Based on your T&C, any trade which is closed 5 minutes or less from the opening is classified as Scalping.
Scalping means a speculative type of trading where the opening and closing of a position is executed within a very short timeframe (e.g. five minutes or less);
Unfortunately, this means that if I have a Stop Sell order in place, and if the share price drops rapidly since the Stop Sell order was created, this results in my position being closed, which now classifies as scalping. This is a core concept of risk management when it comes to trading, especially important during these crazy times of volatile market, however based on your T&C this means that it’s not allowed to manage risk on your platform.
I asked David on the Trading212 staff about this and this was his reply:
It’s okay to trade small sizes & close positions in less than 5 minutes, even more than a few (10-15-20, etc…) positions. The problem arises when that’s the sole way of trading & is aimed at abusing an issue with the trading app.
So providing it isn’t abusing the system etc, they deem this acceptable use.
Granted the wording could be more clear, I hope amendments are put in place.
Interesting, so if I buy shares worth £250k, I can’t manage my risk by creating a Stop Sell order. Imagine if I would buy Wirecard stock for £250k just 3 minutes before it dumped more than 50%. This to me is instant more than £125k loss which I would never get back. I hope people can see how flawed is this platform. T&C needs to be updated ASAP. Look at the current market, it’s just insanely volatile, companies go bust. To me this is gambling, not trading, insane…
Each their own in this market, it is indeed full of risk right now.
Personally I don’t run with any Stops, so my positions echo this by being spread and relatively small in ratio to my funds.
I’d just place emphasis on being careful right now as even if a Stop is in place, if there is no liquidity then the market may drop below your stop price, resulting in bigger than expected losses.
You could emulate a staggered approach of having multiple Stops set for portions of your position, albeit not perfect - this could help possibly.
Again, it’s not easy right now, I can’t honestly advise an exact answer.
Just to be clear, going back to your original post - this is allowed, you can set a Stop sell order up and if it executes the second after, this is ok and fair use.
The only way this is not allowed is when your doing 100-1000 trades per minute making money that way.
In regards to gambling, the only odds we all have is 50/50 at the end of the day.
Analysis of stocks can only take us all so far, exogenous factors effect stocks all day everyday, but ultimately the only odds any of us have complete control of … is always 50/50.
As others are saying - providing you are trading using the platforms features and are not intentionally “scalping” with every trade you will be ok.
By analysing past trends you can come up with statistical probability of whether your investment will give returns. By managing risk, e.g. placing Stop Sell order, you aren’t gambling, you are actively protecting your investment, whereas gambling doesn’t care about risk management. Additionally, gambling is essentially provides way lower probability (the mathematics of gambling), therefore in my books gambling is a totally different beast. If you think that trading is gambling, you are wrong and it’s an insult to every trader who takes this seriously…
100% agree. I think it is the most important thing to remember when trading and is exactly why risk mitigation is essential (diversification, stop loss etc).
So the question stands, will @Team212 update T&C to reflect scalping true definition/meaning as discussed in this post, as stating that all trades closed bellow 5 minutes since the buy order was created counts as scalping doesn’t reflect the reality, please? I’m focusing on day trading, and I need reassurances that my account won’t be suspended if my Stop Sell will execute bellow 5 minutes, I usually make 3 to 5 trades per day, some days I don’t trade, so this totally qualifies as valid use of Trading212 platform, based on what’s being discussed in this post.
They just want to protect themselves from people abusing it. So if you occasionally need to close early to protect yourself that’s fine and very different to intentionally doing it multiple times a day, every day to make money which is scalping. I’m not sure how they could word that in legal sense without people pushing the definition.
You can always turn to the forum for answers to your questions as I too wasn’t sure the exact meaning of scalping and what I was able to do when I started on CFD. Obviously I stopped a lot of trades under 5 mins as I needed to, I for sure wasn’t waiting 5 minutes to do so. I was fine. There was a thread on here discussing it too. Sorry I can’t find it now.
As long as it’s not solely how you are trading which flags up and it’s occasional then it’s okay. Was for me. I had to do it quite a few time’s but it wasn’t constant
I don’t CFD anymore - far too stressful on the old nerves!
I think if Trading 212 were to explain why scalping is prohibited then it would help people to understand what is reasonable and what is not. Here is my guess as to the reason for the ban.
As I understand it Trading 212 keeps a book of open buy and sell positions on each instrument and than hedges the net difference, so they are left in a position of indifference as to which clients close out positions profitably and which do not. Ideally, Trading 212 would like the balance between long and short positions to be equal so they do not have to pay for a hedge. This makes me think there can be these possible reasons for banning scalping:
If large positions are opening and closing in a matter of a few seconds then this makes it difficult for Trading 212 to keep track of the difference between the open long and short positions and so maintain the proper hedge for the difference between them; at the very least it makes it more costly to do so.
Trading 212, quite reasonably, wishes to protect itself against a rogue trader who somehow has a better access to market data. A price feed that is a fraction of a second faster could be enough for that person to make guaranteed profits by scalping. Remember that Trading 212 accesses the market through the middleman of Interactive Brokers, and so there is going to be a small delay for them in setting up their hedges.
They also need to protect themselves against someone trying to make consistent profits by noticing small price differences between the real market price of AAPL shares and the AAPL CFD, which may be due to delay in updating one or other of these prices.
If this ban were not in place then protection would have to be factored into an increased spread which would be to the disadvantage of the majority of CFD traders. One can view the ban as something that makes things better for the majority who are not wishing to scalp.
I’m focusing on day trading, and I need reassurances that my account won’t be suspended if my Stop Sell will execute bellow 5 minutes, I usually make 3 to 5 trades per day, some days I don’t trade, so this totally qualifies as valid use of Trading212 platform, based on what’s being discussed in this post.