I am currently scalping in stocks, not in forex. I am just intending to extend my strategies to new markets, and I think that forex is the best candidate. May be I am wrong, but my view is there are only three ways of earning money from the financial markets: 1) Being Alan Greenspan (or equivalent) 2) Arbitrage 3) Being a Market Maker Do you really think that you have a chance playing the game under their "fair" rules? Anyway, is scalping/arbitrage really unfair? Thank you for your advise Danger66. Greetings: Pablo
Danger66, I thought scalping was buying at the bid and selling at the offer, how can you do that with any retail forex broker ?! Can you do that with currenex ?
Not necessarily. Even though buying at the bid and selling at the ask is a form of scalping, to me it's more like market making. None of the scalpers we fund scalp that way. They enter the market when they think it's going to go their way pretty quickly. If they tried to buy at the bid and sell at the ask, they'll miss the boat many times. Yes; you can post bids and offers on Currenex.
What is the definition of scalping then if it doesn't have to be buying at the bid and selling at the offer ?
There is no definition of it. It's like trying to define "investing." Although general definitions are used, none of them are 100% accurate because "investing" (like "scalping"), means different things to different people. Each broker might define scalping differently based on the type of trading activity that they don't want. To me, scalping is the opening and closing of a position in a very "short" period of time. Here the term "short" is also subject to definition. What is considered a "short" period of time. That's subjective. To me, it is at most a few minutes - even though I have seen algorithmic scalpers who generate 100's or 1000's of transactions a day.
How many scalpers do you have in your team now ? What scalpers tend to do best, discretionary or automated and how much of each you have ?
I have found discretionary scalpers to be the best, even though I have seen some very talented algorithmic guys who I'm trying to work something out with. I only work with a handful of scalpers - very few. They are really difficult to find and most of the profitable ones are trading for themselves.
Yes, it must be hard for them to keep up with everything they are investing in. Plus I agree, it is a lot of work for a small gain unless they have a big gain.
Not true. "Small gain?" Only if they are not very good at what they do. Really good scalpers are not only very profitable, the fact that they are in a position only a very short period of time adds another level of risk control that's absent from swing trading: reduced market exposure. When exposure to the market is reduced (by limiting trade duration), you are less susceptible to gaps which can leave a big dent in your armor even if you use stops. Successful scalping is about being in control and not just blindly opening and closing positions.
Isn't the problem with algorithmic guys that the live real results are most of the time not in line with the (optimized) backtested results ?