Does scalping still work?
I’m doing a course today at the office where, amongst many things, I will talk about scalping and answer this question. The answer is ‘Yes’ by the way.
Qualifying the ‘yes’
For every market, there is a strategy and every strategy a market. Your mission is to join the two up. If you deploy the wrong strategy in the wrong market then you will get bad results. So underlying this ‘Yes’ is some depth and qualification, it takes a bit of effort to give a full explanation.
Debate
I was prompted to do this post because of a debate which recently raged on the forum, but the same topic has also been discussed a lot in the past. I’ll often use threads like this and other material people have posted to give a full and detailed answer to the questions when I talk about specific strategies. Specifically pointing out various elements of the thread which highlight just how confused people can get, regardless of best intent. It’s common to see people make fundamental errors when talking about trading and this has been the case for as long as I remember. Using publicly available errors and assumption can be quite a useful educational tools.
Distortion
One of the reasons that the questions like these get asked, is because of the distortion you see at a top level nowadays. When I first started trading people completely dismissed all the notions I was putting forward, but of course, it was all true. But now it seems everybody is a expert! The problem is that as time has worn on, the messages from genuine market participants get drowned out by people keen to profit by selling information on trading, not by actually doing it themselves. I’m not saying this is the case on this particular thread, just in general. As competition increases between participants on the sell side, each pushes the acceptable boundaries further and you end up with a very distorted view. This now permeates all aspects of the market, even software. That’s where we have also ended up with scalping as a strategy as well.
Using statistics like a drunk use a lamp-post
One interesting aspect of the thread was the proposition that the statistics proved it was not possible, added with the weight of somebody well qualified to prove that. But one thing you should always ensure is that you don’t use statistics like a drunk uses a lamp-post, for support rather than illumination! Statistics can easily be used to justify equally polar arguments if they are used eloquently enough. It’s a really easy trap to get caught in. I made the same mistake in the past so I don’t assume anything any longer. If I am researching something I need to prove why it works but also I’ll try to disprove as well. That tends to eliminate any bias.
Proof
But I have to say, the longer I’ve been in the market; the more I realise it’s actually a lot more valuable to just get on with it. If you proffer an opinion that somebody disagrees with, it often seems almost impossible to get them to change their mind. At best you tend to end up in a rhetorical circular argument, which of course is a complete waste of time and energy. It’s fairly obvious after a while that it’s more important to do it, than getting sucked into a debate about whether you can or not. If people don’t want to do something because they consider it impossible, that’s their problem and not yours.
On this particular example, to show people scalping was still possible, I ran an experiment on the thread and scalped with £10 stakes, then posted the graph. Admittedly the last day on this graph but was a bit exceptional, but sometimes things go very right as well as very wrong.
I’ll present the, carefully collected, data from this a bit later to my visitors today and show them the underlying detail, I’m pretty sure none will be able to argue with the logic. Especially as you can see the results in black and white and I can explain why the strategy worked in great detail. As they say, the proof is in the pudding. I’ve eaten a lot of pudding in 16 years.
Difficult to argue against, then again………
Category: Trading strategies
I don’t believe the original poster of the forum thread you mentioned used any statistics to say that scalping was not possible but that it was not as easy as people like to make out.
Euler stated that the playing field was level for all, when clearly it is not. Some have a technological and/or skills advantage.
For example, your website still advertises the BetAngel VPS, which is touted as an advantage gaining asset or is that a misnomer? At the other end of the scale someone might have a slow PC with a poor ping to Betfair.
There are “traders” who will never understand how betting markets work or have losing trading strategies (e.g. Martingales) or are just not intellectually up to the job. Not everyone can be a scalper.
Yes, there are successful scalpers reporting their undoubted skills on your forum but then they would hardly login to say, “I am thick and lost thousands” would they?
I believe the original poster was trying to create some balance on your forum. Maybe not successfully but then the forum is not balanced as it exists to advertise your product in a positive light and so the debate was always going to be a hard task.