Overseas FX trader “TradeView” boasts the industry’s top level commission cheapness and narrow spread. In fact, many overseas FX veteran traders use “TradeView”.
However, the reason why “TradeView” is liked is not only due to fees or spreads.
- 1 Automatic trading and scalping are possible in “TradeView”!
- 2 Why is “scalping” easy to regulate?
- 3 Why is the automatic trading tool easy to regulate?
Automatic trading and scalping are possible in “TradeView”!
Another reason that “TradeView” is favored by overseas veteran traders is that “TradeView” does not prohibit automatic trading and scalping.
Currently, there are many securities companies banning scalping and automatic sales, many accounts are frozen or suspended if they violate.
By enabling scalping and automatic trading like “TradeView”, trader’s asset management diversity expands.
“TradeView” boasts the narrowest spread in the industry, making it ideal for scalping and automatic trading.
Why is “scalping” easy to regulate?
Scalping is often subject to regulation or prohibition by securities companies.
In cases where scalping is regulated, it can be divided into two patterns: a case where a securities company adopts “Dealing Desk (DD)” and a case which adopts “No Dealing Desk (NDD)”.
Reason ① To be involved in the profit and loss of securities companies that adopt “DD”
“Scalping” is often prohibited because it involves profits and losses of securities companies that adopt “DD” as a transaction form. In particular, many Japanese securities companies adopt “DD” so many companies can not “scalping”.
Transactions that adopt “DD” are also called “relative transactions”. Companies that conduct “relative trading” are making transactions by ordering the reverse order from trader’s order.
Ultra-high frequency trading in a short time like “scalping” brings ongoing profit to traders. This leads to the loss of securities companies that adopt “DD”.
In general, “scalping” refers to transactions that make 10 or more orders in one minute or settlement within 5 minutes after ordering.
Such short-term transactions do not miss the benefits of small price movements, so traders are more likely to make a profit. A securities company receives the same amount of loss each time a trader gains a profit. Therefore, “scalping” tends to be disliked from securities companies.
To the contrary, the definition of “scalping” falls apart for each securities company. (Low frequency trade that obviously does not fall under “Scalping” is excluded.)
Even if you are dealing in such a way that it does not fall under “Scalping” under your assumptions or general criteria, if it is judged that the securities company is “scalping” without permission, it will be treated as “scalping”.
Even if you did not do trading like “scalping” on purpose, if you are judged to be “scalping” by a securities company prohibiting it, you must accept warnings and account freezing.
Reason 2 Excessive load on the system of securities companies that adopt “NDD”
Even in securities companies that adopt “NDD” as a trading format, there are many cases where “scalping” is prohibited. The reason is “excessive load on the trade system due to high frequency trading”.
A securities company that adopts “NDD” does not directly intervene in the transaction. A securities company that adopts “NDD” consists of directly connecting the customer and the interbank providing the rate, and taking the fee incurred in the transaction between them.
Incidentally, “TradeView” also adopts “NDD”.
In the system of a securities company that adopts “NDD”, every time an order is placed, the order data is transmitted over the Internet line and is sent to the market provider using the trading platform.
Although it is not a heavy load if only sending and receiving orders, at the moment the order is received, the computer performs the necessary calculation processing at ultra high speed, so there are limitations on communication lines and processing speed.
When conducting an extremely frequent transaction like “scalping”, it will put pressure on the limited communication environment, the computer, and the whole system. This is the reason why securities firms adopting “NDD” ban “scalping”.
However, “scalping” banned by a securities company that adopts “NDD” often refers to a mechanical high-frequency trade by an automatic trading tool. Discretionary “scalping” by human beings are rarely attended.
Why is the automatic trading tool easy to regulate?
Automatic trading tool of FX is gaining popularity from many people, but it is currently the case that it is subject to regulation and prohibition by securities companies.
There are two reasons why FX’s automated buying and selling tools are often regulated or banned.
Reason ① Regulation by law is severe in Japan
In Japan, when conducting investment advice or agency business under the Financial Instruments and Exchange Act, approval by the Financial Services Agency or the Treasury Bureau is required.
Sales and rental of the automatic trading tool fall under the investment advice and agency business in Japan, and are subject to regulation.
According to Article 29 of the Financial Instruments and Exchange Act and Tenth No 4 of Article 197-2 of the Financial Instruments and Exchange Act, approval from the Financial Services Agency and the Treasury Bureau is mandatory for lending and selling the automatic trading tool.
However, most automatic trading tool distributors are not licensed in Japan.
So, transactions using the automatic trading tool are forbidden because it is against the law to use it at a Japanese securities company.
Reason ② Excessive load on the system due to mechanical high-frequency trading
Automatic trading tool is capable of mechanical high-frequency trading. So, there is a possibility to overload the trading system of the securities company and overload it.
For the benefit of users using some automated trading tools, we must avoid pressing on the system and causing trouble for other users. It will cause you to lose the trust of the company.
Even if you use an automated trading tool that is approved by the Financial Services Agency or the Treasury Bureau, you can not use it without the permission of the securities company.
In particular, please be sure to check whether transactions using automatic trading tools are prohibited under the company’s terms of service.