The evolution of scalping
*Free post* a dying art or have the opportunities moved elsewhere?
Turning profitable on Betfair can be done relatively quickly. It took me a few months, but it can be achieved in a few weeks. STAYING profitable is where the real test lies.
The reason why edges die and profits seemingly dwindle over time is because market conditions change. Getting profitable is one thing, but staying there requires regular monitoring of results and assessing the changes within the market.
I did not know this when I started. I thought the 3 month grind it took to turn profitable was all that was required. The first year was an exciting journey as I managed to make just shy of £1k a month off horse racing, rinse and repeating the same methods daily. It felt like a dream.
Now and again I’d hear in forums how the glory days were ‘over’ where you could just follow the momentum and ride out the waves on the pre-race markets. I must have caught the tail end of the golden era: whilst following momentum was possible, my profits were a far cry from the likes of Jim Makos and Adam Heathcote who were fortunate enough to clear multiple 6 figures and pivot away from Betfair around the time the premium charge was introduced. What a time that must’ve been to get involved!
Trading swings in momentum requires good timing and a larger appetite for risk which I didn’t really have at the time. A strategy that suited me well was ‘scalping’. Sitting either side of the bid/ask or back/lay price, getting matched and repeating the method, racking up as many ticks as possible before a horse race went in play.
It took alot of shooting in the dark and a few smelly losses to realise that the strategy worked best on races where the most information was available i.e handicaps or grade/group racing. The reasons which weren’t obvious to me at the time were that the more information available on a horse, the more accurately their runs could be forecast so less variations in opinion. Hence the more stable prices.
10-20 minutes before a race, you could sit either side of the price, steal 2 or 3 ticks. Rinse and repeat over 20 races a day.
The final 3-4 minute mark is where the market explodes to life as the prices to get more volatile as big money flies in as big punters, bookies laying off risk or smart trackside knowledge tends to push the prices around before they finally settle again around the final 30 seconds. Another small window of opportunity to steal 1 last tick.
My second year on Betfair saw my profits dwindle, despite seemingly becoming a better trader. I had even traded more markets and bet more aggressively, only to notice my profits had become more sporadic. The market changes were subtle but it wasn’t until my 3rd year that I had realised it was little to do with me, but the changing market conditions: Phantom money (also known as spoofing) is where traders fire in big stakes with no intention of getting matched to try and influence the movement of prices. Couple this with a rise in bots, where traders automating strategies would further hog liquidity and the landscape of pre race markets were now a very different game. Price movements made no sense anymore. Patterns were virtually non existent as the bigger players competed to mop up every last bit of gravy leaving little for small individual traders to fight for.
Scalping was becoming less and less viable as prices would break range routinely. The only real opportunity left to make decent money was during big festivals (Cheltenham, Royal Ascot, Grand national etc.) where liquidity and volume is so high & difficult for big players to move the prices.
Well since last year, the seemingly unbreakable festival liquidity has also been hit: UK gambling regulations has taken an unprecedented move in order to restrict punters through affordability checks which has had a catastrophic knock on effect. Liquidity at Royal Ascot and the Cheltenham Gold Cup have been down at least 20% year on year since 2020. UK gambling is the backbone of horse racing which funds prize money and sponsorships to keep the wheels turning.
‘The era of stable, liquid pre race markets is now a fond memory’
The markets are now so illiquid that the trading window is confined to the last few minutes pre-off which makes scalping very risky. Whilst I’ve successfully transitioned to trading in-play racing profitably, scalping can still be a potent weapon if you look in the right places…
Where to look now
Through trial and error across a variety of markets, I can safely say that scalping is very much hear to stay. In fact, it looks even more promising than ever. When one opportunity folds another rises. I’ve broken down what I feel are the best scalping markets into the following tiers:
Tier 3:
Football: Pre match/half time on football matches are amongst the most stable markets across Betfair. Stability ultimately boils down to liquidity and price action. Major European leagues, particularly La liga and Premier league are widely covered hence the high liquidity. Due to relatively lower asymmetric information, pre game prices are not volatile. Half time their virtually stagnant (no football being played duh!) but volume is slightly lower. Definitely worth a look.
Festival racing: The likes of Cheltenham Gold cup, Royal Ascot, Grand national, King George day etc. As explained, racing markets have been battered in recent years and the festivals have not been exempt. Ordinarily, high quality meetings would be the ultimate market for scalpers but due to thinning markets and subsequent higher volatility, these markets are no longer the priority.
Tier 2:
ODI cricket: Highly liquid. The only reason why I categorise this as 2nd tier is due to the infrequency of games. ODI cricket faces a squeeze between the favourable T20 and traditional test formats but when opportunities do present themselves, 50 over cricket is as good as it gets when comes to high quality scalping. Games are only played between nations and due to the rich history of data between teams and pitches, markets are relatively stable compared to the other 2 formats.
Australian racing: This probably comes as a surprise to many, but I consider Australian racing as the gold standard of pre race markets. The season is rather short (their summer falls during our winter) so between October and December, you can expect the highest quality pre match markets that have a perfect blend of liquidity and stability. The lack of shrewd information, bots and drones are a contributing factor.
Tier 1:
T20 cricket: The most liquid market on Betfair. Expect colossal sums of money (10s, even 100s of millions of pounds matched) in small countries in leagues you’ve never heard of. There are several reasons for this (will be explained in future posts) but for the sake of not going off tangent, you just need to know that this is the most volatile and liquid format of cricket. If you know how to pick your spots carefully, you can make a consistent income year round. There is dozens of franchise and international games to keep you ticking over all year long.
Test cricket: The number 1 market for scalping across all sports on Betfair. Having traded every format of cricket, football and racing, I can comfortably say that learning to scalp test cricket games should be one of the first tools in any beginners arsenal.
Liquidity is usually north of 10 million (over 50 for big series), with extremely slow moving markets for up to 5 days. You can take your time building into positions and can rack up over 100s of ticks profit over the course of a game. Test cricket and Australian racing should be the first 2 markets any beginner sinks their teeth into.
Unlike those who yap alot about strategy and theory, I will provide live examples of me practising what I preach.
My premium newsletter will contain regular tutorials of me deploying various strategies across different sports in future posts. This coming Sunday, I will show myself scalping either a football or cricket game with detailed analysis. On Wednesday I’ll be delving into the rationale behind my latest crypto play.
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Speak soon
Anyman Trading