DislikedSo if a scalper is using a 5 pip stop loss on a demo account it would work fine but on a real account market maker would probably "spike" him out?Ignored
The smaller the stop loss the easier for the MM to hit it.
Lets say you have a 5 pips SL. Your broker spike you out and you call them.
First most of the traders don't call. But if you are the 1% or less that calls the first barrier is their technical support.
The guy will ask you why you think the spike was illegitimate.
You will probably tell him that you compared your charts with other brokers and they don't have the spike.
Than the guy will say that since they have different "liquidity providers" small discrepancies in price may happen.
So from the minority that calls 90% will stop right there because it is a valid point.
Lets say you push forward and keep arguing.
The tech support will say they can't accept other brokers price.
Lets say you ask for a supervisor and you convince the guy to take a look at it.
So now you have to prepare screenshots, write a letter, send it and wait patiently
Some brokers require these matters to be handled by snail mail.
Than after a while you call them to see whats going on and they tell you they never got your request
so you have to start all over.
My point is that the majority of traders will not go through this process
And even if they correct some trades it will be such a small number that it would not matter.
Now lets say you lost 500 thousand dollars in your 5 pip SL.
Than you may take them to court. It is easy to them to get a quote from one of their banks 5 pips above price.
So now you not only lost 500 K but you have to pay lawyers, go through the whole hassle etc.
Now the bigger the price discrepancy the more difficult for the broker to justify it.
What I just said is from personal experience dealing with MM over the years.
So instead of wasting my time I changed my way of trading. I close my positions manually
anything from 20 to 50 pips. Never had problem with spikes since.
Don't call me. I call you!