Here’s a copy and paste of the chat I had with Oanda about their scalping policy. I’m testing scalping the markets and just wanted to see what they had to say policy-wise; read on:
OANDA: Hello. How may I assist you?
xxxx: Hi. What is Oanda’s policy on scalping?
OANDA: The term scalping here primarily refers to latency trading, where clients unfairly exploit, to their advantage, delays that may occur due to the fact that FXTrade is Internet-based.
OANDA: On the rare occasions when we have believed a customer has been trading in this manner, we try to contact them and ask them to stop. Usually this is effective, but in the few cases this has not been effective, we start to reverse the trades that were executed unfairly. If necessary, we also close the account.
xxxx: How long does a trade need to be active for it to be not considered a scalp?
OANDA: You can open trades for a short period of time, it is allowedxxxx: Okay, I’m still unsure of the explanation you gave about exploiting because of an internet delay? Could you explain more?
OANDA: There are no specific time restrictions on the trade’s life span, but if you exploit the internet connectivity delay for your advantage, it is considered as a scalping. If you want to open and close trades for a short period of time, it is possible
xxxx: Could you give an example of how the exploit is used? Because if price is simple shown on the screen and I feel I’d like to close, I don’t know how the delay is affecting me adversly or whether closing the trade would get me in trouble.
OANDA: Yes, if price is simply shown on the screen and you feel like to close the trade - it is allowed. The scalping is unfairly exploitation of the Internet and its delays
OANDA: Is there anything else I can help you with?
xxxx: Nope I think that is okay. Thank you.
Now after all that, HOW does one exploit because of the price lagging. I can’t get my head around it because if I am only shown a number on my screen, I have no idea whether it is lagging or not. Thus if I close a trade, how do I know whether I am ‘exploiting’ their system?
Anyone have a clearer explanation than what Oanda had to say?