What determines if someone is scalping on Forex?

I have read that some brokers frown on the art of scalping.


Is there an actual set of rules or guidelines that a broker can look at to determine if a trader is scalping?


If I open a deal and there is a huge swing in the price and all of a sudden I am 10 pips up in 30 seconds, then I am going to close the deal. Isnt that normal and what most people would do?


Does it depend on your capital? Is a broker more likely to turn a blind eye to someone closing very quick deals who has only say $5000 capital, as opposed to a trader who has $100,000?

Interested to hear people thoughts.

Well that depends upon your brokers definition of what scalping really is. Definitions vary from 'exiting a trade on the fist leg of movement without giving it a chance to retreat' or 'entering and exiting a trade within a minute'. Some people consider it just taking out less than 10 pips at a time. A well known forex CTA says it is any sort of trading aiming to profit within a short time, up to about an hour. 'Scalping' seemingly has no clear definition, and therefore gives brokers a lot of wiggle room.


Personally, I do not generally trade the news or make a habit of trading in that manner (unless in that situation you spoke of and I deemed that price was overextended by moving rapidly in a short space of time), but I would not trade with a broker who had a problem with 'scalping'. They should make their money from commissions and spreads and therefore should promote as many trades as possible regardless of the time that these trades are in play for. If there data is shit and someone is scalping them using a quicker feed, or they are a bucket shop and someone has found an edge to rip off the broker then I have no sympathy for them. Provide a better service or die.


Here is what IBFX's Todd Crossland says about scalping (lifted from http://www.metatradertools.com/forex...-blog/?p=138):

Todd Crosland; We don't actively promote scalping however it is allowed. If customers continue to only trade the news and only stay in there trades for 30 seconds there will be an issue. If they are trading for 2-3 minutes there is not a problem.


Here is Oanda's chat support response (lifted from http://www.moneytec.com/forums/205543-post56.html):

OANDA: The term scalping here primarily refers to latency trading, where clients unfairly exploit, to their advantage, delays that may occur due to the fact that FXTrade is Internet-based.
OANDA: On the rare occasions when we have believed a customer has been trading in this manner, we try to contact them and ask them to stop. Usually this is effective, but in the few cases this has not been effective, we start to reverse the trades that were executed unfairly. If necessary, we also close the account.