Is scalping allowed?

[king156]

Sorry for the stupid question. But I was just wondering does IG allow scalping such as getting into a currency pair and shorting it and getting out 30 seconds, 1 minute later for example for maybe 1/2/3 points profit?

Is that allowed I heard that IG will put your order on hold if you do that a lot?

Any help much appreciated thanks.

 

[gle101]

Sorry for the stupid question. But I was just wondering does IG allow scalping such as getting into a currency pair and shorting it and getting out 30 seconds, 1 minute later for example for maybe 1/2/3 points profit?

Is that allowed I heard that IG will put your order on hold if you do that a lot?

Any help much appreciated thanks.

Well IG is one of the few brokers I have not tried out yet. But I guess the same appplies to them as the others, try scalping, it is definetly worth a try, you will get notice if and when they start playing games with you. If that occurs move on, do not stay put!

 

[jkane]

Well IG is one of the few brokers I have not tried out yet. But I guess the same appplies to them as the others, try scalping, it is definetly worth a try, you will get notice if and when they start playing games with you. If that occurs move on, do not stay put!

scalping is for suckers with spread trading firms

Spreads too wide

Have to trade real prices for that

 

[king156]

scalping is for suckers with spread trading firms

Spreads too wide

Have to trade real prices for that

What do you mean real prices? thanks

 

[timsk]

What do you mean real prices? thanks

Hi king156,
jkane is referring to the underlying market. When you trade with a spread betting broker, you're trading prices they set themselves and they are the ones on the other side of your trades.

in general terms, scalping and spread betting do not make good bedfellows. Some SB firms won't tolerate it and specify in their T&C's the maximum frequency and minimum duration of trades. However, a few do allow it, but many members will tell you that this is because most traders that attempt it are hopeless at it and the SB firm makes shed loads of easy money out of them. The few who are good at it are shown the door.

IMO, spread betting and scalping is not advisable for newbies. Add forex into the mix and it's a recipe for disaster. The nature of scalping is that trades last a matter of seconds, very often in pursuit of a few points - as in your example. By necessity, the only way to make any real money is to bet large size and to max out on the available leverage. If you were doing this on January 15th this year trading EUR/CHF, then the chances are that you'd be one of those people facing crippling debts and possible bankruptcy.

The bottom line is that unless you're very experienced and know exactly what you're doing - avoid scalping like the plague. If you can't help yourself and simply have to try it, trade via a SB firm that offers guaranteed stops - and make sure you use them without fail on every single trade. Coz you know what happens on the one trade when you don't: yep, it's bye-bye account time!

Tim.

 

[wackypete2]

Hi king156, By necessity, the only way to make any real money is to bet large size and to max out on the available leverage.
Tim.

So many people say this but it simply isn't true. The flaw in that reasoning is assuming scalpers make only 1 or 2 trades per day. Because they usually only make a small amount of money on each trade most scalpers trade very often, sometimes 50 to 100 trades per day. In this way you can use small amounts and low leverage and it will all add up. Although scalping is not recommended for beginners because it is difficult and intensive, a seasoned scalper actually has less risk, IMO

Peter

 

[king156]

Hi king156,
jkane is referring to the underlying market. When you trade with a spread betting broker, you're trading prices they set themselves and they are the ones on the other side of your trades.

in general terms, scalping and spread betting do not make good bedfellows. Some SB firms won't tolerate it and specify in their T&C's the maximum frequency and minimum duration of trades. However, a few do allow it, but many members will tell you that this is because most traders that attempt it are hopeless at it and the SB firm makes shed loads of easy money out of them. The few who are good at it are shown the door.

IMO, spread betting and scalping is not advisable for newbies. Add forex into the mix and it's a recipe for disaster. The nature of scalping is that trades last a matter of seconds, very often in pursuit of a few points - as in your example. By necessity, the only way to make any real money is to bet large size and to max out on the available leverage. If you were doing this on January 15th this year trading EUR/CHF, then the chances are that you'd be one of those people facing crippling debts and possible bankruptcy.

The bottom line is that unless you're very experienced and know exactly what you're doing - avoid scalping like the plague. If you can't help yourself and simply have to try it, trade via a SB firm that offers guaranteed stops - and make sure you use them without fail on every single trade. Coz you know what happens on the one trade when you don't: yep, it's bye-bye account time!

Tim.

Many thanks for clearing that up! Maybe I will look into forex trading as iv been doing the odd scalp on euro / usd for last couple of months with a different SB company but think its time to go eur/ usd on forex. I presume scalping is fully allowed on there? Thanks sorry for all the questions

 

[Fugazsy]

King

For scalping is best a broker with little spread and commission, I will be sending a PM with some suggestions of broker I consider decent .

 

[timsk]

Hi king156,

So many people say this but it simply isn't true. The flaw in that reasoning is assuming scalpers make only 1 or 2 trades per day. Because they usually only make a small amount of money on each trade most scalpers trade very often, sometimes 50 to 100 trades per day. In this way you can use small amounts and low leverage and it will all add up. Although scalping is not recommended for beginners because it is difficult and intensive, a seasoned scalper actually has less risk, IMO

To help ensure that you're not confused by the apparent difference in opinion between Peter's post and mine, I'll add this for clarity . . .

Peter is quite correct in what he says if you're an experienced scalper trading 'real' prices - to borrow jkane's expression (i.e. trading via a direct market access broker). However, IMO, his comments do not apply to spread betting which is a completely different kettle of fish. I won't go so far as to say it's not possible to do what he describes via a SB platform, as there's probably someone doing it somewhere. However, I've never heard of anyone doing it and I'll wager heavily they are few and far between and almost certainly aren't green about the gills newbies. In a nutshell, the tricky job of scalping is made even harder when spread betting because:
1. The SB firms make their own prices which they can change to suit them rather than you.
2. The spreads are generally wider (than 'real' prices) which will make the cost of doing multiple numbers of tiny trades prohibitively expensive.
3. You may well experience slippage and re-quotes and not receive instant execution at the price you want.

Many thanks for clearing that up! Maybe I will look into forex trading as iv been doing the odd scalp on euro / usd for last couple of months with a different SB company but think its time to go eur/ usd on forex. I presume scalping is fully allowed on there? Thanks sorry for all the questions

Your question is a little confusing to me I'm afraid - I don't know what you mean by ". . . its time to go eur/ usd on forex"? A forex pair is a forex pair regardless of the spread betting firm you use. As I said in my last post, whether or not you can scalp will be governed by the spread betting broker. Switching pairs - or even to a different market altogether - is unlikely to make any difference.
Tim.

 

[alexaherself]

iv been doing the odd scalp on euro / usd for last couple of months with a different SB company but think its time to go eur/ usd on forex. I presume scalping is fully allowed on there?

I don't understand what you're asking. When you say "on forex", do you mean "in the interbank market rather than through a spreadbetting company?". If you do, the answer's yes.

But don't imagine that anything/anyone other than a spreadbetting company is "the interbank market". That isn't so at all. Most retail forex brokers are themselves market-makers, and they hold the other side of your position just like a spreadbetting company can.

I suspect that you're assuming that the relevant distinction here is between "spreadbetting firms" and "others", but it isn't: it's between "people who hold the other side of your position" and "people who don't". To express that another way, most retail "forex brokers" aren't really "brokers" at all: they're market-makers pretending to be brokers.

Nobody will mind you scalping the market, but (if you're any good at it, which very few people are) nobody will want you scalping them. Most retail forex brokers welcome scalpers, because most scalpers lose, and that's good for the brokers if they're trading against their own clients. But when you start to win regularly, one way or another it will be "Goodnight, Charlie" and you'll need to use somewhere like Interactive Brokers, who really are brokers and don't hold the other side of your positions so that it isn't their money you're winning.

 

[king156]

I don't understand what you're asking. When you say "on forex", do you mean "in the interbank market rather than through a spreadbetting company?". If you do, the answer's yes.

But don't imagine that anything/anyone other than a spreadbetting company is "the interbank market". That isn't so at all. Most retail forex brokers are themselves market-makers, and they hold the other side of your position just like a spreadbetting company can.

I suspect that you're assuming that the relevant distinction here is between "spreadbetting firms" and "others", but it isn't: it's between "people who hold the other side of your position" and "people who don't". To express that another way, most retail "forex brokers" aren't really "brokers" at all: they're market-makers pretending to be brokers.

Nobody will mind you scalping the market, but (if you're any good at it, which very few people are) nobody will want you scalping them. Most retail forex brokers welcome scalpers, because most scalpers lose, and that's good for the brokers if they're trading against their own clients. But when you start to win regularly, one way or another it will be "Goodnight, Charlie" and you'll need to use somewhere like Interactive Brokers, who really are brokers and don't hold the other side of your positions so that it isn't their money you're winning.

Where can I join an interactive broker then? Thanks that really cleared up what I meant by the way

 

[Pat Riley]

So many people say this but it simply isn't true. The flaw in that reasoning is assuming scalpers make only 1 or 2 trades per day. Because they usually only make a small amount of money on each trade most scalpers trade very often, sometimes 50 to 100 trades per day. In this way you can use small amounts and low leverage and it will all add up. Although scalping is not recommended for beginners because it is difficult and intensive, a seasoned scalper actually has less risk, IMO

Peter

Hi Pete, how's the craic?

A lot of time gets spent talking about scalping without a proper understanding of the term. Ya can't scalp on a retail platform. Lord knows it's tough enough on the institutional side. A lot of traders specifically aim for a few cents, pips, points and call it scalping. It's not. Good luck to em all I say whatever they call it and I hope their gold weighs heavy upon their saddlebags. Scalping is where you use enormous size for minute profits typically such as an on an arb scalp, but sometimes just on the cross if anyone's witless enough to allow it. More typically these days too, an arb scalp is unlikely to present on a single asset and you're lookin at doing a more structured arb scalp across not just assets but sectors too. Ya need direct market and machine speed and size and the wits of Soloman to make a crack at it.

 

[king156]

Hi Pete, how's the craic?

A lot of time gets spent talking about scalping without a proper understanding of the term. Ya can't scalp on a retail platform. Lord knows it's tough enough on the institutional side. A lot of traders specifically aim for a few cents, pips, points and call it scalping. It's not. Good luck to em all I say whatever they call it and I hope their gold weighs heavy upon their saddlebags. Scalping is where you use enormous size for minute profits typically such as an on an arb scalp, but sometimes just on the cross if anyone's witless enough to allow it. More typically these days too, an arb scalp is unlikely to present on a single asset and you're lookin at doing a more structured arb scalp across not just assets but sectors too. Ya need direct market and machine speed and size and the wits of Soloman to make a crack at it.

SO if that's scalping I should be fine doing £1 pp finding an entry to get the odd point profit in say under 1 minute? As its not large amounts of money like you say...

 

[alexaherself]

Where can I join an interactive broker then?

"Interactive Brokers" is the name of a specific broker I mentioned as an example: https://www.interactivebrokers.com/en/home.php (you'd need quite a bit of capital, to open an account there). As Pat explains above, you may need a non-retail broker (who doesn't hold the other side of your positions), to do this successfully in the long run.

 

[timsk]

SO if that's scalping I should be fine doing £1 pp finding an entry to get the odd point profit in say under 1 minute? As its not large amounts of money like you say...

Hi king156,
I have a little challenge for you. It's very specific, you must follow the instructions precisely.
1. Open an account with a spread betting broker of your choice, depositing the minimum amount of money to allow you to trade at £1.00 per point.
2. On Friday 8th May (in twelve days time) at precisely 1.29 pm, open a trade on EUR/USD. Go long or short - it's up to you. The timing is critical though - make sure you do it at exactly 1.29pm.
3. Sit yourself down comfortably, watch what happens to your PnL and enjoy the show.
4. Afterwards, post your experiences to this thread and let us know if you're still of the view that you ". . . should be fine".
Tim.
PS. One thing I forgot to say: be prepared to lose most - if not all - of your money!

 

[mike.]

Just to add to timsk's example, this is some data from fxcm after the analysis of the eur/chf crash back in january. It barely made the news. Just remember losses can exceed your balance.

No Liquidity - There was almost no available liquidity for approximately 40 minutes
Dramatically Low Pricing - External ECN prices went as low as 0.2000 and 0.5000
Extreme Spreads - The average spreads of EUR/CHF were more than 2000-3000 pips
Extreme Range - The average range of EUR/CHF was 6000 pips.

 

[gle101]

scalping is for suckers with spread trading firms

Spreads too wide

Have to trade real prices for that

It might not be the best strategy for a lot of traders as it do demands that you are extremely focused. Spreads are absolutely not too wide on selected instruments, yes scalping is quite possible I would say. If you will be successful in the long run is another matter altogether, this in reference to the scalping strategy and well known broker issues.

 

[Luc.Chase]

Sorry for the stupid question. But I was just wondering does IG allow scalping such as getting into a currency pair and shorting it and getting out 30 seconds, 1 minute later for example for maybe 1/2/3 points profit?

Is that allowed I heard that IG will put your order on hold if you do that a lot?

Any help much appreciated thanks.

Scalping simply means that your target is about the same distance as your stop. What you're referring to is high-frequency trading.
Spread-betting firms don't care if you scalp. But remember to make money scalping your trades need to be profitable at least about 80% of the time. If you can do that, then you should make money.

Regarding high frequency trading. Unless you're using a computerised trading system, you're unlikely to be able to trade manually at a speed that would bother a modern SB firm. Their limits tend to be around 20 trades per ten seconds or 50 trades per minute.

 

[timsk]

Hi Luc.Chase,

Scalping simply means that your target is about the same distance as your stop.

This might be how you define scalping - which is fine - but it's not my understanding and I doubt whether most other members would define it that way either. Broadly speaking, it stems from the practice of trading within the bid / ask spread, but has evolved to describe trades that last for minutes or seconds (rather than for hours or days) and tend to be for relatively small gains in terms of pips / points won.

. . .Spread-betting firms don't care if you scalp.

That may be true in some cases - but not in all cases. Some SB firms have a clear policy regarding scalping.

. . .Their limits tend to be around 20 trades per ten seconds or 50 trades per minute.

I'd be interested to know which SB firm has this as their policy. I'm with ETX Capital and this is what they say in their T&C's (note emphasis!) . . .

11 SCALPING POLICY
11.1 Our Scalping policy shall apply to any online quoted financial market that is traded through your use of the Electronic Services.
11.2 We may deem an activity as Scalping if that Order or Trade has any of the below characteristics:
(a) the Trade is opened and closed within Two (2) minutes (i.e. the Order for the closing Trade follows the Order for the open Trade in two (2) minutes or less);
(b) an opposing Trade is placed within two (2) minutes of another Trade being opened thus creating a fully or partially hedged position (also known as a “locked position”); or
(c) the Order for opening or closing the Trade is placed on a latent price.
11.3 By providing fixed spreads and liquidity to you, where it is possible to do so, we try to help you trade in volatile global financial markets by giving you greater price stability. We do not provide fixed spreads and liquidity to enable Scalping, and will deem any instance of Scalping to be a Manifest Error (for more information on the treatment of Manifest Errors please see clauses 9.21 to 9.24). Scalping is considered a breach of your Terms and Conditions, and we may act reasonably and in good faith and in our sole discretion:
(a) immediately terminate your account and your access to our servers;
(b) void any Trade (i.e., treat the Trade as if the Trade had never taken place) which was part of any Scalping activity;
(c) close any Trade on the basis of our then current prices which was part of any Scalping activity ; or
(d) amend any Trade, so that it is as it would have been if the Order was executed in the absence of Scalping.
11.4 We can exercise the above rights even if you have entered into (or refrained from entering into) arrangements with third parties relating to the relevant Trade and even if you may suffer a trading loss as a result.
11.5 We reserve the right, in our sole discretion, to change your underlying liquidity feed to another provider in order to protect against abuse (including Scalping). Such a change may result in variable spreads being applied to markets you trade. If the liquidity feed is changed we shall have no requirement to notify you or give you prior warning of the change. We shall not be obligated to change the liquidity feed and may take any other action permitted by standard customer Terms and Conditions.

Tim.

 

[king156]

Scalping simply means that your target is about the same distance as your stop. What you're referring to is high-frequency trading.
Spread-betting firms don't care if you scalp. But remember to make money scalping your trades need to be profitable at least about 80% of the time. If you can do that, then you should make money.

Regarding high frequency trading. Unless you're using a computerised trading system, you're unlikely to be able to trade manually at a speed that would bother a modern SB firm. Their limits tend to be around 20 trades per ten seconds or 50 trades per minute.

Thanks that's just what I needed to know