I have tried to find a definitive answer on what constitutes a scalp in forex, under 1 minute, under 10 pips? I know some brokers do not allow it but how do they define it as a whole?
I have tried to find a definitive answer on what constitutes a scalp in forex, under 1 minute, under 10 pips? I know some brokers do not allow it but how do they define it as a whole?
Ignored
By definition, scalping is a method of arbitrage in the small price gap created when the spread inverts. On these forums the term "scalping" is misused to refer to short-term trades. What constitutes a "short-term trade" is still subjective.
So scalping by entering and exiting a position is simply day trading. Would I be correct to assume scalping is spread betting?
Ignored
Yes to the first part.
No to the second, let me clarify.
Normally the ask will be higher than the bid. When this is the case, if you immediately liquidate a new position you would have a net loss of the spread.
A scalping opportunity would arise when the bid is higher then the ask. Because of this, if you immediately liquidate a new position you would have a net gain of the inverse spread.
Let me illustrate my point.
Normal market conditions:
Ask 1.0003
Bid 1.0000
If you bought the ask and immediately liquidated your position you would have a net loss of 3 pips.
Scalping market conditions:
Ask 1.0000
Bid 1.0003
If you bought the ask and immediately liquidated your position you would have a net gain of 3 pips. You would continue to make this trade until the gap closed and normal market conditions resumed.
I think spread betting would be comparable to options trading.
I had no idea that even happen as I am so use to playing typical stocks where the bid is always less then the ask, very interesting, sounds like that could be done with a bot, no wonder most don't like that.
Hello
sorry to crash in on your thread but as a junior member i can't start my own yet.
I was wondering about this as well, I am a newbie, trading a demo account and only looking at eurusd at the moment, sometimes i'd only take 2 to 4 pips (after the spread has been covered) and exit. would many brokers consider this scalping?
1. a fraudulent form of market manipulation. (I think this is how "the wolf of wallstreet" made a boatload of money, which he eventually went to prison for)
2. a legitimate method of arbitrage of small price gaps created by the bid-ask spread. (this is what Czech is referring to).
3. a legitimate method of trading based on quick momentum trades triggered by order flow reading setups. (this is what most mean when they talk of scalping, on a retail level at least.)
1. a fraudulent form of market manipulation. (I think this is how "the wolf of wallstreet" made a boatload of money, which he eventually went to prison for)
2. a legitimate method of arbitrage of small price gaps created by the bid-ask spread. (this is what Czech is referring to).
3. a legitimate method of trading based on quick momentum trades triggered by order flow reading setups. (this is what most mean when they talk of scalping, on a retail level at least.)
I guess they could make you hold a trade open for a minimum amount of time, though I have never used a broker that did this, nor would I ever use one that does.
Why would they deny a scalper unless they are a true bucketshop... any legit MM would allow it as they will make money from you regardless, and with the stats majority won't last long with a scalping style and they will make a ton of money off of it just by capturing the spread. So really they are scalping you... as per definition #2. They could also have poor execution.
Eureka! I am starting to see it now, those that restrict it I stay away from, I now know what a bucket shop is and I stay far away from them. I was baffled to read that on a brokers site, they did not allow scalping and that is why I wanted a true definition. It amazed me to see that as I thought it would be a good thing on those brokers that work on the spread but in a landscape full danger I am glad there are tells.
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Joined Mar 2016
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yes its very common suggestion but more effective , for swing trading its more appropriate to use daily time frame. but sometimes you can use other timeframe in demo to see the performance how it works.
