"Scalping allowed" and what the terms really say

[Shadow Trader]

Marketing pages for brokers often say scalping is welcome. The terms of business are a separate document, and the two don't always agree.

A typical gap: the website says "scalpers welcome", while the client agreement says the broker may "terminate accounts engaged in abusive trading practices", defined broadly enough to cover almost anything the broker dislikes.

Some contracts define abusive practices to include latency arbitrage, high-frequency strategies, exploitation of pricing errors and "excessive order rates". The last one matters most for scalpers. A limit might be set at a certain number of orders per minute or per day, and an EA that sends modifications constantly can hit it.

Another thing to check is how the broker handles profits it considers illegitimate. Some reserve the right to void trades and reverse gains. Having the right and exercising it are different, but the right is the basis for any dispute.

Reading the terms isn't fun. Still, the sections on execution, abusive trading, order limits and account closure contain the information that determines whether a scalping approach is welcome.

Asking support direct questions, and saving the replies, creates a record. A vague answer is also an answer.

Which clause in a broker's agreement has been the most surprising for a short-term trader?