Too much profit? Scalpers?

[zekecanada]

Hi there,

I am a newbie but I have been diligent in reading as much as I can and taking in fine forums just as this.

I have come across a few posts that talk about Scalpers...tooo much profit...and how brokers don't like that??

What can they do to stop you? Not that I'm a scalper, but I do intend to be as profitable as possible and I do intend to minute/hour/day trade...is this going to be a problem for me(not from a bad strategy point of view..lol but from the broker)

Also, I am considering using what I believe is a reputible broker, the only charges are the spread and withdrawls....not sure if naming them is ok or not, but it starts with an F has an X and is very well distributed over the internet. Their service appears to be flawless and I have yet to find anything "fishy" that I can see...(the gut says they are ok)

one last question, if I am trading with an online tool, and I close a transaction, is that not "DONE", FINAL, etc...I've seen comments that this isnt necessarily the case?

Hope this isn't tooo much or to vague, my many thanks in advance!

Zeke!

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[Steve Pickering]

Originally Posted by zekecanada

I am a newbie but I have been diligent in reading as much as I can and taking in fine forums just as this.

A good way to start!

I have come across a few posts that talk about Scalpers...tooo much profit...and how brokers don't like that??

This has been addressed on other posts, but yes, essentially brokers don't like traders taking profit out of them. It should not be a problem if the broker has a platform that interfaces directly with the market maker. IMHO, if the broker makes excuses about the feed being slow or the market maker getting upset - drop them!

What can they do to stop you? Not that I'm a scalper, but I do intend to be as profitable as possible and I do intend to minute/hour/day trade...is this going to be a problem for me(not from a bad strategy point of view..lol but from the broker)

They can revoke your account. To be honest, it is very difficult to be a scalper because you, as an Internet-based trader, are at the end of the food chain - that is, you are getting information after everyone else. Your hope as a scalper is that you broker is slightly behind the other broker and you can see anomalies between the prices quoted.

Also, I am considering using what I believe is a reputible broker, the only charges are the spread and withdrawls....not sure if naming them is ok or not, but it starts with an F has an X and is very well distributed over the internet. Their service appears to be flawless and I have yet to find anything "fishy" that I can see...(the gut says they are ok)

"Reputable broker" is probably an oxymoron, but the firm you mention is one of the most widespread. If you are in doubt about a broker, just check out the forums, the survey on this web site and the NFA website under BASIC (Background Affiliation Status Information Center) (http://www.nfa.futures.org/basicnet/) .

I would like to see brokers cater more to the needs of traders: For example, allowing an infinite choice of trade amount (within the margin conditions). This would allow the trader to trade with a constant amount of capital per trade, regardless of magnitude of the stop. There is only one platform that I know of that does this. The others obviously don't care about what the trader needs to make consistent profits. It is a bit like going to the gas station and only being allowed to buy 50 litres at a time for your car.

one last question, if I am trading with an online tool, and I close a transaction, is that not "DONE", FINAL, etc...I've seen comments that this isnt necessarily the case?

It ought to be, but some brokers seem to have missed the motto of the professional body that they have have been so keen to become members of, namely 'My Word is my Bond'. When a trade is DONE, it is done - end of story. You cannot get out of it and neither can the broker. If you have one single instance of this - dump the broker!

I must say, I have no hard evidence of brokers reneging on trades, but I can imagine all kinds of excuses being made why they might: the system was down, the price had moved, etc.. Be sure that the trade is confirmed in some way on the screen - incorporated in the position window for example.

A more serious proble is not getting stops and limit orders executed. The problem is here is that you are often away from the computer when the orders get triggered. The only strange thing is that I have never heard of a broker 'forgetting' a stop loss order when the market has made a recovery to the trader's favour!

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	Market Maker A market maker provides pricing and liquidity for a particular currency pair and stands ready to buy or sell that currency at the quoted price. A market maker takes the opposite side of your trade and has the option of either holding that position or partially or fully offsetting it with other market participants, managing their aggregate exposure to their clients. If a market maker chooses to keep the trader's position without offsetting it in the market, the trader's profit is the market maker's loss and vice versa, leading to a possible conflict of interest between the trader and his market maker. A market maker earns their commission from the spread between the bid and offer price.

	Margin The deposit required to open or maintain a position. Margin can be either "free" or "used". Used margin is that amount which is being used to maintain an open position, whereas free margin is the amount available to open new positions. With a $1,000 margin balance in your account and a 1% margin requirement to open a position, you can buy or sell a position worth up to a notional $100,000. This allows a trader to leverage his account by up to 100 times or a leverage ratio of 100:1. If a trader's account falls below the minimum amount required to maintain an open position, he will receive a "margin call" requiring him to either add more money into his or her account or to close the open position. Most brokers will automatically close a trade when the margin balance falls below the amount required to keep it open. The amount required to maintain an open position is dependent on the broker and could be 50% of the original margin required to open the trade.

[Chance Robertson]

Originally Posted by zekecanada

What can they do to stop you?

First of all , there is no a single forex broker in this world that I'm aware of that would say "No" to scalping - That's how they make their profits of pip spreads! The more frequent you are as a trader the more profitable your broker is.
However, if you hold your multiple positions for less than five minutes for more than ones they generally put a temporary restriction on such accounts until all the orders that you've placed are settled. You must understand brokers pay fines too.

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