Mistake 1: Predicting and trading in different timescales

 

You must make sure that you match the timescale of your prediction  of the price’s direction with the amount of time that you hold your  position.

  You must make sure that you match the timescale of your prediction of  the price’s direction with the amount of time that you hold your  position. 

For instance, a classic betting exchange trading mistake would be  if you are trading the favourite’s price 3 minutes before the race is  due to start and you see that the price is being Backed heavily and is  going down. You think that this horse has a really good chance of  winning the race so you decide to Back also.

 

WRONG!!!

 

If you do that you are basing a short term trading decision on a  long term view of the price. The timescale of your prediction of the  price, i.e that the price will go down because the horse will win the  race, is different from the intended timescale of your trade, which is  to trade out of it with a profit in a minute or less.

 

Unless you’re going to hold the bet until the race has finished then  you can’t base trading decisions on where you think the price will be  when the race has finished.

 

Mistake 2: Not getting out instantly

 

Short term traders on the betting exchanges don’t realize just how short term you have to be to avoid the losses.

 

To trade without knowing anything about what is going on, you have  to assume that any movement against you is going to carry on going  against you in the most painful way it can. And this isn’t to drastic  of an assumption, as anyone that’s held onto a losing trade only to see  it get worse and worse will agree.

 

Without any knowledge to the contrary you have to assume the worst,  and the only protection against this is not to be in harm’s way: The  less time you’re in a position, the less can go wrong.

 

Take your profits quickly and your scratch trades and losses even quicker.

 

By quickly I mean instantly, profit scratch or loss you should be  out, or at least have your counter trade in, within 10 or 20 seconds at  the most.

 

Mistake 3: Not doing scratch trades

 

There is a tendency amongst new traders to see the scratch trade as a waste of time.

 

The scratch trade is where you lay and back the horse at the same  price. Once someone has done a scratch trade, only to then see the  price go 2 or 3 ticks the right way they tend to stop doing them. The  new trader can’t get it out of his mind that the scratch trade just  cost him a profit and stops doing them.

 

However, human nature, some more than others, will always make us  dwell on what we just missed out on without appreciating what we’ve  got.

 

A scratch trade that gets you out of the market before the price  suddenly turns against you is soon forgotten about as the trader  quietly congratulates his trading skills and quickly forgets all about  it. A missed profit has a different effect on many people than a saved  loss of the same size has.

 

The fewer scratch trades you do the more losses you will have, that  is a fact, so therefore you need more profits just to get back the  extra that you’re losing.

 

It’s far better to not lose and then to not win than it is to lose and then win.

 

Mistake 4: Letting losing trades ride as bets

 

To be a successful trader you must be taking profits and losses of  roughly the same size, but having more profits than losses, with the  scratch trade taking the place of the losses.

 

As soon as you start to let your losses get bigger than your profits  you’re creating an uphill battle for yourself because then you have to  have lots more profits than losses just to break even.

 

The absolute worst thing you can do is hold on to a bet because you  were losing on it and let it ride as the race runs. Doing this is total  insanity from a risk reward ratio and is gambling at it’s worst.

 

If you want to gamble then gamble but at least do it properly. Don’t  do a hybrid mix of trading and gambling where you’re doing each one  badly.

 

To make small one and two tick profits and then risk your whole bank  on the outcome of a horserace because you couldn’t take a small one or  two tick loss is stupid. You know that in the long run it’s going to  end in tears so why do it?

 

There’s no point in winning 9 times and losing once if your loss is  50 times the size of your profit. Anyone with such a complete lack of  discipline not only will lose but deserves to lose.

 

Mistake 5: Reading form and watching racing on TV

 

As a short term scalper the last thing you want to do is read from and watch the racing on television.

 

Those that wish to gamble on the outcome of the races should of  course do these things but a trader should avoid the formbook and the  television. Not only are they distractions from trading but they  implant biases in the betting exchange trader’s mind that detract from  his ability to concentrate solely on the numbers and the patterns of  movement that they are creating, leading to Mistake 1.

 

The scalper shouldn’t read the racing paper or switch on the  television and should only log in to Betfair at the most 20 minutes  before the first race.

 

Mistake 6: Wanting to enjoy the racing

 

Trading is often described as boring and detracting from the  enjoyment of racing.This may be the case but horseracing is of no  concern to the scalper so this comment is meaningless.

 

Horseracing has nothing to do with what the scalper is doing.

 

Wanting to enjoy the racing or enjoy your betting is fine but you  cannot trade successfully at the same time. You can do one or the other  but not both.

 

Trading requires concentration and dedication and if you’re watching  horseracing at the same time then you are being unprofessional.

 

Mistake 7: Over thinking their trades

 

Most traders over think which way the market is going to go which  has 2 drawbacks: firstly, they don’t do enough trades which cuts down  their potential to make money and secondly when they do eventually pull  the trigger they have put so much thought and effort into their trade  that they fall in love with it.

 

They are unwilling to get out of such a trade with an almost instant scratch trade or an almost instant small loss.

 

It’s as if doing that would be to embarrassing after waiting so long and putting so much time into it.

 

This is why people ride their losses due to their inability to accept so quickly that they were wrong.

 

Instead of entering into a trade with the confidence that you are  right, each trade should instead be entered with the assumption that  you are wrong with a willingness to react correctly if indeed you are  wrong.

 

As much as you may have built up your reasoning for the trade you  just did, you must remember that you don’t actually know anything about  what is going on and it’s ok to be wrong.

 

Mistake 8: They don’t use BetTrader

 

Not using BetTrader PRO betfair trading software when scalping is by far the biggest mistake anyone could make!

 

It’s the only Betfair trading software that was designed and built by a full time UK horseracing prices scalper, namely me!

 

They say necessity is the mother of invention and that’s definitely the case with the BetTrader betting software.

 

Having live price feeds and one click bet submission at any price,  lay or back, gives the trader the absolute flexibility he needs to turn  on a sixpence which the betfair website and other betting exchange  trading applications don’t let you do.

 

Mistake 9: Getting distracted during races

 

It’s easy to get distracted by lots of different things when you’re trading but you must ignore everything.

 

Don’t check your emails, don’t be on instant messenger and don’t go on the betfair forum while the racing is on.

 

To really get in the groove you have to concentrate on every race,  moving onto the next race when that one is due to start. That slack  period where you have just greened up on a race and then move onto the  next race and there is still 10 minutes to go and everything is quite  calm shouldn’t be used to do other things.

 

That’s the time where you can sit back for a few minutes while  nothing much is happening and relax a bit, but you must still watch the  price and be aware of what is happening.

 

Don’t take your eyes from the screen except to go for a piss. If you  smoke then smoke in front of the computer or not at all, nipping out  for a cigarette will cost you thousands of pounds over the course of a  year.

 

And don’t completely leave the moment by chatting online to others,  don’t even answer the phone or check out other websites. Concentrate  dammit!

 

For 3 and a half hours you are a trader and nothing else, you’ll be  surprised how much better you trade when you don’t allow any outside  distractions of any kind, letting yourself be absorbed by what you are  doing and really seeing the movements and imagining what they might do  next.

 

Mistake 10: Wanting a profit of a predetermined size

 

Many people decide how much they want to make out of a trade before  they enter it and then set their exit price according to that rather  than what it looks like they can reasonably get now.

 

Wanting to make 2 ticks is great but putting your counter trade in 2  ticks higher than you just layed at and then sitting back waiting is  gambling, not trading.

 

It might go up, but it might go down, if you can’t get out straight  away with a profit you should ask for a smaller profit. If you can’t  get the smaller profit straight away you should scratch, and if you  miss the scratch trade you should take a loss.

 

If instead of all that you remain motionless with your counter trade  still in at the same price waiting for your 2 tick profit then you are  gambling and will have your share of profits but also your share of big  losses.