To Scalp or Not to Scalp that is the question ?

[Agent86]

Hi all,

I'm not a scalper and don't consider myself one, however I'm concerned that my trading style may be considered scalping by my broker ?

Backround of my style:
I've been testing my strategy for 3 YEAR STRAIGHT on a demo and doing quit well with consistent gains of 120 - 200 pips every single month with no consistent losses. Yes I said 3 years of demo trading LOL. NO robots but live manual trading.
Trading between 7am-12am est time which is good time for me to trade.

The question I have is that if I take a trade during the day typically on a 5min chart and a trade can last for 15 min. as long as 1 hour, and I have a clear entry and exit strategy.
Occasionally I get my exit signal and exit quickly and still end up in a small profit, but rare to be in and out that quickly.
As I've said typically I get my entry signal then I stay with the trade until it hits my target which can usually be 15-60 minutes approx. Then I'm usually done for the day after 1 trade.

Some days there is no trades at all so I have to wait till the next day or so.

Anyhow the question again is: Will a broker consider this scalping ? I don't feel this is scalping but more of a position day trading in my opinion.
I know typically scalping involves much shorter time frames and many trade the 1min charts ;and many in and out trades.

Do I have anything to worry about with a broker deciding to shut me down if I go live with consistent gains like this ?

Please advise what you think about this ?
Thanks

 

[Pharaoh]

86, where have you been hiding? Off on another adventure with the lovely 99?

It REALLY depends on the broker. Some of the worst bucketshops have VERY vague rules about what constitutes scalping. Also, watch out for sudden widening of spreads and slippage once you go live.

With a normal broker, closing an occasional trade after only a minute or so shouldn't set off any alarm bells. You could send a copy of some of your trades, highlighting that some are closed more quickly than others to a few brokerages and ask if this is permitted. Another option is to look for a broker that permits scalping. Many ECN or semi-ECN brokers do, but watch out for the commissions eating into any savings on spread.

The final test of a broker is two-fold.

First, can you withdraw ANY money. Sadly, there are brokers that will let you make all the money you like, then will suddenly have problems once you try to withdraw anything.

Second is what happens if you are profitable enough to try to withdraw money beyond your initial deposit. A good broker should be happy that you are actively trading and give you no problems. A broker that has issues once you are playing only with "house money" is almost guaranteed to be trading against you.

 

[Agent86]

RE: scalping or not ?

Hi

Yep I've been hiding LOL and not in the forums much.

But I have been at my computer from around 6am-12 est.

Sort of busy though listing on ebay, boxing and shipping, and watching charts while I run my other business.
It took a while to get situated so I could do that, but no extra hands to chat in the forums. Sometimes you just don't have enough hands LOL

Anyhow, thanks for the info, I'll have to research this a bit cause I don't want a problem with the broker.

I'm very certain that I will have regular gains when live, and also I use OCO's on all stop/targets so once a trade is initiated I have set stops and target, so I hope this would not flag anyone as a scalping trades.

Especially since is only 1 trade a day or 2) at the very most on occasion

The strategy is very consistent and I'm hitting about 80%-90% correct on all trades, however not all hit the target and signal to exit early but end up still in positive gains. So a 2:1 risk/reward or better is great for this because even if you end up wrong 50% of the time you could still end up making some money simply due to the math of the risk/reward ratio.

Anyhow, I've not heard of a broker penalizing someone for this type of trading which is more of a day trade, however I just wanted to see if anyone has heard of this type of thing with a known registered broker or not ?

Thanks for all the input, and happy trading.

 

[Agent86]

One more thing

One last thing

I see many strategies and some appear to work well according to the thread posters, but I also see that there is large stops and also large draw downs too.

I know the name of the game is to capture as many pips as you can.

I've developed a few strategies on the Fibonacci trader platform in the past and back tested it back 10 years or so.

It seemed to have consistent gains of about 300-400 per month which was great, but the risk reward was terrible, although it had a high percentage of accuracy in the 75% range, however there was intermittent losses during a few months which was not so bad over the long term. Lets say 3 months had losses of about 400 or so pips in a row, thats around 1200 pips, but then consistent gains for 8 or 9 months in a row.

However, the problem with this is that if you get in when during the 1200 pips loosing streak then you will think the system really,really sucks bad.

And technically you would be right, however over time it's very very good.

But most people don't have the equity or emotional discipline to stick in there.
I know I don't and would not want to take even 100 pip loss 2 months in a row. Which is why I developed my own strategy and tested it for 3 years.

My strategy would allow even the mini and micro trader to make consistent gains and double their lots every month to duplicate profits every month in order to then start trading full lots and so on.

Anyhow, I was just wondering how people do it, and how they can tolerate such large stops on some of these robot traders etc.