WHY DO SOME BROKERS HATE SCALPERS? ๐Ÿ˜ˆ

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Why do some brokers hate scalpers? Why do some brokers frown upon scalping? Is scalping illegal? No, its not illegal! Then, why do some brokers prohibit scalping? There is no legislation that says that you have to hold onto your trades for a minimum period of time! But there are some things you can’t do.
If you trade with brokers having direct market access to the exchange, they don’t really care because their pricing model is based on commissions from clients. The more you trade the more commissions they get.

Why do Dealers/Brokers Hate Scalping?

If you are trading with a CFD provider, you are trading against them in a technical sense. Ideally these providers want to have a balanced book where client positions even each other out. They will simply hedge the net exposure. The issue they have with scalpers is that they can’t hedge the net exposure as scalpers are too fast and this leaves brokers potentially exposed.

Original video source. Compare ECN brokers in our table.

26 COMMENTS

  1. thats another reason to add to say trading is not gambling because sometimes the "house" lose ๐Ÿ˜›
    i'm scalping because the exposure is less if you do it like trading intraday momentum, but just scalp a very little swing during the high volatility hours, when the market cannot absorb the amount of money that is going into the system.
    During this period, the called main zones of support or resistance are like 5-20 pips bigger (5-8 most of the times), even if its a push to take Stop losses and reversal again to the direction of some main trend.
    This variation usually ranges around any kind of combination of atr+spread or atr-spread variation, and thats for my pocket on london/tokyo/newyork opening hours on the Cable and the Ninja XD

  2. They should love scalping because each and every brokers claim to be earning from spreads and spreads alone. Aren't scalpers creating most profit for them?

  3. It is possible to find a "broker" that is able to allow you to "trade against yourself" or hedging — but it is a prop firm and considered an institution, multiple providers where they place one trade with a provider, the other side with another.

  4. The first scalpers are the institunionals with their HTF algorithms creating spoofing and icebergs orders and brokers get a kick out of their orders as they trade in larger blocks. Of course mainstream will discourage scalping for retail traders lol

  5. The brokers don't care how people trade cos they know the trader pays the spread on every new trade and millions of stop losses make them new spread amounts each day also the brokers know traders are guessing cos news and charts are useless and brokers know trades go wrong from the start and they know 90% of traders will lose.
    Brokers don't have stop losses due to challenging funds.
    Happy trading Hayden

  6. Whoa hold on, so in the US if you have two different broker accounts and are running two different trading algorithms and they happen to trade contracts between each other because one had a sell signal and the other had a buy signal at the same time and they traded the same contract to each other, you technically broke the law?

  7. They must love me when i lose more than win and in minutes .
    I should have two accounts and bid against my fist entry ,becsuse it useally in the wrong direction , immediately . So enter , the first one , opposite on the second .
    Close the first as soon as it goes wrong . Keep the other till it peaks .
    Hmmmm

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  9. Are Core-Spreads happy to have scalpers ?
    By the way, it's a great channel Mark. Thanks very much !! Over the past couple of weeks of watching your videos, you've taken me from knowing nothing at all, to now being able to sucessfully trade on a live account. I'm looking forward to learning a lot more of course ๐Ÿ™‚

  10. Hi Mark –

    I was recently terminated by Fidelity. My strategy was to trade one symbol every day (typically AMD), and scalp the noise. I would short the tops and buy the drops – conversely, would buy the dips and sell the rips. Typically would trade b/t .02 – .04 ticks, but sometimes would profit on just .01 tick. If the trade ever went against me by .03 ticks or less, would stop out. Would typically put on about 100 trades per day, and was trading usually in 1K share increments.

    Fidelity says the market maker identified me and asked them to make me stop, or they would stop paying them rebates on their order flow. That is the most information I can get from them on this.

    Do you possibly understand this situation and why exactly the risk manager deemed me a hazard? The way I see it, I was cut off because I found an arbitrage in their system taking advantage of recent zero commission trading and the market maker discounts they passed on to their customers (they call it price improvement). Would Fidelity really be worried about my making $500 – $1,000 per day exploiting this inefficiency? I was discretionary trading – did not use software or any type of automated algo to do this.

    Chris

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