalping?

A) Already answered but I will add that front running a market will always guarantee a profit over those who are late. I would love to see successful Betfair "scalpers" returning the same gains on a level playing field where all traders have the same latency/information/hardware set up.

That is why I said I am looking at this academically with reference to financial markets. So long as markets are unfair then there will be those who benefit over others. At the moment that is permissible on Betfair and maybe clamped down on in financial markets. That is my academic rationale.

Finally, computers were invented to take over the drudgery of man's activity. Why sit in front of the screen and trade one horse race market at a time when you can design bots to trade all of them simultaneously? If you have technology then use it to its fullest.