Hello Everyone,
I’ve noticed in my readings that dealers/brokers hate scalping. My understanding is that it is a quick movement into and out of a position, repeated frequently throughout the day in order to gain small PIPs.
The dealer/broker still gets the PIP spread on each trade? So, why do they find it against their interest?
Any feedback will be greatly appreciate it.
Thanks
[B][I]FastMoney[/I][/B]I’ve never heard this… and like you say it doesn’t make sense… they still get their spread. Where did you hear this from?
No Yarcofin he is absolutely right…Most of broker’s hate scalper’s even they dont allow scalping… I have an example of CROWN FOREX they have just 1-Pip spread on all major currency pair but they dont allow scalping…Also Aonda dont allow those scalper’s who close their position’s with in one minute…Atleast for minute trader have to hold his position… Also there are some other broker’s who dont allow scalping… But there are also some broker’s who allow scalping…:rolleyes:
PipHacker!!!
I agree, the only thing I know brokers hate is “HEDGING”, I met a few reps. from FXDD over the weekend and they dont mind day sclapers, I think it works out better for the broker.
This question has been discussed elsewhere on the forums
at great length, a search will find all the occurances.
Suffice to say some brokers allow it, where others attempt to
deter scalpers, a quick email to your broker of choice will settle
the question.
But this question also goes hand in hand with news trading &
they get entwined together, wrongly.
Hello Yarcofin,
Thank you for your response. I read this twice. First in a the book “Forex Revolution” and the second in the book “Technical Analysis of the Currency Market” by Boris Schlossberg.
I can’t believe this author, who states two contradictory statements in the same paragraph regarding this issue. First, he explains that the required profit from scalping must take into consideration the spread cost on both transactions. Then, he obfusicates the issue by stating that scalping eats away at the main source of income, which is the spread, thereby calling scalpers “thiefs” in the eyes of brokers! This guy is a senior Currency Stragist @ FXCM?
Hello Piphacker,
I specifically asked Oanda (via live chat) with respect to the frequency of intraday trading and limits. Their reply was that there are no limitation on the frequency nor the holding period.
[B][I]FastMoney[/I][/B]
This totally does not make any sense to me !
if a trader scalps, he/she will bring more profit to a broker than someone that keeps a position for hours or days in the market 
it’s as if you said that a food store would hate a buyer that comes 10 times a day to buy whatever food …
I don’t think most brokers care about really fast trades.
What they are concerned about is trades so fast that it takes advantage of a feed lag on their charts compared to another live feed that may be a few seconds faster. These trades are so fast that the offset of orders can’t be hedged at market. Yes this is taking advantage of them and stealing.
So if you just like trading fast and scalping a few pips here or there, no problem.
If you are automated trading on a system that cheats these feed lags, huge leverage, no trade ever over a few seconds, no losers ever… They will hand you your a** because you are not a trader, you are a thief.
Is it actually illegal? They are still getting their pips on the spread, it shouldn’t matter if you are trading with/against them.
If there is nothing in their terms & conditions that specifically says you can’t do it, I don’t see how they could stop you.
What I am talking about is a setup done by crooks that is rare, beyond most of our means, but a brokers worst nightmare. They always have to be on a lookout for this.
I consider myself a scalper at times because I trade fast. Sometimes my trades may take a minute(rare), or sometimes 45 mins or more. I don’t care about the time frame as long as my price target has been reached and the trade I am in is still justified to move my way. I don’t think brokers care either.
They are looking for patterns of only a few seconds(never held longer), huge lots, and no losers ever. This sets off alarms that these trades might not be legit.
I don’t understand why crooks would want to do this anyway. You would think with all the effort it took to set up such a complex system that you will get busted on, you could have just learned how to trade the markets the legal way to begin with. I guess the lure of guaranteed money and self doubt in ones confidence.
So if you just want to “scalp” ( a fast trader with low tp’s), go ahead. They don’t care and love the constant source of spread commissions.
The way this is stopped is by slow trade transactions,
a minute to fill a trade plus a minute to close a trade is
a long time for a scalper.
The broker may say they do not like scalping, then use
the method above to deter this practise.
A traders’ recourse to this is to find a broker who does not
employ these methods.
It is the brokers who set the rules etc., not the traders.
I still don’t get it. No matter how fast you close a trade, the very instant you opened it, it’s too late, you already lost 3 pips to the spread. there is nothing else to win for the broker and nothing else to lose for the trader. If you managed to enter a trade and exit in one second, and the market has not moved, you are 3 pips under (the spread) so I still don’t see what wrong can be done in speed trading, except paying the spread fee for nothing :eek:
Brokers don’t take our individual pidly orders to market. They use their liquidity for our orders and their computer matches the overall big picture of all client orders and hedges against that in the market. Then they can in theory make money from the spread by itself after their spread is paid. Shady speculative brokers may let some orders stay not hedged in the market for hopes that those orders are losers and then they keep your loss.
Now they can match the overall big picture fast with their systems but it takes a few seconds. Now if this system was manipulated by a lagging price feed arbitrage counter system and huge lot orders in not long enough to be matched, they can lose a lot of money.
Thank you mytwopips,
This answer makes a lot of sense. That is why many brokers are anxious to get any and all newbies into opening accounts with the lure of the quick profit on such little investments.
[B][I]FastMoney[/I][/B]
Yes true. I would think the smart ones would rather have a business model that attracts successful clients. More long term stable growth that way.
Hi there Guy’s…Actually im searching for the another form where i have read about the same topic in detail… I dont wana paste the link of another form into the babypip’s form but this is true that most of broker’s hate scalper’s… Like yestarday i have post the example of CROWN FOREX with just 1-Pip spread on all major currency pair’s but you cannot close your position with less than 10-Pip’s …Atleast you must have the 10-Pip’s profit onthe board… But if you are a scalper then you can send request to them to change your trading package… they can change your package and charge normal spread to you like other broker’s… so you can do scalp trades but with normal spread…But i think any ECN Broker is best for scalping like Efx Group & Mbt trading… Oanda is another broker with tight spread but i have read the post of different trader’s in another form that you cannot close your position with in one minute… atleast you have to hold your profit for a minute… though Oanda was my broker 3/4 Year’s back but i never do any scalp trade on that time coz im not a scalper 
so im not sure about this… But i think Oanda is best for Scalper with no commission and very tight spread’s with but with leverage just 50:1:mad: … I quite with them just becouse of leverage:rolleyes: …
PipHacker!!!
Alright. Enough of this! :mad: :mad: :mad: :mad:
[B]Lets get the facts straight[/B].
Like daydreamer65, I have been on this forum for some time.
Daydreamer65 is correct in what he says.
[B]This question has indeed been answered before - I know, because I have answered it before myself.[/B]
The statement that brokers hate scalpers is :
[B]NOT CORRECT[/B]
For an [U][B]accurate answer [/B][/U]go to the following hyperlink :
Forex Brokers that Allow Scalping: Research and Results | Forex strategies revealed
Granted, the writer of the article [I]Does[/I] admit at the end of the article that the information is based off of communication with customer service representatives, and not based off of any live account or demo account experience.
While I’m not disagreeing with you, there has been a group of individuals here on Babypips who argue that Oanda has labeled them as “latency traders” (scalpers), when these traders claim (I’d hope truthfully) they were using Oanda charts, and were in trades over 30 seconds in length, and had very few trades per day.
I acknowledge and understand that Oanda does not want scalping, however, the definition of true scalping seems to be this:
-Trades which are short in duration (Short=less than a minute, often times under 10 seconds)
-Gains of less than 10 pips
-Multiple trades over the course of a minute
Does the above mentioned traders (some of which are members of this forum, I have ran across others traders with similar experiences on others) sound like true blue scalpers?
Absolutely not.
Point is people, imo, while a customer service agent can tell you a company’s policy, it is the [I]interpretation of the policy by individuals with authority[/I] that you should truly concern yourself with. The issue has nothing to do with a specific broker, but a perception of the individuals in the fraud protection department monitoring the trades.
Perception can be heavily influenced by emotion, bias, past experience, etc. as we all know.
Just be careful out there, research brokers and speak with individuals who have similar trading strategies as yourself (if you could be construed as a scalper) and are using the broker your are considering.
Yeah I know, in the end I just said what everyone else did…
[B]
Oh Come On Tymen:p No Body care’s that broker’s hate with scalper’s or not…& if anybody care’s than atleast PipHacker Dont care’s lol I Think thread strater know got the answer, seem’s to me a vague discussion now…
PipHacker!!!:rolleyes: [/B]