New terms and policy and day trading

I dont really understand why when i email your support, they tell me its okay to day trade with 212 no matter how many shares i buy monthly and now in your new terms and policy i see that scalping and day trading are basically forbidden. Anyone care to explain? Can i day trade (scalp)?

It would be interesting to hear from the @Team212. However, I imagine that what they mean is that day trading is fine when this is a genuine endeavour to profit from price movements over a few minutes or hours. But they don’t want you to be placing large numbers of limit orders that you then cancel just a few moments later (“spoofing”, as I have seen those trying to move the order book do), or follow a repeated pattern of trading in which you buy multiple positions and then sell them a minute or two later; which is again, so I have read, done with a view to market manipulation. Of course motive to manipulate the market is hard to prove, so T212 have to reserve the right to restrict a customer’s trading if they see patterns of trading they think is abusive, albeit that is hard to define.

One time I watched over the shoulder as someone was spoofing; he had set up a special trading venue close to and with extra high speed access to the LSE and was placing/withdrawing £1m and more on the order book at a time - so I think it really only works when placing large orders and with extra high speed access to the exchange where milliseconds matter - probably not something people here are set up to do. The T&Cs do not mention day trading as a prohibited activity.

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I hope someone from @Team212 would care to answer

@baserv It’s fine to day trade on Invest, however, scalping is prohibited in regards to CFD trading.

I’m sure there is a logical reason but that sounds pretty counter intuitive.

Yes, puzzling. One would have thought that more trading means more profit for T212. But I think it is because T212 takes the opposite side in CFD trades, and sometimes hedges them. If huge numbers of positions are being opened and closed within seconds there is no time for T212 to decide if and how to hedge. T212 could also be at risk from a scalper who has access to a faster price feed than T212 do.

A quick google search finds that Plus500 also prohibits “any trading method … such as scalping, automated data entry system and hedging, or which falls under the definition of market abuse such as insider trading”. Freetrade and eToro also prohibit scalping. However, IG actually has training videos on their website to explain scalping strategies. However, IG fee structure for CFDs is different.

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And what about day trading inside ISA to “avoid taxes” is it allowed or somehow prohibited by regulations?

@David let me clarify. If i day trade on Invest account im fine? Even if i hold my positions open for a very short time frame?

@Team212 so in the end: can i do day trading and scalping on Invest account?

@baserv Yes, you can, it’s absolutely fine.

Is it also allowed in ISA account?

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@vvsvin Yes, scalping behaviour is restricted only on the CFD platform.

Thank you for confirming.