Discuss Do most brokers define gap trading a fraudulent trading?

[forexbet]

I understood that some brokers say gap trading is fraudulent trading.

Do most brokers define gap trading a fraudulent trading?

 

[Ethan.ishere]

Well I wouldn't say most brokers define it as fraudulent, but almost all of them have some sort of rules in place for such trading styles.

 

[Lee-me]

Any broker that doesn't will be suspicious to me honestly.

 

[VasilTodorov]

i think most of the brokers know it illegal but it is logical to read rules and user agreement before working

 

[forexbet]

I believe nobody can see the future of asset prices. Does the "fraudulent trading" just broker's bull**** excuse for steal money if a trader got unexpected profit from gap while keep silence if the trader lost by gap?

 

[compu-forex]

It's not the gap trading that they really have an issue with. It's when traders "work" the system. What fraudulent traders do is they load up on the leverage right up to 100% of margin shortly before the market closes. Normally they trade an equity CFD such as facebook that is going to announce certain results after hours. The trader then does the opposite trade at another broker, so they are fully hedged. The results announcement normally generates a gap that will drive one account into massive profit. The other account will not only margin out but will be driven into massive negative balance.

These traders are not trading normally bacause they are trading on the negative balance protection.

Now arguably the broker should introduce lower leverage limits for such trades(1:1), rather than calling it fraudulent. However, then I find that MY leverage would be limited so at the end of the day, traders that do this trading style is screwing all us normal traders, so I'm not too broken up when I see a broker kicking back against such traders.