Dealing centers and scalping.

More than once I have had to deal with the fact that a broker prohibits trading using the scalping strategy, and not just prohibits, but cancels transactions (especially if they are profitable), or even blocks the account.

Different companies have their own restrictions on opening short trades, some simply limit their minimum duration to 3-10 minutes, others allow opening no more than 20 trades per session, and still others provide small leverage.

So for what reason do dealing centers not like those who trade scalping?

It would seem that everything is natural; the larger the volume of transactions a brokerage company transfers to the foreign exchange market, the more spread it will receive.

And scalping involves not only large-volume transactions, but also a large number of open positions, and a separate commission is taken from each new order.

It turns out that it is profitable for a broker to work with scalpers, because the size of the close spread for just a day of trading can exceed the size of the trader’s deposit .

There are several reasons for not loving.

• The broker does not withdraw anything anywhere - that is, trading is carried out entirely on the internal platform and to ensure liquidity of the DC it is sometimes necessary to open counter transactions. And if the trader is lucky, it means giving him a fairly solid profit, because some scalpers trade in volumes of 10 and 100 lots .

• Load on servers - which leads to an increase in order execution time and the occurrence of technical failures.

It would seem that for a reputable broker there are 50 extra transactions per day, but what if there are 100 or more such scalpers? • Weak partners - in most cases, the liquidity of dealing center transactions is provided by one or a group of banks, in this case the entire burden is transferred to the liquidity provider.

If it is a dozen large banks or even an interbank market, scalpers’ transactions will simply dissolve in the total mass of orders, but when working with just a couple of banks, problems may arise. In any case, the prohibition of scalping trading does not characterize the broker from the best side - he trades using only the internal platform ( Forex kitchen ), has weak technical support or cannot provide sufficient liquidity of transactions.

You can find companies that allow scalping in the " Scalping Brokers " section.