Is Scalping Evil?

[Ozric]

First post from a total newbie. Howdy!

Maybe you guys can shed some light on this: I opened a demo spread betting account with CMC and found that the only way I could make a consistent profit was to place a series of very short term bets (minutes) after a trend had established itself. Then take a few ticks and get out. Got 50 pts on the FTSE in a few hours and felt quite pleased.

But, reading around I've discovered that SB companies don't seem to like this. Something about 'not giving them enough time to hedge.' So, my question is: has anyone reading this ever had their SB account nobbled due to persistent scalping?

Thanks.

 

[pboyles]

There. Maybe now we can get down to the issue of scalping. Hopefully no one has had any problems in this regard (and I can't find anything on CMC's website that details what they would consider to be 'inappropriate trading practices') but just thought I'd throw it out there.

Back on subject, you will indeed experience problems if you try to scalp with a SB company. If you want to scalp you'll need a futures account, not SB or indeed retail forex.

 

[pboyles]

...and you probably want to look at more liquid instruments like the Eurostoxx, Bund or e mini S&P futures.

 

[Splitlink]

Just make sure that it is not you that gets the haircut.

 

[pboyles]

maybe we should just say that scalping meedo would not be an evil thing? if just for the sake of staying in the line with the way this thread develops or so.

Goodbye

 

[BataviaTrader]

First post from a total newbie. Howdy!

Maybe you guys can shed some light on this: I opened a demo spread betting account with CMC and found that the only way I could make a consistent profit was to place a series of very short term bets (minutes) after a trend had established itself. Then take a few ticks and get out. Got 50 pts on the FTSE in a few hours and felt quite pleased.

But, reading around I've discovered that SB companies don't seem to like this. Something about 'not giving them enough time to hedge.' So, my question is: has anyone reading this ever had their SB account nobbled due to persistent scalping?

Thanks.

Hi Ozric,

Welcome to the board, and apologies for the rough start here. Anyway, I do a bit of scalping too, but I never had any problems so far, and hopefully it will stay that way, I am with IB by the way.

Happy trading,
BT

 

[tommog]

I think you are on to a loser scalping with a spread betting firm or retail FX brokerage. You need ultra low futures commission (< 20% of a tick) to make it cost effective. So say you are scalping the bund, its 10 euros a tick you shouldnt be paying more than EUR1.30 a round turn.

If you are spreadbetting you pay the spread. Which is > 100% of a tick. So if you did 20 FTSE trades in a day you would effectively need to make 20 ticks just to break even. Very few people can do that, and even if you can you should be trading a 6 figure futures account.

 

[Splitlink]

I think you are on to a loser scalping with a spread betting firm or retail FX brokerage. You need ultra low futures commission (< 20% of a tick) to make it cost effective. So say you are scalping the bund, its 10 euros a tick you shouldnt be paying more than EUR1.30 a round turn.

If you are spreadbetting you pay the spread. Which is > 100% of a tick. So if you did 20 FTSE trades in a day you would effectively need to make 20 ticks just to break even. Very few people can do that, and even if you can you should be trading a 6 figure futures account.

I've tried this. If you are lucky you go a long way in a long time. I found it tiring, in the extreme, because I am an old man for that. Apart from that, I was snatching a few points profit, quite successfully until, all of a sudden, a series of bad trades lost me about ten or twelve points, taking all those valuable gains away from me.

I gave it a few days and reverted to more leisurely (and more profitable) trading.

By all means, satisfy your curiosity and give it a try. You'll soon know whether it is for you, or not. In the meantime, keep the stakes low.

 

[Ozric]

Thanks for the replies, guys.

I found it tiring, in the extreme,

Ditto. It does tend to fry one's brain after a while. But, as they say, everything in moderation.

 

[Splitlink]

Thanks for the replies, guys.



Ditto. It does tend to fry one's brain after a while. But, as they say, everything in moderation.

Yes, but if you do things in moderation as I like to do, these days, you might as well take what you think are the better, longer term trades. For instance, I haven't done one this morning and I have the computer on, it's just that I can do other things around the house and keep an eye on the chart, at the same time.