scalping with IG

[newspreadbetter]

I've started scalping a few days a week, not massive amounts but keep reading that SB firms do not like scalpers, and are likely to shut your account down. realistically, how many trades per day/small profits are we talking to raise their finely waxed eyebrows?

 

[tomorton]

Its arguable that scalping is almost impossible with SB, the spread is too great a percentage of your potential gross profit, so that you need an unforeseeably (by TA) and improbably large move in your favour in order to break even.

But if you're very good at it, please see this most honest quote from Capital Spreads, one of the more reputable SB firms. If you're in multiple short-term positions per day and making a consistent profit, they will take the view that you are arbitraging, using a direct price feed to take advantage of the delay between the underlying price and their bid/offer. This tactic leaves them open to uncovered risk so they will put you on dealer acceptance and your trades will not be automatically booked through the platform, the delay in opening / closing your trades will vapourise your reasons for getting in/out.
http://www.financial-spread-betting.com/Scalping-spreadbetting.html

Sorry to be negative but just don't bother.

 

[peakoil]

tomorton is 100% on the ball.

Spreadbet Scalping + those three words ( "making consistent profit" ) = forget about it.

OTOH...

Spreadbet Scalping + making consistent losses = welcome at almost all firms.

YMMV & HTH.

 

[gle101]

I've started scalping a few days a week, not massive amounts but keep reading that SB firms do not like scalpers, and are likely to shut your account down. realistically, how many trades per day/small profits are we talking to raise their finely waxed eyebrows?

Not likely shutting down your account, but more likely starting to manipulate your trades, you will for sure know when this occurs. If so stop trading with them immediately and move on. Do not continue as you will not win in the long run. I think there is no number of trades, but more a percentage of winning trades vs. losing trades, that they might think is not a normal outcome of trading. Your bet size might not be the deciding factor, but it will certainly help in directing their radar towards you.

 

[gle101]

Spreadbet Scalping + making consistent losses = welcome at almost all firms.

YMMV & HTH.

Ha ha.

 

[gle101]

I don't think scalping in itself is the issue, but extreme market conditions will for sure make it impossible for many of the SB companies to cope with the volatility. The platform infrastructure and price feed must be of top notch quality, this in order for them to handle the very fast price fluctuations. For many years the volatility have overall been very low, this past week it really have started to move a lot. How many of the SB firms can cope with his kind of extreme market volatility that we have seen this past week, just a few if any is my opinion. This will hit the scalpers hard, as they might be accused for trading on lagging quotes, when in fact they might just be after the momentum of the price action itself.

 

[jkane]

scalping only works on legal exchanges based in usa

spread betting pure rippoff..spreads to wide

 

[newspreadbetter]

So its more the % of wins than the time a trade is held for? What sort of time frame is classed as 'scalping'? (I know there's not a definite figure, but are we talking seconds, minutes etc?)

some of my trades I do hold onto for 30 minutes to an hour, surely these are 'legitimate' trades that wont raise eyebrows?

And as I've only ever used SB, what other ways to scalp/carry out a number of quick trades per day are there please?

 

[tomorton]

Yes, trades of 30-60mins shouldn't trigger alarm bells with your SB, and on most markets the points / pips involved in such a move should keep the spread to a manageable percentage of your gross gain. Not the sort of move that SB firms will assume is arbitrage.

But short-term trading notionally only appears low-risk and higher probability - after all, its easier to predict the weather in 30 minutes' time than it is to predict it in 30 days, surely? However, the margin for error is so tight that TA for such trades is notoriously difficult to get right consistently.

Its also very hard to let your winners run when this is against your own self-imposed time limit (the session's Close) so that's a good way to make sure you never get exceptionally big winners. Add to this the very real temptation to over-trade / revenge trade - chasing losers so as to end every session in the money.

Surely for most traders a route to an empty account?

 

[gle101]

Yes, trades of 30-60mins shouldn't trigger alarm bells with your SB, and on most markets the points / pips involved in such a move should keep the spread to a manageable percentage of your gross gain. Not the sort of move that SB firms will assume is arbitrage.

But short-term trading notionally only appears low-risk and higher probability - after all, its easier to predict the weather in 30 minutes' time than it is to predict it in 30 days, surely? However, the margin for error is so tight that TA for such trades is notoriously difficult to get right consistently.

Its also very hard to let your winners run when this is against your own self-imposed time limit (the session's Close) so that's a good way to make sure you never get exceptionally big winners. Add to this the very real temptation to over-trade / revenge trade - chasing losers so as to end every session in the money.

Surely for most traders a route to an empty account?

Depends on the market conditions and instrument traded, the problem is the recent volatility, you must set a large stop in order to not being stop out in violent swings. Being locked in a timeframe would be just another limitation that will hurt your performens, this in a game which is hard enough as it is. Overall though, I agree, a longer time frame if you can master it increases the profibility.

 

[Forexmospherian]

I've started scalping a few days a week, not massive amounts but keep reading that SB firms do not like scalpers, and are likely to shut your account down. realistically, how many trades per day/small profits are we talking to raise their finely waxed eyebrows?

Hi newspeadbetter

I only briefly traded with IG approx 4 yrs plus ago - but had a lot longer experience with GFT UK for approx nearly 5 yrs- and they were spread betters and I was as I like to call it a FX Intraday short term trader - ie not a pure scalper taking profits of only 1 or 2 pips and making over 40 or 50 + trades a day.

I had two large account of over $100k and reached a limit of approx £ 150 + per pip or over 22 lots before their rules and "fixing " encouraged me to move on to an ECN /STP broker.

As in anything - there is normally a way around things.

I had learnt all the tricks from my earlier days with CMC - who used to slow my platform down and always give me negative slippage etc - making it very difficult to scalp with 3-5 pip stops . That company got outed and lost thousands of clients and was fined heavily for totally manipulating their platforms to make sure only a small percentage of their clients made money

The compromise I reached with my then personal account manager at GFT was ever trade above £100 per pip - ( in those days over 15 lots per pip ) would take between 30 and 60 seconds before it was confirmed. A trade of only say 1 lot per pip or any under £30 per pip - I could get on within half a second to 2 seconds which I could live with at that time

Next rule - they would not let my exit the trade for a minimum of 3 mins - I negotiated that down to 2 mins in the end - as started to look at adopting my strategy to target short term trades that would make 7 -25 pips and be finished within 20 -30 mins maximum duration.

Some months I was making over $20k spreadbetting ( net ) and paying GFT anything from $7 - 12k in spread costs etc - with my normal spread on the EU being 1.5 to 2 pips and 2-3 pips on the GU and AU.

After 6 months of these new rules enforced upon me - I started to look at exiting over 50% of the stake in profit and then leaving the other half on with ideally the stop in a small profit or at least not allowing me to lose the profit I had gained on the scalp part.

This meant I would have some of my trades lasting a few hours - even days etc - meaning my average trade duration over say 50 trades would not be just 5 mins - but as high as over 30 mins +

I was only able to achieve this because at that time after thousands of live trades scalps - I was very skilled and was able to work on average win rates of over 65% - even with tight ( soft) stops and the extra restrictions being used to encourage me to either leave or find another broker.

If you are new to FX trading and shorter term trading - I dont recommend you scalp for 1-3 pips and make over 50 trades a day with any spread betting company - find a ECN /STP broker and do it there and pay tax if you are looking at using larger capital and stakes etc.

In this trading game - money talks and also having a big mouth and not being frightened of demanding your rights and threatening legal action etc etc all assist in you - as a customer - getting a fair crack of the whip. If you are only going to deposit $1k or $5k - then unfortunately - you bargaining power is weak - and similar if you only make 8 trades a month - you are not going to get the same preferences as making 100 + trades a month - as the brokers are not going to earn much from spreads and commission etc.

If you are part time it might take a few years to get to a consistent profitable level - in some cases as long as 5+ all depending on the amount of study and commitment you do etc

GL

Regards


F

 

[tomorton]

Fantastic post F, straight and on the ball.

 

[Forexmospherian]

Fantastic post F, straight and on the ball.

Cheers tomorton - thank you for your comment

Good Trading

Regards


F

 

[newspreadbetter]

Thanks guys (I'm assuming)

Having read more on here, in every forum and sub-forum, it actually looks as though I may not be a scalper as i first thought? My trades run from a few minutes to over an hour, and range from 4-10 or 12 a day. Now my understanding is that scalper hold the positions for a few seconds, or less (I'm still to learn how thats possible)

Apologies for the mix up, but thanks all for putting me straight(ish)

After reading the the amounts some of you lot make/made I doubt very much my few hundred pounds a week will bring down my SB firm

 

[timsk]

Having read more on here, in every forum and sub-forum, it actually looks as though I may not be a scalper as i first thought?

Hi newspreadbetter,
There are a lot of trading terms which mean slightly different things to different people. Some people use the term 'scalping' merely as a way of describing short term trades which last a matter of minutes or, even just seconds. If you were at a proprietary trading firm, the term may well have a much tighter and more specific definition. Here's an example of that which will give you further insight into what some traders mean when they use the term scalper: Interview with US Stock Scalp Trader Ben Tippen
Cheers,
Tim.

 

[tradespreads]

You can assign terms to things, such as Scalper etc, but they're actually quite meaningless as has been pointed out they mean slightly different things to different people.

The Market Makers (eg, ugly word Spreadbetters) which have free trades such as on some of the FX markets actually promote trading small and often. This is what Day Traders might do. But if you're holding position for a few seconds during Day Trading say, that's just ridiculous. That's why there is HFT and the average trader can't do that. Even if you fancy yourself as an F1 driver at the wheel of the platform what guarantee do you genuinely have that latency in the rest of your tech, strategy or broker isn't letting you down? Answer, very little. So futile exercise holding positions for a few seconds. This isn't Scalping. Scalping is somewhat an unnecessary term IMV.

So these spreadbetting services promote the trader making a number of short trades during the day. Looking at opportunities in a market and focus and realm of human possibility you're looking at just a handful of trades during the day, realistically speaking. Trades lasting anywhere from a couple to maybe even 15 or 20 minutes.

The other side of spreadbetting is you have to rely on getting lucky (more often than not) with a big move. Because the spreads are just so damn wide you can't do much there. Yes called, getting lucky.

 

[jkane]

spreadbetting is all luck

Any real pro does not even waste their time with them

Any real pro trades on real exchanges

 

[tomorton]

spreadbetting is all luck

Any real pro does not even waste their time with them

Any real pro trades on real exchanges

For most daytraders, however they access the market, win or lose is a coin toss. But that's not because they use SB.

 

[tradespreads]

Indeed trading is alot more like gambling than anything. People will insist on telling you otherwise but a coin toss it pretty much is. Unless you can determine the odds in your favour by 100% (which you can't) it's a gamble.

If you review the SB services you'll soon come to realise they're nothing more than fabricated toys made for name-sake merely to keep people entertained.

Having said that what's the difference between day trading and swing trading. A real trader wouldn't really care about timeframes.

Frankly a shi**y profession..