The reason why you might try is because the existence of spreadbetting in the UK means that there are virtually no futures brokers, especially ones offering low commission rates. If you're in the US, how do you know SB-ers would be happy to have scalpers?
Virtually no future brokers really? Well you could be right but I would find one if you wanted to scalp, I am about to join a prop house in the UK and they scalp. If your doing good volume some broker will be interested. Well brokers would be happy to have scalpers because they trade so much and generate them money? Even if they do offer a better structure to scalp I would assume a bigger percentage of the profits would go on commissions compared to a swing trader because the scalper trades so frequently but at least they offer the scalper cheaper trades. With a SB company the more you trade the more often you pay the spread so the more they earn, so if your trading frequently there making more? Don't they just trade the thing themselves but offer it to you at a bigger spread, so your paying them each time for their service and scalpers use their service the most. The scalper is paying the same as a day trader and the spreads aren't even that good for day trading! I am new to this but I just ran through some figures and it just seems so crap to use a SB'er.
Good discussion on spread betting vs using a broker
When I read about successful scalpers they talk about looking to take a few ticks out the market, or take a portion of their volume out after 1 tick move then the rest after another 1 to 2 ticks. They look to pay about 1 tick in spread, and IG index for example is 3 ticks spread on GBP/USD. You would have to be really accurate.
For example using this method where you take half your volume out after 1 tick and then aim for 2 to 4 ticks for the other half, you gotta have a fair amount of succesful trades even with a 1 tick spread. If you use IG your already needing 3 ticks just to break even and say you have a stop loss of 2 ticks, your risking 5 ticks to make 1.75 and this assumes in a profitable trade once you have taken half the volume out at a 1 tick profit the other half does not fall back below a 1 tick profit.
+1 tick [half the volume]
+1-4 ticks (avg of 2.5) [half the volume]
Therefore a successful trade would on average get 1 tick for first half 2.5 ticks for second half which is equal to doing 1.75 ticks for the whole lot.
with a 70% accuracy on scalping you would be losing 1/4 of a tick per trade.
(-5 * 0.3) + (1.75 * 0.7) = -1.5 + 1.225 = -0.275
I think thats why when I browsed the forums it seems people are using much bigger stop losses for "scalping" and looking to capture bigger moves but isn't this more like day trading, so maybe that's because alot of people are using SB'ers. I thought scalping was not much better than a 1:1 risk to reward ratio.
Also I am pretty confused on some things, I read scalping is more to do with playing the spread or trading the spread. Is anyone able to explain to me what trading the spread really is and use an example, is this just for arbitrages? I also don't really quite understand how can a scalper make money from a market that doesn't move or has wide spreads, I think it's something to do with liquidity decreasing the gap but I don't see how it's profitable. Can someone explain?
I read an interview where this guy said as soon as he got the spread down to 1 tick or less he was able to be profitable and says it's a must. I always kinda thought by looking at the spreads that IG was ok'ish for long term bets, I think it's hard enough to scalp as it is and having twice as big spreads is just gonna make it far too hard imo. Of course someone's probably doing this but how many are doing it long term?
