Quote:
Originally posted by efex.co.uk
You do run the risk of experiencing delays while all your market orders go through a dealer rather than automatic instant electronic execution. They'll do this when, for example, a trader opens a large trade on a spike and closes it milliseconds later for a few pips and a lot of profit. The problem for the broker in trades like this is he has nowhere to offset your position, the instant automatic order execution will put him on the other side of your trade, in effect he loses what you win in a trade like that. A good example was the recent controversy over filled market orders around NFP data which were later revoked, the broker simply lost too much money and explained later that the price did not exist and the market never really traded there. Slightly unfair perhaps but that was their prerogative, after all they dictate the terms of business and either we tow the line or close our accounts and go elsewhere, but in more or less any event the broker has no valid reason to close your account, whatever your style of trading happens to be, they have other ways to discourage trader practices which affect their profit line.
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Absolutely right, they do indeed.
There's a huge area of misunderstanding here in most bulletin-board posts about "scalping".
Your broker has no problem with you scalping the market. He just doesn't want you scalping _him_.
I sometimes find it useful, as a customer myself, to ask myself how I'd want and expect a broker to resolve an issue if I had an interest in their company. They have a duty to their clients and they generally want to keep them (and of course they vary enormously in the lengths they'll go to and the points they'll stretch to do that, also highly dependent also on the client's behaviour and attitude), and they also have a duty to their own stockholders.
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