Best Forex Brokers For Scalping
Scalping may be one of the most popular strategies for Forex traders today; that is in case it is not THE most famous approach to day trading. Dozens of different Forex-related websites continuously praise it as one of the best methods of trading in general, even being a competitor against mid-term and long-term styles. Find out which Forex broker allow scalping and More!
However, scalping is not for everyone. Every trader boasting about it on the internet also keeps mentioning how it is one of the toughest ways to trade.
And, it is completely true; scalping requires a strong and calm mindset, one that can withstand the most frenetic movements without losing ones focus.
However, nothing is impossible; if you really want to try one of the best Forex strategies, there is no reason for you not to be able to.
Read on to ensure you have all it takes to start taking advantage of it.
Which Forex Broker Allow Scalping?
|Broker Type||ECN, DMA|
|Min Deposit||$100.00 USD|
|Account Base Currency||AUD, CAD, CHF, EUR, GBP, HKD, CNY, NZD, SGD, USD|
|Trading Platforms||IRESS, Metatrader 4 and 5, MAM, PAMM|
|Regulations||FSCL and FSPR|
|Account Base Currency||USD EUR GBP AUD NZD SGD CAD JYP ZAR|
|Trading Platforms||Metatrader 4|
|Account Base Curreny||USD, EUR, GBP, AUD, CAD, Bitcoin, Gold, Bitcoin Cash, Litecoin, Ethereum and XRP|
|Trading Platforms||Metatrader 4/5|
What Is Scalping In Forex?
If you want scalping explained in as few words as possible, then scalping is ultra-fast trade and tiny trades. That would be the summary of scalping.
However, there is always more than what meets the eye.
Yes, scalping is the execution of trades that are both extremely quick and in very small size. When scalping, positions are held for an average maximum of 3 minutes (180 seconds), after which they are immediately closed regardless of their profitability.
Nevertheless, expert scalpers can keep positions for mere seconds.
The idea behind this strategy is to take advantage of the micro movements in price that occur by the hundreds during a single day, which are only a few pips in difference. If the trades are small but executed instantly, they can add up to a noticeable profit at the end of the day.
Trading this quickly also has an added benefit that is that losses are smaller than with longer and larger positions. The other side of the coin is that profits are also smaller than the ones from other approaches.
Scalping is better done in the busiest hours of the day, when the different sessions overlap (from 2am to 4am and from 8am to 12pm EST). That is because of how this approach thrives in high liquidity.
Also parting from the benefit of liquidity, you should also concentrate on the most popular pairs like EUR/USD or GBP/USD.
As a general tip, most USD-related pairs tend to be good for scalping.
When starting, your best bet is to stick to a single, very liquid pair.
Another issue when scalping is that you need to keep constant watch on the spreads as you choose where to trade.
That is because, while spreads can be very low with some brokers, the profits from scalping are also very small; in many cases, they could equal the spreads of some of the most expensive brokers.
Therefore, you need to choose the lowest spreads possible and ensure that your profits—at the very least—double them. Another benefit from liquid currencies is that the spreads tend to be lower for them.
Risk management is also a very important part of scalping, especially when considering that the tiny losses can pass unnoticed and quickly ramp up.
Speaking of losses, a calm mind is a huge necessity when scalping since you are bound to have numerous lost transactions during a single day, and on the topic of requirements, scalping requires a lot of time spent watching charts and monitoring trades to open and close positions, which are things that you will most likely have to do yourself.
What Should I Look For In A Forex Broker That Allow Scalping?
By reading the previous section, you probably already have an idea of what you should look for in a Forex broker that allow scalping, so let’s jump straight into it.
Before looking for anything specific feature you may think of, it is important that the broker actually allows scalping and what it entails.
The reason the opposite would be true is that some brokers may have issues with scalping due to how it can saturate them with positions, which has led many inexperienced firms to financial issues and even bankruptcy over missed margin calls and similar scenarios.
So, before entering a broker, make sure the Forex broker allow scalping and it allows you to proceed with your scalping techniques.
As we mentioned previously, spreads can put a quick end at your career as a scalper; therefore, you must take spreads seriously.
The average spread for the EUR/USD pair is 1.5 pips. Let’s say that a trader closes 100 positions in a day—50 in both session overlaps. That means that the cost for the day is 150 pips.
That means that you are already spending 150 pips from your profits, and this is not taking into consideration how many trades that are lost.
That is why you need below-average spreads with your broker.
Powerful Technical Tools.
Scalping is all about technical analysis.
That means that you need a strong array of technical indicators and signals. Multiple time frames on a single screen is a particularly useful feature for traders.
A scalper needs a fast platform that can execute trades quickly and seamlessly so that they can make the most out of every second and squeeze the highest number of orders possible.
Plus: Automated Trading.
Automated trading is not imperative, but a strong “robot” can ease your mind from having to trade. The issue with this feature is that finding a well performing automated trading strategy for scalping can be very difficult.
However, a good execution of limit, market, and stop-loss orders is crucial so your trades can happen as independently as possible.
There are many Expert Advisors that can be download via the Metatrader platform. Using these EA’s can be risky and should be well tested before live trading with larger sums of money.
How else can I get automated scalping via my platform?
There are a few ways you can scalp trade automatically.
- You can use platforms such as ZuluTrade where you automatically copy trades from a trader where his or her strategy is scalping.
- SignalStart is another system that is similar to zulutrade and allows you to copy trades off different trading systems. Some of these systems are scalpers.
- The metatrader platform has a feature called copy trade. This allows you to subscribe to other traders account and essentially copy their trades. You will also find trading systems to be scalpers.
Is The Scalping Strategy Too Risky?
The answer to this question is “yes and no”; let us explain.
Scalping does not necessarily mean that the risk percentage for each trade individually is increased in comparison to other, longer-termed approaches.
What it does mean is that the number of trades increases exponentially, which translate into both wins and losses. That is what gives way to the misconception that scalping equals more risk.
On the other hand, there is one truth; scalping requires more conditions than most strategies to be successful.
The real risk from scalping comes from the fact that it is prone to suffering from factors that would not affect other trading styles—mainly the continuously mentioned spreads.
As such, a good trader will know what to look for in his broker of choice, and this will prevent him from risking too much while trading, but inexperienced traders will gloss over many details that can end their careers suddenly.
Another issue that can increase risk when scalping is not taking your losses seriously. Longer-termed strategies increase the amount you lose per trade, so it becomes more noticeable and forces you to assess your plan.
But, the same does not happen with the micro-losses that occur when scalping.
The end result is that traders tend to not care a lot about their losing trades, and they end up quickly ramping up to significant losses.
The last significant risk for scalpers is their mindset; this goes hand-in-hand with the previous statement about lack of care.
Traders can suffer from a case that contradicts the previous one—they could become frustrated at many losses in a row.
Such emotions could lead them to make mistakes like switching to a less liquid or more expensive pair that could ruin their chances at successfully scalping.
The bottom line would be that, yes, scalping is risky, yet its risks are more linked to the mindset of each trader and the requirements BEFORE engaging in the strategy. When it comes to risk in the trades themselves, scalping fares similarly to other approaches.
A great way to shut down risk for scalping is using trailing stop orders, which set a pip minimum for exiting a trade in case of a movement against you, and using limit entry orders, which set a specific price for closing positions.
An Example Of A Scalping Trade.
A scalper finds a broker with an average spread of 1 pip for the EUR/USD, JPY/USD, and GBP/USD pairs. The pairs currently sit at 1.0124, 1.0431, and 1.9321 respectively.
He proceeds to open 350 orders from 8am to 12pm, and sets a trailing stop for 2 pips and a sell limit order for 1.0130 (EUR/USD), 1.0437 (JPY/USD), and 1.9327 (GBP/USD).
At the end of the session, he loses 200 trades and wins 150—a fairly noticeable difference.
However, he has made 900 pips and lost 400, plus a total cost of 350 pips in spreads. This ends up being 900 pips made against 750 spent, which equals a total profit of 150 pips in two hours, all because of keeping losses tight with stop-loss orders and ensuring the sell limits make up for the possibly lost trades.
Please note the importance of using stops to make the trades as predictable as possible, and the importance of choosing the lowest spreads possible.
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