Scalping is a technique used by sports traders to make a profit by taking advantage of small price movements on the betting exchange.
In this article, I will explore what scalping is, how it works, and whether it can be an effective betting strategy. I will also offer some tips on how to get started with scalping on betting exchanges.
Article Contents
What Is Scalping?
Scalping on a betting exchange refers to a betting strategy where a bettor aims to make a profit by exploiting small price movements in the betting market. It involves placing both a back bet (betting on an outcome to happen) and a lay bet (betting on an outcome not to happen) on the same selection, with the aim of making a profit regardless of the outcome of the event.
The idea behind scalping is to take advantage of market inefficiencies and fluctuations, with the aim of locking in a small profit before the odds change. The profit made through scalping is usually small, but it can add up over time with the use of the right techniques and strategies.
Scalping is a popular strategy among experienced sports traders, as it allows them to generate profits without ever relying on the outcome of a single event. However, it does require a sound understanding of the markets and the ability to react quickly to changes in odds — which makes it a challenging strategy for novice bettors to implement successfully.
Pros & Cons Of Scalping
Scalping on a betting exchange, like any betting strategy, has its pros and cons. Here are some of the main advantages and disadvantages of scalping:
Pros
- Low Risk: Scalping is a low-risk betting strategy, as it involves taking small profits on trades rather than placing large bets..
- Consistent Profits: With scalping, you can make consistent profits before or even throughout a sporting event, rather than relying on a single bet to win.
- Flexibility: Scalping can be done on any market where there are fluctuations in odds, giving you a wide range of betting options.
- Control: As a scalper, you maintain a level of control over your bets and can adjust your position based on how the odds are moving.
- Automation: The concept of scalping is simple and can be implemented with an automated rule-based system. It can potentially generate profits with little input.
- Scalability: With so many betting markets available, there’s the possibility to scale up a profitable scalping operation.
Cons
- Time-consuming: Scalping requires a lot of time and effort to identify and execute trades. You need to be constantly monitoring the odds and making quick decisions.
- Low Returns: Scalping involves taking small profits on each trade, which can limit your overall returns. You will need to make many trades to see significant profits.
- Commission Fees: Betting exchanges charge commission fees, which eat into your profits if you’re making a lot of trades.
- Risk of Losing Money: While scalping is a low-risk strategy, there is still a risk of losing money if the odds move against you or if you make a mistake in your trading.
- Software Subscriptions: Trading tools are required for effective scalping, and these come at a cost. Usually they are available on a monthly basis.
- Premium Charge: The most successful scalpers on the Betfair exchange will inevitably be hit by the infamous Betfair Premium charge. This severely limits profitability for the top scalpers.
Scalping Example
Scalping is a short-term “in and out” trading strategy without a long-term view. Scalpers aren’t interested in the individual football teams, or the horses/jockeys/trainers in a race, or even the outcome of the event. They’re essentially ‘cold traders‘ with one thing on their mind: capitalising on a small 1-2 tick price movements.
Take the following example, where you request a back bet of ￡100 on Spurs at 2.0 and a Lay bet of ￡100 at 1.80 at the same time.
If both bet requests are matched then the following outcomes apply (excluding commission):
Spurs Win
- Back bet: ￡100 x 2.0 = +￡200 return
- Lay bet: ￡100 x 1.98 = -￡198 return
Net result = +￡2
Spurs Don’t Win
- Back bet: ￡100 x 2.0 = -￡100 return
- Lay bet: ￡100 x 1.98 = +￡100 return
Net result = ￡0
This scalp example generates a return of ￡2 if Spurs win, and ￡0 if they don’t. Remember that commission will be applied to the trade at the end, on the total profit. In this scenario, the small price difference enables a risk free trade.
Trading software can be used to “green up”, and spread that ￡2 evenly across the three outcomes of the match, thereby “locking” a profit. This would produce a guaranteed profit, as shown from the hedge bet calculator below:
It is important to note that this example assumes that both bets are matched. In practice, this isn’t always going to be the case.
Sometimes the odds move against you before you successfully place a corresponding bet on the other side of the market. Or if a major event occurs, such as a key player getting injured, the odds may quickly change, leaving only one of your bets matched. This poses a significant risk that needs to be carefully considered before engaging in scalping.
When Do Scalpers Enter The Betting Market?
Generally speaking, scalpers look for market volatility. High levels of volatility creates sudden price movements, which provides opportunities for scalpers to make a small profit. This typically occurs when new information impacts the odds, such as a non-runner announcement or a tip from a racing broadcaster.
It is important for scalpers to enter the market ahead of other traders, in order to take advantage of the price movements before it becomes saturated with participants competing for the same odds. Getting there early ensures scalpers have the best chance of securing a profit before the markets stabilise and the odds settle down.
Importantly, volatility does’t guarantee success because the risk of a price moving in the wrong directon is high. So scalpers should approach the market with caution and be prepared to adjust their positions as necessary.
Tips For Successful Scalping
Here are some tips for successful scalping on the betting exchange:
- Use a low commission betting exchange: A low commission rate means more profits for you, so choose a betting exchange with low commission rates. See Betting Exchanges.
- Stick to your strategy: Be disciplined and stick to your plan, even if you think a particular outcome is more likely. Don’t deviate from your strategy just because you’re feeling impulsive or emotional.
- Be patient: Scalping can take time to show results, so be patient and don’t get discouraged if you don’t see immediate profits. Stick to your strategy and keep trading.
- Use software to identify opportunities: There are many software tools available that can help you identify potential scalping opportunities and execute trades quickly. These tools can give you an edge in the market. See Trading Tools.
- Start with small stakes: Start with small stakes until you feel comfortable with the process. This will help you minimize losses and gain confidence in your strategy.
- Target liquid markets: Scalping works best in busy and active markets. Look for markets with high liquidity, such as UK horse racing, in the final 20 minutes before the off.
- Watch out for the tick sizes:?Increments become steeper as you go up through the odds. For example, when you get to 2.0 the tick sizes start moving in 0.02 increments instead of the 0.01 below 2.0. An upward swing of 2-ticks from 2.0 means more than a downward swing of 1-tick . Therefore if the price has an equal chance of moving up or down you need to be careful.
- Be aware of market news: Keep an eye on market news and events that could affect the odds of a particular market. This can help you spot potential opportunities for scalping.
- Keep a record of your trades: It’s important to keep a record of your trades, including your entry and exit points, stake size, and profit/loss. This can help you analyse your performance and identify areas for improvement.
- Learn from your mistakes: Don’t get discouraged by losses. Instead, learn from your mistakes and adjust your strategy accordingly. This can help you improve your performance over time.
- Manage your emotions: Emotions can cloud your judgement and lead to impulsive decisions. Stay calm, focused, and disciplined, and stick to your plan.
- Use stop-loss orders: Stop-loss orders can help you minimize your losses in case a trade goes against you. Make sure to use them wisely and adjust them as needed.
Don’t Believe Every Success Story
There are several websites and social media channels that teach scalping techniques. Some of them promise consistent profits through their subscription-based courses.
I cannot help but feel sceptical about scalping courses. If scalping is as profitable as they claim, wouldn’t these course creators continue to earn from it themselves, rather than selling the solution? I suspect some online resources were developed by unsuccessful scalpers.
Check out my article: Can sports betting courses be trusted?
As a general rule, it is unwise to believe every success story you read on the internet or see on YouTube, when it comes to sports betting.
However, I can recommend Mike Cruickshank’s “Betfair 1% Club,” which offers information on a low-risk scalping technique for Betfair markets. This course is available in PDF format as part of the diverse Betting Mastermind package — a collection of valuable sports betting tools and resources. Although there is an upfront cost, overall, the package is well worth the investment.
Learn more about Betting Mastermind.
Is Scalping Worth The Effort?
Making a success of scalping depends on a number of factors, including your skill level, experience, risk tolerance, and the market conditions. While scalping is a profitable approach for experienced traders who are able to frequently identify and capitalise on changes in the odds, for many less experienced traders, it’s a strategy of mixed results.
Scalping can also be time-consuming and stressful, as it involves monitoring the markets closely and executing trades quickly. This can be especially challenging for those who have other commitments or are not able to devote a lot of time to sports trading.
Lastly, it’s important to reiterate that scalping is not a guaranteed source of income and it requires a high degree of automation and technical expertise to achieve consistent, optimal results. In other words, it’s not a “get-rich-quick” scheme, and needs to be approached with caution and realistic expectations.
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