1. Predicting and trading in different timescales

You must make sure that you match the timescale of your prediction of the prices direction with the amount of time that you hold your position. For instance, a classic mistake would be if you are trading the favourites 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 youre going to hold the bet until the race has finished then you cant base trading decisions on where you think the price will be when the race has finished.

2. Not getting out instantly

Short term traders dont 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 isnt to drastic of an assumption, as anyone thats 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 harms way: The less time youre 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.

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 cant 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 weve 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 youre losing. Its far better to not lose and then to not win than it is to lose and then win.

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, the scratch trade taking the place of the losses. As soon as you start to let your losses get bigger than your profits youre 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 its worst.

If you want to gamble then gamble but at least do it properly. Dont do a hybrid mix of trading and gambling where youre 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 couldnt take a small one or two tick loss is stupid. You know that in the long run its going to end in tears so why do it? Theres 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.

5. Reading form and watching racing

As a short term scalper the last things you want to do is read form 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 traders mind that detract from his ability to concentrate solely on the numbers and the patterns of movement that they are creating, leading to scenario 1. The scalper shouldnt 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.

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 youre watching horseracing at the same time then you are being unprofessional.

7. Over thinking their trades

Most traders over think which way the market is going to go which has 2 drawbacks: firstly, they dont 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. Its 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 dont actually know anything about what is going on and its ok to be wrong.

8. They dont use BetTrader PRO

Not using BetTrader PRO when scalping is by far the biggest mistake anyone could make! Its 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 thats definitely the case with BetTrader. 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 trading applications dont let you do. When traders use the competition they start thinking their gimmicky little weight of money indicator is actually going to tell them which way the market is going to go. After putting their faith in that or in some equally crap graph they fall in love with the bet like in point 6 and dont react the way they should when it goes wrong. Until my competitors do a demo video with higher stakes than 2 pounds, or show us one of their top traders Betfair results for any period of time where they make more than tuppence hapenny they can kiss my arse. Watch my Demo Videos

9. Get distracted during races

Its easy to get distracted by lots of different things when youre trading but you must ignore everything. Dont check your emails, dont be on instant messenger and dont 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 shouldnt be used to do other things. Thats 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. Dont 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 dont completely leave the moment by chatting online to others, dont even answer the phone or check out other websites. Concentrate dammit! For 3 and a half hours you are a trader and nothing else, youll be surprised how much better you trade when you dont 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.

10. Wanting a profit of 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 countertrade 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 cant get out straight away with a profit you should ask for a smaller profit. If you cant 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 countertrade 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.