What is scalping?

[TraderABC]

Originally Posted by cyberwave

Thanks for your input

This means that most of the time they are on the other end buying what i am selling or selling what i am buying instead of matching me with another client,..if what you say is true (which i think it is,..this was my original personal opinion to begin with) .. it means they want more people to lose money,...the question that rises here,..is the trading courses they offer for free when you sign up,..why do they offer training and do they put misleading infos in that training ?

i have studied the full V.I.R.T corse and i found some info in it useful,..but why train us if they want us to lose ? unless we r getting from them false info that make us lose in the forex market ?

Think about it. For every seller there must be a buyer. In order to earn money, you need to analyze the trade better than the other guy. When 99% of literature and classess teach the SAME thing, when 99%+ of software charting packages have the SAME indicators, who do you think will take the opposite side of the trade?

Why would Large Banks, and large funds such as Quantum Fund by Soros, fall for the oldest tricks in the book? Why would they give their money to some one who has taken basic "FX course for beginners" ? If the information we are taught is so good then why do 90% people fail at trading? If the info we are taught in books and classess are so good, why so many people fail? Don't tell me it is all Psychology fault because automatic backtesting takes care of that. Why are there so many signal services out there IF what we know is so good?

Have you ever learned the above 2 paragraphs at your courses? Unfortunately I have not. All I heard was recitation of decade old techniques that does not work today over periods of time.


If you have programming experience and a platform that allows to automatically backtest strategies, do yourself a favor. BACK TEST POPULAR INDICATORS AND STRATEGIES OVER LONG PERIOD OF TIME. I did it over 3.6 years for 1hr charts and 2.6 years for 5 minute charts, and up to 10 years for daylies.

[TraderABC]

Originally Posted by phildunn

I found a article about this issue at http://electronicforextrading.com/fo...commissionfree

Forex Brokers. Are They Really Commission Free?

Submitted by Forextrading on Mon, 2005-04-25 22:36. Forex Brokers

Most, if not all, Forex brokers attempt to entice prospective traders by claiming that they do not charge commissions for trading currencies. Indeed, most Forex brokers do not charge commissions, but make their money on the spread (1-5 pips depending on the broker). As you may remember from your stock trading days, the spread is the difference between the bid and the ask.
So does a pips or two make a difference? You bet it does. Many traders like the Forex market because of the leverage (400:1 depending on the broker), which gives the trader substantial buying power and control over large blocks of currencies. Let's assume that you decide to buy 100,000 block of currency. If this particular broker charges a 4 pip spread, you will end up paying the broker $40 just to enter the position. Spend another $40 to exit the position and you end up paying your broker $80. These type of costs eat away a trader's profit and increase losses.
Another way some brokers make money is by maintaining trading desks that trade against customer positions. If the broker feels that a customer entered into a losing position, it will take the opposite side of the trade and make the money that the customer ends up losing. Does this this mean my broker wants me to lose money? Judge it for yourself.
Next time a broker entices you to open an account by claiming that they do not charge any commission, make sure to find out the spread on major currency pairs. Also inquire whether they trade against their own customers, because you don't want your won broker to turn against you.

Look like it is true that brokers earn big money by trading against us !!!

Think about it. If most people loose, then it makes sense to go in the opposite direction. Your broker has access to trades of its customers. What I am saying is they know what position you are in, so they can using statistics trade against you with 90% win percentage. Actually more, since THEY get your spread and maybe even swap (for position traders).


Have you ever learned AGAINST WHOM you are trading? In most, if not all courses if they touch that subject they only mention other traders. But if those traders are almost in IDENTICAL position as you, then who is trading against them?

[Ray G]

Don't get down about it, just beat them at it. Stay away from ultra short trades and set a goal for 5 or 10 pips a trade and never take their crazy 30 pip stops.

In most markets, it takes me about 20 minutes to realize a good 10 pip move, if the market is moving. In slow markets, I've went with two lots and waited 30 minutes just to get 3 pips. But at the end of the day, I get my 10 or 15 pips and no one can rightly accuse me of genuine scalping.

Then there's trading on the news. There's no way they have the personel to trade against their clients on a big news release; way too much data flowing. A $2000 account (USD) trading one lot on last month's non-farm payroll would have made the average house payment in profit on a 20 minute trade. Other news releases are similar though not always that big.

The opening of today's market will probably jump one way or another, too quickly to get traded against by your broker. That might be a scalp but once a week probably won't get you labeled.

And lastly, stay with the larger brokers, based in America. They have the most to lose. Too many Elliot Spitzers running around who want to be Gov/Prez. If someone like Spitzer found out Fx brokers were actively trading against their clients, whom they trained to trade as such, it would be great political fodder.

[TraderABC]

Originally Posted by cyberwave

then we should never listen to there trainings,..and we try to stay away from there radar like you say,..because there is nothing we can do about it...but worse,we should expect some nifty tricks in the software to make us lose money ? that would be terrible

Good advice. If 90% loose, then it pays to use a strategy that does not involve that. How good is a strategy if it fails 90% of the time? Think about that.

the rule of casinos comes to mind

the house always wins,.. maybe this is why only 5% makes money on this market,i am started to doubt if an honest trader like most of us can make money out of this market ?

It does not always win, but usually 90%+ of the time. It HAS to win in order to be in business and 90% of traders HAVE to loose in order to maintain 10% winners. And to tell the truth there isn't much unusual in that. Why do you think that a freshmen who studied trading for few month from some basic books be able to outperform SEASONED PROFFESIONALS? Tell me a basic forex book that does not cover basic stuff such as double tops, head and shoulders, ema's, MACD's divergences, etc.


ANd another nail. BROKERS CHANGE THE QUOTES. DO an experiment, open multiple demo acounts from diff brokers (or check online quotes). You will see that there is few pip differences in quoted prices... IF different brokers quote slightly different prices, if they know what position their clients are, why do you think they do that?

[cyberwave]

Originally Posted by Ray G

Don't get down about it, just beat them at it. Stay away from ultra short trades and set a goal for 5 or 10 pips a trade and never take their crazy 30 pip stops.

In most markets, it takes me about 20 minutes to realize a good 10 pip move, if the market is moving. In slow markets, I've went with two lots and waited 30 minutes just to get 3 pips. But at the end of the day, I get my 10 or 15 pips and no one can rightly accuse me of genuine scalping.

Then there's trading on the news. There's no way they have the personel to trade against their clients on a big news release; way too much data flowing. A $2000 account (USD) trading one lot on last month's non-farm payroll would have made the average house payment in profit on a 20 minute trade. Other news releases are similar though not always that big.

The opening of today's market will probably jump one way or another, too quickly to get traded against by your broker. That might be a scalp but once a week probably won't get you labeled.

And lastly, stay with the larger brokers, based in America. They have the most to lose. Too many Elliot Spitzers running around who want to be Gov/Prez. If someone like Spitzer found out Fx brokers were actively trading against their clients, whom they trained to trade as such, it would be great political fodder.

Is GFT forex based in the states ? I can still beat them by using version one of the software and trading major news announcements

there advice to there clients is "Never trade on major new announcements"...i think this is a joke,...why not ?

[cyberwave]

Originally Posted by TraderABC

Think about it. If most people loose, then it makes sense to go in the opposite direction. Your broker has access to trades of its customers. What I am saying is they know what position you are in, so they can using statistics trade against you with 90% win percentage. Actually more, since THEY get your spread and maybe even swap (for position traders).


Have you ever learned AGAINST WHOM you are trading? In most, if not all courses if they touch that subject they only mention other traders. But if those traders are almost in IDENTICAL position as you, then who is trading against them?

wise words that makes me want to stay away from this market,..according to your back testing,..what results did you get ? I do not have the programming skills to do that,..i am a chemist,..i can only get back at brokers by burning there faces with acid but i cannot create a software if my life depended on it

Any strategy there that actually led to a win overall over the years ?

Also what do you suggest for a trader who want to make money in this market against those who he trust the most ? where is the way out of this and how can someone make money ? and if you make good money,..can they stop you ? can they freeze your account for a lame reason or a weak arguement on there side ?

[Ray G]

Experts are experts by whose accounting? Not usually mine.

Don't trade news? If someone told me that to my face, I would politely but sharply let them know that they were insulting me, and of course, insult them back. (But nicely yet ever so sharply.)

Don't all of the books warn against short term trading? Don't they advocate positions trading; long term stuff with huge stops? Why yes they do.

Short term trading is where their soft spot is.

As for keeping them off of your back; I've found with other companies, not brokerages, that a letter from the state attorney general works miracles. Really. Most states will have a form on their AG website that a citizen can fill out and they accept it and send on their own correspondance to the accused company. Basically, that company is notified that a complaint has been registered and it will be looked into by the AG. Right or wrong, most companies really do not want any attention from the AG (or any lawyer for that matter).

So look at whatever "they" tell you, books, instructional stuff etc, and do what they advise against. Well some of the times. Money management is still very important and the importance of trader psychology is still paramount to making prudent decisions.

But keep in mind all of this, next time someone is telling you how "crazy" short term trading is. As far as I'm concerned, the longer my trade, the more exposed I am to others' manipulation.

[Ray G]

On the pricing subject though, in this big of a market and it's international status, it would be impossible for every broker to be right on the same pip. There is no one, central clearing house or exchange to regulate that kind of uniformity and that really is in our favor. We don't want that much regulation.

So the brokers do have it within their ability to not accept or move certain prices until the last second, as it benefits them. But in the long run, everyone is going to be within a few pips of each other.

In other words, they're not going to hold their bid/offer at a two pip difference to the market just for my mini account. Someone else much bigger will swoop in for some arbitrage, and really, there's not enough money in it. But if the overall sentiment is one way, and they're trying to trade a certain direction, they might not accept the opposing prices until the last possible second. Or vice versa, they will accept bids/offers more quickly when it supports their own positions.

All the more reason not to expose oneself to the market for too long a period. Short term trading it seems, isn't as crazy as the books would have us believe.