How do you define scalping

[John26]

I just did my first 2 spreadbets today - I want to make sure I play fair.

I made 150 quid shorting oil and sp500 between 17.18 and 17.26
Would this be regarded as scalping by the spreadbetting company - I obviously was right in the swing and entry and exit were perfect, so from my point of view, i had to exit. I just want to ask you guys if you think this is ok. Last thing I want is to be told off by broker for only being in the trade for 8 minutes.

Cheers.

 

[neil324]

It will be defined in the terms & conditions of the account.

 

[John26]

It will be defined in the terms & conditions of the account.

Well, I thought it would be, but I can't find the word "scalping" doing a search in their T's and C's.

 

[Forexmospherian]

I just did my first 2 spreadbets today - I want to make sure I play fair.

I made 150 quid shorting oil and sp500 between 17.18 and 17.26
Would this be regarded as scalping by the spreadbetting company - I obviously was right in the swing and entry and exit were perfect, so from my point of view, i had to exit. I just want to ask you guys if you think this is ok. Last thing I want is to be told off by broker for only being in the trade for 8 minutes.

Cheers.

Hi John

I was with GFT Uk about 6-7 yrs ago on a FX spreadbetting account and we came to an agreement after several disagreements about this subject

I had no problem the first few months on small stake sizes - but as soon as I went over £100 a pip - in those days approx 14 /15 lots a pip - they started to get funny with me

They would take between 30 and 90 secs to enter my trade - saying it had to be manually checked ( maybe to set off / hedge - but really a big excuse ) and then they would not allow me to exit any scalp under 3 minutes

I have been a scalper for over 10 years - purely on FX - originally just after 5 -10 pips within anything from 1 min to 10 minutes. Nowadays - I try to catch longer scalps lasting from say 5 to 20 mins - and if they still have legs with leave a partial stake on with stop moved into profit and then it might run for hours - or even days and weeks in some cases

I have heard many different definitions of scalping - some day/ weekly traders thinks an intraday trade lasting a few hours for say 50 pips is a scalp - but its not really - scalping is normally taking advantage of very quick moves and so the trade might only last from a few seconds to a few minutes.

If you were not using so called spreadbetting brokers or bucket shops - you would not really have to worry - as many of the new age ECN / STP brokers ( none spreadbetting ) can be scalp friendly.

Ideally don't allow every trade just last 2 to 8 minutes - try and stay with some say 20 or 40 mins or longer - then you would not be classified as just a scalper

Its all a learning curve and of course all depends how successful you become - it might mean you have to move several times until you find a suitable spreadbetting broker who wants your business etc etc

GL

Regards


F

 

[highbury fx]

I just did my first 2 spreadbets today - I want to make sure I play fair.

I made 150 quid shorting oil and sp500 between 17.18 and 17.26
Would this be regarded as scalping by the spreadbetting company - I obviously was right in the swing and entry and exit were perfect, so from my point of view, i had to exit. I just want to ask you guys if you think this is ok. Last thing I want is to be told off by broker for only being in the trade for 8 minutes.

Cheers.

The period of time a broker notes in their t+c's for a client to remain in a trade to not be considered a scalper will vary from broker to broker. Normally its around 2 minutes. On that basis you remaining in a trade for 8 minutes shouldn't be a problem.

But.. Theres always a but !

Scalpers and brokers have a bit of a love hate relationship. The vast majority of client's that scalp will ultimately lose money over the life time of their account which is why brokers put up with them. When a scalper wins money the broker gets a bit agitated and has a tendency to over react which is a human reaction rather than a commercial one.

Scalping to me isn't about the amount of time you're in a position, its about how you got in to the position to begin with. If you have dealt on a latent price for your entry it doesn't matter to the broker how long you're then in the position for because you've scalped me at a level that I cannot hedge and I will have a problem with that. If you deal on a price 5 pips better than you should've been able to you have a big advantage over the market and you have the luxury of being in a position that is winning money immediately - there is no rush for you to get out of that position which is why the 2 minutes minimum rule is quite subjective.

A scalper in my book is someone who knowingly takes advantage of a slow price before it has changed. If these clients weren't generally so bad at running the subsequent risk it would be more of a problem than it is.

Every now and then you get someone very patient and very tight. Someone who is happy to go in and out quickly for a small amount of pips and these clients are very difficult to make money from. Brokers are businesses and if they haven't got a fair chance to make money from a customer what is the point of having him as a customer.

SB/CFD firms offer thousands of products 24 hours a day and quote a tight price where you can buy or sell, they have to have controls on that risk and they have to be able to spot people quickly who can damage their income and have procedures for protecting themselves. If an ATM gave free money away it wouldn't be operational for much longer than it took the bank to realise what was happening. Scalpers treat SB/CFD firms like a broken ATM and that isn't ever going to be sustainable.

if you're in this for the long term forge a relationship with your broker and get to know them. Make an effort to be professional in your communication with them and it will go a long way to helping you out in 50/50 situations.

 

[gle101]

The problem here is that we have two definitions on the term scalping, in the real world of trading it is fully acceptable and legitimate, however in the world of market makers, for the most part it is considered to be a bad thing, which can result in that they brand you as someone who takes advantage of lagging price quotes (their favorite expression against scalpers).

Many market makers have crappy platforms, especially some of the web platforms, which simply cannot cope with the extreme high volatility of today. You will noticed it, if and when they start playing games, most of them do if you are a successful scalper. But really, I don't see a problem in a trade lasting for 8 minutes. As mention by previous poster, ECN brokers is probably a better choice for scalpers, especially if you are into forex and oil (but some of them have there own problems with excessive slippage to be aware of and true or not ECN is always up for debate).

 

[timsk]

I just did my first 2 spreadbets today - I want to make sure I play fair.

I made 150 quid shorting oil and sp500 between 17.18 and 17.26
Would this be regarded as scalping by the spreadbetting company - I obviously was right in the swing and entry and exit were perfect, so from my point of view, i had to exit. I just want to ask you guys if you think this is ok. Last thing I want is to be told off by broker for only being in the trade for 8 minutes.

Cheers.

Hi John,
Here's a definition of 'scalper':

'Scalpers tend to make numerous trades, perhaps hundreds in a single day, accruing lots of small profits into a respectable daily total. Losses per trade tend to be minimal, from ‘scratch’ (i.e. break even) to a few ticks at most. Typically, a scalp trade will last from a few seconds to a few minutes, rather than for hours and, certainly, would never be held overnight.'

I'd be extremely surprised if any spread betting broker would class you as a scalper based on a trade lasting 8 minutes. It's just possible that if all your trades last for less than 10 minutes and you're consistently profitable trading in any real size (i.e. £10.00+ per point) that your account might get flagged for dealer intervention. This could result in delayed quotes and additional slippage while your position is hedged in the underlying market. However if, as you say, there's nothing in their T&Cs about it, you've got nothing to fear. Why not contact them and ask them direct what their policy is? If they're not happy about your trading style then, as FoMo says, there are plenty of scalping friendly spread betting firms out there who you can move to if needs be.
Tim.

 

[gle101]

Hi John,
Here's a definition of 'scalper':

'Scalpers tend to make numerous trades, perhaps hundreds in a single day, accruing lots of small profits into a respectable daily total. Losses per trade tend to be minimal, from ‘scratch’ (i.e. break even) to a few ticks at most. Typically, a scalp trade will last from a few seconds to a few minutes, rather than for hours and, certainly, would never be held overnight.'

I'd be extremely surprised if any spread betting broker would class you as a scalper based on a trade lasting 8 minutes. It's just possible that if all your trades last for less than 10 minutes and you're consistently profitable trading in any real size (i.e. £10.00+ per point) that your account might get flagged for dealer intervention. This could result in delayed quotes and additional slippage while your position is hedged in the underlying market. However if, as you say, there's nothing in their T&Cs about it, you've got nothing to fear. Why not contact them and ask them direct what their policy is? If they're not happy about your trading style then, as FoMo says, there are plenty of scalping friendly spread betting firms out there who you can move to if needs be.
Tim.

Yes I agree, this is the right and correct definition of a scalper. For some reason market makers love to brand momentum traders as someone taking advantage of lagging price quotes.

 

[gle101]

The period of time a broker notes in their t+c's for a client to remain in a trade to not be considered a scalper will vary from broker to broker. Normally its around 2 minutes. On that basis you remaining in a trade for 8 minutes shouldn't be a problem.

But.. Theres always a but !

Scalpers and brokers have a bit of a love hate relationship. The vast majority of client's that scalp will ultimately lose money over the life time of their account which is why brokers put up with them. When a scalper wins money the broker gets a bit agitated and has a tendency to over react which is a human reaction rather than a commercial one.

Scalping to me isn't about the amount of time you're in a position, its about how you got in to the position to begin with. If you have dealt on a latent price for your entry it doesn't matter to the broker how long you're then in the position for because you've scalped me at a level that I cannot hedge and I will have a problem with that. If you deal on a price 5 pips better than you should've been able to you have a big advantage over the market and you have the luxury of being in a position that is winning money immediately - there is no rush for you to get out of that position which is why the 2 minutes minimum rule is quite subjective.

A scalper in my book is someone who knowingly takes advantage of a slow price before it has changed. If these clients weren't generally so bad at running the subsequent risk it would be more of a problem than it is.

Every now and then you get someone very patient and very tight. Someone who is happy to go in and out quickly for a small amount of pips and these clients are very difficult to make money from. Brokers are businesses and if they haven't got a fair chance to make money from a customer what is the point of having him as a customer.

SB/CFD firms offer thousands of products 24 hours a day and quote a tight price where you can buy or sell, they have to have controls on that risk and they have to be able to spot people quickly who can damage their income and have procedures for protecting themselves. If an ATM gave free money away it wouldn't be operational for much longer than it took the bank to realise what was happening. Scalpers treat SB/CFD firms like a broken ATM and that isn't ever going to be sustainable.

if you're in this for the long term forge a relationship with your broker and get to know them. Make an effort to be professional in your communication with them and it will go a long way to helping you out in 50/50 situations.

Love and hate relationship, yes I sign up on that statement.

 

[highbury fx]

Yes I agree, this is the right and correct definition of a scalper. For some reason market makers love to brand momentum traders as someone taking advantage of lagging price quotes.

Hi gle101

from my side of the dealing screen.....

what timsk says and what you have agreed with may be the correct theory definition of a scalper but try running a book which does tens of thousands of trades per day from thousands of clients and you'll see what our definition of a scalper is.

if someone clips me on a price that puts me offside immediately they are in my view a scalper. its my book, its my market, its my risk, its up to me how I define my clients. if my clients want to trade somewhere else because they have decided I am not giving them what they need than they are able to. I have to try and not be overly cautious and accumulate as many clients as I can doing as many trades as i can and make as much money as i can whilst still remaining a good provider of all things trading related to my clients.

i don't want my clients to be upset with our firm, i want them to be happy with us and trust us to be their trading partner but if someone is making it difficult for me to either make money or retain good relations with my liquidity partners then for the good of my pnl and the good of all my other clients that rely on me getting good pricing from my LP and passing it on to them i will take action.

 

[gle101]

Hi gle101

from my side of the dealing screen.....

what timsk says and what you have agreed with may be the correct theory definition of a scalper but try running a book which does tens of thousands of trades per day from thousands of clients and you'll see what our definition of a scalper is.

if someone clips me on a price that puts me offside immediately they are in my view a scalper. its my book, its my market, its my risk, its up to me how I define my clients. if my clients want to trade somewhere else because they have decided I am not giving them what they need than they are able to. I have to try and not be overly cautious and accumulate as many clients as I can doing as many trades as i can and make as much money as i can whilst still remaining a good provider of all things trading related to my clients.

i don't want my clients to be upset with our firm, i want them to be happy with us and trust us to be their trading partner but if someone is making it difficult for me to either make money or retain good relations with my liquidity partners then for the good of my pnl and the good of all my other clients that rely on me getting good pricing from my LP and passing it on to them i will take action.

Hi highbury fx,
Yes I fully understand your side of the issue. The problem as I see it, many market makers see that traders as one who is taking advantage of lagging quotes, while the trader might trade on the price action and the momentum of the real market. I mean, many SB and CFDs traders are also looking at the real market at the same time they are trading SB or CFDs. OK I agree, if the winning streaks are way beyond the average traders, and for a very long period of time, then I understand you as a market maker must take some kind of action. However, the flagging as I have have experienced it is almost impossible to get removed. And I have never experienced a warning of some kind before manipulation starts appearing on the trading account. Also when you get in contact with the support dept. to solve the issue you will always hear that this is the way the market behave.

 

[John26]

Hi highbury fx,
Yes I fully understand your side of the issue. The problem as I see it, many market makers see that traders as one who is taking advantage of lagging quotes, while the trader might trade on the price action and the momentum of the real market. I mean, many SB and CFDs traders are also looking at the real market at the same time they are trading SB or CFDs. OK I agree, if the winning streaks are way beyond the average traders, and for a very long period of time, then I understand you as a market maker must take some kind of action. However, the flagging as I have have experienced it is almost impossible to get removed. And I have never experienced a warning of some kind before manipulation starts appearing on the trading account. Also when you get in contact with the support dept. to solve the issue you will always hear that this is the way the market behave.

Very interesting, still not sure where I am, I spoke to my broker and the guy on the phone said, in an uncertain and laid back manner, that they expect people to stay in the trade for a few minutes. I asked if that was the case even if I was on the wrong side and wanted to come out, he mumbled "yes"...!

Here I am trying to play fair, but they want me to let my losses run... !:-0

What I'm trying to ascertain is if I could be regarded as being "naughty", taking 20 to 30 quid on £5/point if I make a bad call and decide to come out? Or perhaps they have more of an issue with traders grabbing 1 or 2 k here and there betting 100 quid a point?

 

[gle101]

Very interesting, still not sure where I am, I spoke to my broker and the guy on the phone said, in an uncertain and laid back manner, that they expect people to stay in the trade for a few minutes. I asked if that was the case even if I was on the wrong side and wanted to come out, he mumbled "yes"...!

Here I am trying to play fair, but they want me to let my losses run... !:-0

What I'm trying to ascertain is if I could be regarded as being "naughty", taking 20 to 30 quid on £5/point if I make a bad call and decide to come out? Or perhaps they have more of an issue with traders grabbing 1 or 2 k here and there betting 100 quid a point?

Well this is the point, today's market is extremely volatile, one have to get out fast at times. My experience though, you have have many short term trades in a short period of time, which will form a certain trading pattern. Mind you, this must be a winning pattern above the average trader, if you are on the losing side they will probably not bother you. I am against being forced to stay in a trade, this game is hard enough already without it. But I guess one have to trade with a scalper friendly company in order to feel at ease if you are a short term trader, not many around though when it comes to market makers.

 

[John26]

Thanks very much for your help all.
I spoke to broker and they told me basically that I should stay in positions for 2 minutes minimum (including losing positions - this is harsh imo). At least I know where I stand.
Confusing though, they asked me what my style was and based on my answers, they offered to send me some material/webinar - Surely these people don't want me to know how to trade?!

 

[gle101]

Thanks very much for your help all.
I spoke to broker and they told me basically that I should stay in positions for 2 minutes minimum (including losing positions - this is harsh imo). At least I know where I stand.
Confusing though, they asked me what my style was and based on my answers, they offered to send me some material/webinar - Surely these people don't want me to know how to trade?!

Well if they don't want your business go somewhere else. A time limit on trades is absurd, and have nothing to do with trading. Hopefully more scalper friendly companies will emerge in the realm of market making, this as the overall competition tightens day by day.