What exactly is Scalping? | Forex Factory

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What exactly is Scalping?

  • #1
  • First Post: Jul 18, 2007 10:49am Jul 18, 2007 10:49am
Guys I know pretty much what scalping is... I have a question though... Lets say I opened a trade at Eur/Usd...
I started with -2 pips and in 1 minute suddenly it became +1... and i decided to close my trade... Would that mean that I scalped?

Also i know that it is legal, but i heard that a broker rejected a client because he was scalping all the time... Can my broker do the same to me too?


Also in a 10 min period in the same currency pair, I decided to open a trade and close it for 3 times... Lets assume all 3 started with -2 spread and I closed them in a few moments to gain +1 pip... That would also be scalping?
  • #2
  • Jul 18, 2007 11:27am Jul 18, 2007 11:27am
Quoting Alfa159
Guys I know pretty much what scalping is... I have a question though... Lets say I opened a trade at Eur/Usd...
I started with -2 pips and in 1 minute suddenly it became +1... and i decided to close my trade... Would that mean that I scalped?

Also i know that it is legal, but i heard that a broker rejected a client because he was scalping all the time... Can my broker do the same to me too?


Also in a 10 min period in the same currency pair, I decided to open a trade and close it for 3 times... Lets assume all 3 started with -2 spread and I closed them in a few moments to gain +1 pip... That would also be scalping?
Scenario 1, YES, Scenario 2 - YES
  • #3
  • Jul 18, 2007 11:30am Jul 18, 2007 11:30am
Quoting Alfa159
Guys I know pretty much what scalping is... I have a question though... Lets say I opened a trade at Eur/Usd...
I started with -2 pips and in 1 minute suddenly it became +1... and i decided to close my trade... Would that mean that I scalped?

Also i know that it is legal, but i heard that a broker rejected a client because he was scalping all the time... Can my broker do the same to me too?


Also in a 10 min period in the same currency pair, I decided to open a trade and close it for 3 times... Lets assume all 3 started with -2 spread and I closed them in a few moments to gain +1 pip... That would also be scalping?
Yes, both are scalping, and yes brokers can pretty much do whatever they feel like doing because this market is lacking (much needed) regulations
  • #4
  • Jul 18, 2007 11:30am Jul 18, 2007 11:30am
Yes in 3 cases.

If your broker is an ECN it will usually allow scalping
  • #5
  • Jul 18, 2007 11:33am Jul 18, 2007 11:33am
Quoting superdezign
Yes, both are scalping, and yes brokers can pretty much do whatever they feel like doing because this market is lacking (much needed) regulations

is there a time period that brokers take into consideration??? Like if i opened a position with -2 pips and closed with +2 in more than 5 mins, than they couldnt accuse me of scalping right?
  • #6
  • Jul 18, 2007 11:37am Jul 18, 2007 11:37am
and also in other words scalping is earning a few pips in a very small amount of time but it is NOT earning a few pips in a considerate amount of time...

If i always get 3-4 pips in my trades in off hours because the movement is lacking, and keep my positions for even lets say 20 mins.. than i guess i would be alright.

(not that I do that, but still need to know)
  • #7
  • Jul 18, 2007 11:46am Jul 18, 2007 11:46am
Quoting Alfa159
and also in other words scalping is earning a few pips in a very small amount of time but it is NOT earning a few pips in a considerate amount of time...

If i always get 3-4 pips in my trades in off hours because the movement is lacking, and keep my positions for even lets say 20 mins.. than i guess i would be alright.

(not that I do that, but still need to know)
Depends, you need to ask / read the policy. I got kicked out from my ex-broker cause I scalp. Those days EU was a target, and earning 20 pips seems wonderful. Not now. Out of sudden you may hit SL (scalper has a tight SL)
  • #8
  • Apr 3, 2009 1:27pm Apr 3, 2009 1:27pm
Isn't such scalping a - EV? I don t know why a broker wouldn t like it. Essentially, you are forcing yourself to "beat the house" (spread), much more than someone who trades over longer periods with fewer positions... Or am I missing something here?
  • #9
  • Apr 3, 2009 3:49pm Apr 3, 2009 3:49pm
Quoting GregForex
Isn't such scalping a - EV? I don t know why a broker wouldn t like it. Essentially, you are forcing yourself to "beat the house" (spread), much more than someone who trades over longer periods with fewer positions... Or am I missing something here?
example 1:

normal scenario

your lets say opening a position sell another guy opens a position long and the market does go down so you make money and the long guy loses money broker collects spread...... broker happy

scalping scenario

you open a position lets say short and the market goes down and u take ur +1pip and close your position...
now the broker didnt have enough time to pass your order to the buyers
so they end up in the losing side of the trade.... and loses money
broker sad if u repeat that they will start slipping your orders(filling you at completely different prices) sometimes they wont let you close your order that fast :S


on the other hand some brokers do welcome scalpers you just have to look for them
hope this helps sorry for the bad english
  • #10
  • Apr 3, 2009 4:15pm Apr 3, 2009 4:15pm
I'd heard that a lot of brokers don't like scalping very often. But if this is a truly electronic market, which I'm led to believe that it is, I don't see why broker would have reason to object. Unless they are a clearinghouse type of thing, like commodities futures used to be. Then broker has to actually take the other side of your trade if he can't offset it.

When I opened with IBFX, I asked SPECIFICALLY about the hedge policies. She said that it was not their policy to monitor accounts except for margin levels & that they really didn't give a damn how you traded.

The one thing that I do know, but not an issue anymore....brokers frown on long term hold on a carry-trade hedge...because they don't get the spread, because you never buy nor sell, but they have to maintain the position & pay the interest.

Before the world economy went all to hell, someone could open an account with $10,000, get 400-1 leverage buy & simultaneously sell a GBP-JPY, get $220-230 per position swap, pay about $ 60 for the short, take out 5 positions, and just sit on it forever, netting $800.00 per day, perfectly hedged, neither gaining nor losing, except to be perpetually in hock for the spread of 9 or so pips per position. Brokers HATED that one. Can't blame them either. Maybe that's what you are refering to in your initial question?.
  • #11
  • Apr 3, 2009 11:11pm Apr 3, 2009 11:11pm
You have to use an ECN where the liquidity providers don't know you and you don't know them. Double blind. You may buy from "A" and sell to "B". Scalping is permitted because you are paying a commission each time you enter or exit a trade.
TRO
  • #12
  • Aug 18, 2009 6:35am Aug 18, 2009 6:35am
pls let me know d brokers that frown at scalping. i hope alpari is not one of them?
  • #13
  • Aug 18, 2009 8:48am Aug 18, 2009 8:48am
Quoting petero
The one thing that I do know, but not an issue anymore....brokers frown on long term hold on a carry-trade hedge...because they don't get the spread, because you never buy nor sell, but they have to maintain the position & pay the interest.

Before the world economy went all to hell, someone could open an account with $10,000, get 400-1 leverage buy & simultaneously sell a GBP-JPY, get $220-230 per position swap, pay about $ 60 for the short, take out 5 positions, and just sit on it forever, netting $800.00 per day, perfectly hedged, neither gaining...
I don't think this is true. Swap rates at most brokers are negative-- if you open a buy with a pair that is earning 3% interest (for example's sake) and simultaneously issue a sell on the same pair, you would be paying 3.5% interest (again, for example's sake), resulting in a negative swap of .5%. You'd also be paying the spread twice (one for the buy and one for the sell) even though you don't have a net position in the market. The end result is that you paid the spread twice and are being charged interest for not actually holding a net position.
  • #14
  • Last Post: Aug 18, 2009 9:10am Aug 18, 2009 9:10am
They've never said anything to me.

I'm a pure scalper making as many as 150 rounds trips a day.

Why would they... they are making a lot of money on me.

Mike
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