How far to let it go against you - help!
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tweebie1999
- Posts: 89
- Joined: Tue Dec 21, 2010 9:23 am
I seem to be struggling a bit with my scalping. I need some advice about how long you watch a trade go against you before cutting out. I know that if you cut out every time a trade goes against you by a tick or two it will often return and go into profit. However often I think it will return to profit but just keeps going against me. Does anyone have some advice? I though I was over this problem.
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marksmeets302
- Posts: 527
- Joined: Thu Dec 10, 2009 4:37 pm
There are people far better at it in this forum than me, but I'll give my opinion: Your main edge in scalping comes from the fact that you are offering the market a price, instead of taking it. Once the market takes your bet, you can get out at no cost or wait until the other side gets matched as well. If the market goes against you, ie., you can only get out at a loss of 1 tick, that's still not bad. Why? Because statistically you have a higher chance to get matched with a one tick profit, than that the market moves one point in your disadvantage. In the long run you'll still make money. "Statistically" you have to take with a grain of salt, because it depends very much on what the sizes are on each side of the book, if there's more being matched on the back side versus the lay side etc. But those are things you can measure.
But.. if you let the market go against you by two ticks, then you tilt the odds against you. Unless you also decide to take one extra tick profit. Mentally this is very hard (well, for me not necessarily for you), so I'd say cut your losses as soon as possible. It also means you don't have to think very hard about where to take profits.
Years ago I attended Peter Webbs course, there are some real eye-opening pieces of advise in that course related to scalping (thanks Peter!
). It's worth considering if you want to get good at this.
But.. if you let the market go against you by two ticks, then you tilt the odds against you. Unless you also decide to take one extra tick profit. Mentally this is very hard (well, for me not necessarily for you), so I'd say cut your losses as soon as possible. It also means you don't have to think very hard about where to take profits.
Years ago I attended Peter Webbs course, there are some real eye-opening pieces of advise in that course related to scalping (thanks Peter!
). It's worth considering if you want to get good at this.-
tweebie1999
- Posts: 89
- Joined: Tue Dec 21, 2010 9:23 am
I have been on Peter's course and the mechanics of a scalp are familiar. You made a good point about the stats and taking a loss of one tick as it occurs. Thanks
Been working on my scalping on horse racing for the last few weeks, i only use stops if the market is defo showing it's going against me, i'l just keep trading and aslong as i keep getting lots of trades right it makes up for the odd bad one.
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tweebie1999
- Posts: 89
- Joined: Tue Dec 21, 2010 9:23 am
Well that's another question. Are the markets still scalpable?
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JollyGreen
- Posts: 2047
- Joined: Sat Mar 21, 2009 10:06 am
My two penneth
Forget scalping! There I have said it, forget scalping until your reading of the market is better. Please do not take that as a negative thing, I am trying to help you and be honest.
Let's look at the basic maths behind it. If you only make one tick at a time then logic says you have to cut out as soon as it moves against you. The more you wait the more you will put yourself in deficit. If you find yourself sitting and "hoping" it will come back to you as you said
I have watched many traders scalp successfully for 3-4 ticks only for the market to move away from them and eat all their profit and more!
So when can you scalp? Ideally you need a handicap or a group race with a high volume of money. That is why Cheltenham, Royal Ascot etc are easier to scalp. You do not want to see constant support for any horse because the market will not be stable so it needs to be neutral (unlikely) or a constant switch of support between runners. You can see now why it is tricky to find the ideal scalping market. You can scalp "at the top" or "at the bottom" but you must be pretty comfortable in the markets to make this pay. The basic idea is a horse drifts or steams in and then stops at a price where the market holds it in place.
I would advise you to look at a market where you want to scalp and then watch it closely. You will start to recognise how it moves and how often you can achieve more than one tick. If you can grab 2-4 ticks then it allows you more margin of error when you get it wrong.
I hope that helps?
JG
Forget scalping! There I have said it, forget scalping until your reading of the market is better. Please do not take that as a negative thing, I am trying to help you and be honest.
Let's look at the basic maths behind it. If you only make one tick at a time then logic says you have to cut out as soon as it moves against you. The more you wait the more you will put yourself in deficit. If you find yourself sitting and "hoping" it will come back to you as you said
then something is wrong with your entry point. However, in most midweek markets and even in a majority of weekend ones you will not find a decent scalping one so there is nothing wrong with your method it is just the market is unsuitable.a trade goes against you by a tick or two it will often return and go into profit.
I have watched many traders scalp successfully for 3-4 ticks only for the market to move away from them and eat all their profit and more!
So when can you scalp? Ideally you need a handicap or a group race with a high volume of money. That is why Cheltenham, Royal Ascot etc are easier to scalp. You do not want to see constant support for any horse because the market will not be stable so it needs to be neutral (unlikely) or a constant switch of support between runners. You can see now why it is tricky to find the ideal scalping market. You can scalp "at the top" or "at the bottom" but you must be pretty comfortable in the markets to make this pay. The basic idea is a horse drifts or steams in and then stops at a price where the market holds it in place.
I would advise you to look at a market where you want to scalp and then watch it closely. You will start to recognise how it moves and how often you can achieve more than one tick. If you can grab 2-4 ticks then it allows you more margin of error when you get it wrong.
I hope that helps?
JG
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tweebie1999
- Posts: 89
- Joined: Tue Dec 21, 2010 9:23 am
JG, you are saying there are only a very few markets where one can scalp with any great degree of confidence. So how are the successful traders making their money if the scalp has all but gone? Pre race, that only leaves swing trading.
There are things you can do that help you when scalping, just have to think outside the box.tweebie1999 wrote:JG, you are saying there are only a very few markets where one can scalp with any great degree of confidence. So how are the successful traders making their money if the scalp has all but gone? Pre race, that only leaves swing trading.
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JollyGreen
- Posts: 2047
- Joined: Sat Mar 21, 2009 10:06 am
Yes, the main trades are swings and mini swings. The former generally comes with a short priced favourite which dominates the market i.e. <3.00 or <2.00 dependant on the market and you could get >10 ticks. The other markets where it appears competitive as in a handicap you will often find moves of 5-6 ticks a regular occurrence. The advantage is get one 80% correct and make 4-5 ticks and get it wrong losing 2 ticks. That means you do not put yourself under pressure trying to take 1 tick each time. By looking for the moves you can get 5 wrong, 5 right and still make a profit which cannot be achieved with scalping.
The way I see it, most days there are several opportunities pre race to profit from swing trades, like said above where there is a short priced favorite, and they steam or drift 10+ points depending on the situation. Where I struggle is on the more competitive races, where there are more horses closely priced, could be three or more between 3 and 5. I nearly always lose money in these trades and am eliminating them from my trading slowly. Like I said I dont understand how people scalp in these markets. I could only understand it in the very high volume races where the price gets traded around a narrow range
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tweebie1999
- Posts: 89
- Joined: Tue Dec 21, 2010 9:23 am
I agree with Archangel about scalping. I have always been focused on scalping and have found in the last few months that it is becoming impossible. Of course, it's possible to get 20 races right but there is always a race that shoots away from you so fast it blows your hard earned daily profits. Despite looking for races with perfect scalping criteria, it is IMO no longer a viable method of trading for the average trader.
Scalping is where this game has changed greatly.
I used to be a scalper and earned a decent living from it, but I've had to adapt to a changing exchange.
Pure scalping has almost been extinguished by so many aspects. I now don't bother with looking for 1 tick up & downs on 10 markets - I just look for 2 markets where I reckon the price will move 5 ticks
I used to be a scalper and earned a decent living from it, but I've had to adapt to a changing exchange.
Pure scalping has almost been extinguished by so many aspects. I now don't bother with looking for 1 tick up & downs on 10 markets - I just look for 2 markets where I reckon the price will move 5 ticks