Scalping: Making money when the price doesn't move

Caan Berry explains...

Big price movements aren't always necessary when backing and laying for a profit on the exchange, says professional trader Caan Berry...

Thursday 31st July saw the 2014 running of the Qatar Bloodstock Richmond Stakes at Goodwood, a race won by Ivawood in emphatic style.

Prior to the start of the race the market behaved much like most high-profile betting heats throughout the year, with a distinct lack of price movement. Usually those learning to ply their trade on the betting exchanges struggle when confronted with this kind of situation as the day-to-day racing markets tend to move considerably more.

Although initially this may seem like a problem it's actually a great opportunity, just one that requires a slightly different approach. If you've ever looked into any other types of trading you may have heard people make reference to 'scalping' - a method in which a trade is placed for a short space of time making use of a very small movement in price, often one or two 'ticks' otherwise known as price increments. For example, if you were to back a horse at 4.5 and then lay it off at 4.4 you would have placed a 'scalp' trade for one 'tick'.

Over the course of the year there are several higher profile events, much like Glorious Goodwood. These attract a lot more betting from the general public; Saturday afternoon markets often fall into this category also. When such events occur it has an impact on how the betting markets behave.

And Thursday was no exception. Fields typically featured plenty of high-quality horses with a string of form to their names, and for this reason alone the prices were often fairly accurate meaning they were less likely than usual to shift drastically. On top of this there was a lot more money being placed within the markets both backing and laying. The end result is a potent mixture for stability within the market, further to that the betting turnover is increased. This can present us with a better chance to apply our method of 'scalping' with consistent success and possibly for larger size bets too. Below is a graph for the price of Jungle Cat prior to the start of the race.

Caan Berry Scalping junglecat thumb 371x280 39610

You can see prior to the start at around 9.0 it barely moved with a money being turned over the whole time. This gives us an opportunity to consistently place bets at both 9.2 (to back) and 9.0 (to lay) for one tick profit without even having to wait for the price to move. Because there is higher turnover than usual there is an increased chance of doing it several times before the race starts!

Jungle Cat went on to run a good race, although finishing third. One of the benefits of achieving a green book prior to the start is that you can then re-use the profit during the race to maximize your return without putting your initial betting bank at risk. During the race I could see Jungle Cat was traveling well three furlongs from the finish and backed the colt at 9.4 with the aid of the Geeks toy software's tick offset tool, trading me back out at 7.4 for an extra 10 ticks profit.

The full version of this article appears on betting.betfair.com.

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