I’d like to quote a review I recently read whilst looking for a new option for brokers. Currently with IBFX, scalping is not possible, spreads are too wide for the system I have come to use. Here’s the quote from a review on OANDA:
Using Oanda has several advantages and disadvantages. This broker is not really that advanced so naturally, the services they can give are limited. Intentional or not, orders are often delayed by several seconds—and also, Oanda sometimes charges 30 pips and above to their spreads. Weird or not, these instances often occur during the times when news are released. One of the few things that Oanda dislikes is an account that makes too much money. If you’re that person, expect your account to be closed and you’ll be asked to leave. But hey, on the brighter side, Oanda is quick to pay deposits and also provide generous and flexible lot sizes. – courtesy strator on reviewpips
Now, here’s the question I’d like to ask for opinions on:
Hypothetically, one out of 100’s of traders is said to be profitable and successful. If one of those traders comes about, and is trading with a retail broker, does the broker have the right to tell that patron to stop their trading and bar them from trading with the broker?
Many brokers are against scalping; I’ll refine that by saying many retail brokers. Being a scalper for the most part as per the new system I’ve tested, should I be worried? What could/should I do to avoid being barred from trading, assume I will keep using the scalping system and not trade something longer term.
The reason why many brokers (and we’re talking the market making type) don’t like scalping is because it can create a large short-term directional exposure on their balance sheet since they are at least initially taking the opposing side. Picture a situation where a bunch of accounts slap long EUR/USD for about 100 full lots. If there is no offset with other customer accounts (ones going short) then the broker has a EUR 10mln short exposure, which it probably is going to hedge. But wait! Just as the broker buys 100 lots away to offset its short EUR/USD exposure, the scalpers close their positions. Now the broker is net long EUR 10mln. Can you see how this could create some serious problems for them?
As for the whole “One of the few things that Oanda dislikes is an account that makes too much money.” thing, who is making this claim? Does he work there? Has he talked with Oanda on the subject? Or is he just expressing his own paranoia? I won’t take that sort of thing seriously about any broker until someone shows the actual proof.
As far as delays on buy/sell transactions, I think any broker platform suffers in the times of high volume. I usually trade the Asian for just that reason.
And about the profiteers, I’m not so sure that Oanda cares whether you make money or not.
I think people who assume those ideas may have never been profitable.
And I’ve not met a broker yet that doesn’t enjoy earning 15 spreads a day from a minute trader, vs one a week from a daily.
ECN puts you straight into the market, where you compete with actual traders.
The broker will charge you a commission on each trade and the spreads will be much lower (typically). This may or may not work out for you depending on the lots you are trading - but it will automatically get rid of any potential problems you may have with a “bucket shop” market maker.
By scalp, I’m looking at entering a position, based on breakouts and netting 1 -3 pips per trade. I understand this kind of system is proposed many-a-time, however I don’t wish this thread to discuss the workings of the system; that’s for a thread I hope to create in the near future.
With this sort of style however, a trade generally lasts from a few seconds to under 5 minutes. If a trade does not move, or begins retracing to a certain level, I exit even at a slight loss.
I have looked into this ECN option before and haven’t recently (I’m talking in the past month or two) revisited how the spreads are. Last I checked I couldn’t find one that beat the 0.9pip spread on the EUR/USD that OANDA offered.
Ah thanks for explaining that, it clears it up a lot! If many people are not scalping though, would any company still have an issue with me trading and winning trades of 1 - 3 pips on a constant basis? I’m not trading with thousands of dollars per-se, though one day I hope I can reach a level where it can be a job/profession.
As to the review I read, I simply posed the question because it made me ask myself if it was actually possible. I’m pretty sure that guy isn’t with Oanda and would know firsthand, just makes you think you know?
Would you say theres a difference between the demo and live trading? I’ve been live with IBFX but I think my forex transition is backwards :P. Started with longer term trades and just can’t do it well enough haha.
My broker loves scalpers. He makes two pips on every EUR/USD trade. He’s well capitalized, so if you make 100 trades a day, he’ll probably send you a nice gift. If your broker doesn’t like the way you trade, find another broker, fast.
OANDA does and can cancel your account if you are profitable. They are in the business to make money.
However that is very rare to happen since most people end up losing money. If they cancel your account, consider that a good thing, means you’re a good trader.
The reason they do that is because they try to not hedge every position so if you lose money, they gain your loss.
They base this on the fact that in the long run most traders will lose money. So they have excellent odds to work with.
However OANDA has excellent spreads and its a great broker to start trading with.
A good thing that I’m making money, yet if terminated, there goes the income haha. That’s where I’m stuck because I see myself doing this long term, and IF I make this a job, I’d like it to be sustainable. Even if I make a decent yearly income that covers me as a full-time job, wouldn’t any company feel like terminating me as a trader? Aside from ECNs of course who make commissions per trade. Thus, would an ECN be the go to option from the get-go? Or should I stick it out and see what happens at Oanda.
That’s the decision I’m stuck with at the moment.
Oh and I’ve been Live trading with IBFX already for about 4 - 5 months now.
If many people are not scalping though, would any company still have an issue with me trading and winning trades of 1 - 3 pips on a constant basis? I’m not trading with thousands of dollars per-se, though one day I hope I can reach a level where it can be a job/profession.
