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Forex scalping is one of many trading strategies that you can use to buy and sell forex pairs. It falls under the day trading category and involves holding trade positions for very short periods. The idea is to make several quick trades in succession so that the small gains will eventually add up to a decent profit, especially if you increase your position size.
In This Guide
Scalping can be a very tricky trading strategy to master but with the right forex scalping brokers to provide you the tools and support you need, it can definitely be a very profitable venture. We have listed some of the best forex brokers that allow scalping below:
ASIC, CBI, BVI, FSCA, IIROC, FFAJ, JFSA, ADGM FRSA
up to 40% bonus
CySec, ASIC, BVI
up to 50% bonus
$10 000 demo
Because of the very fast nature of the trades in this particular trading strategy, forex scalping brokers typically use ECN accounts which give them the advantage of live trading with virtually no transaction delays. With a normal account, even a very short delay can be very costly as the market might move in a completely different direction within just a few moments. Instead of making a small profit, this can easily turn into a significant loss, which is definitely something you do not want. Thus, if you want to succeed as a scalper, one of the first things you need to do is to find some forex scalping brokers that can help you maximize the profits from this fast-paced trading strategy.
Just like any other type of trading strategy, forex scalping is not for everybody. Different traders have different styles and if you are more of a laid-back type of investor who prefers to make trades that last a while before you need to check back on it, then forex scalping might not be the best strategy for you. In this type of trading, you will have to make multiple short trades during the day, with each trade lasting only a few seconds, maybe a few minutes at the most.
Some consider forex scalping to be a rather controversial type of trading strategy. There are also a lot of forex brokers that do not allow scalping because there is a possibility that they might take a loss while the traders gain profit if terminal operators are used and hence, delays might cause problems. Despite these issues though, you can rest assured that forex scalping is perfectly legal and it actually has quite a lot of advantages if you are able to do it properly.
Making several small trades within the course of a single day is exactly the kind of excitement that many forex traders are looking for. If this is your cup of tea, then you would definitely appreciate the stimulation that you can get by having to stay on your toes and watching the market like a hawk all day, keeping an eye out for those endless opportunities for making one small profit after another.
At first, you might not be interested when you see how small you can gain with each trade. But there are actually plenty of chances in a day to get these small profits. If you play your cards right, you can win at almost every trade you make and close each day with a smile on your face. Compare this to long-term trading where you won’t be able to see profits for days or weeks because your trade positions last for much longer.
The profits that you stand to gain with each trade may be small but what this also means is that the risk is also minimal. Compared to the size of your account, the position size that you use for each trade is very small and thus comes with just a very low risk. If you use your stop loss orders properly, you can definitely save your account from massive losses in every trade that you make.
In long-term trading, profits will only come to you if the market moves substantially during your trade. If you wait for days on end and the market only moves a few pips, it would be easy to be disappointed and think that your long wait was not worth it after all. But with forex scalping, even the slightest market movements can already give you a small profit. By getting a series of such successful small trades, you can always end up with a net gain at the end of the day.
Although there are several excellent brokers that do not allow scalping, there are also a lot of scalping-friendly brokers that you can check out. Here are the top five that you might want to look into.
This broker is regulated by several top-tier regulatory bodies, including FCA, CySEC, and the IFSC. They do not have a minimum deposit and accept multiple fund transfer options. More than 250,000 traders trust XTB and a large number of these are using the scalping strategy. Traders prefer them for their feature-rich trading platforms and superior customer support.
Regulated by the ASIC, FSA and CySEC, IC Markets is another highly trusted broker for scalping. They offer several account types including an Islamic account and they also have excellent trading platforms to choose from. They have very low forex fees and also offer great investor education for free.
AvaTrade has more than 300,000 registered members and is highly regarded for their excellent customer support. They also have their own proprietary trading platform for web and mobile, and they offer both fixed and variable spreads. This broker has received multiple awards for their investor education offering. They are regulated by CySEC, ASIC, FSA, FSCA and the Central Bank of Ireland.
This broker is not as big as the others but they do offer great support for forex scalpers. They stand out for their rapid order execution, which is crucial for scalp trading. RoboForex also has some of the most competitive spreads in several currency pairs. You can also benefit from their bonuses and promos like their current 15% cash back offer. You can start trading with them with their ECN account at only $10 minimum deposit. RoboForex is regulated by CySEC.
The list of regulatory bodies that have approved Pepperstone is quite long and it includes top-tier FCA, ASIC, CySEC, BaFin, DFSA, and CMA. The minimum deposit is quite high at $200 but they make up for it with their very competitive spreads and excellent trading platforms that come with a lot of advanced features for seasoned traders. Pepperstone also has commendable customer service.
If you are going to enter the world of forex scalping, you will have to be prepared to keep a very close eye on the market as it can be very difficult to monitor the trends minute to minute and to determine where it is headed. You need to have a really good instinct in predicting market movements.
As we have mentioned earlier, this particular type of trading strategy is not for someone who likes a more relaxed method of trading. In fact, it can be stressful unless you thrive in the excitement and pressure of having to win trade after trade in order to accumulate a decent total gain.
In order to succeed as a forex scalper, you should start by finding the right forex scalping brokers to help you with your venture. There are certain criteria that you need to investigate in a broker to determine whether they can be your perfect partner for forex scalping or not. Here are some of the most important features that you should look for.
The spread, as you know, is the difference between the bid price and the ask price in forex trading. It is also what the brokers earn for each trade that they execute. So whether you gain or lose, you will have to pay this amount to the broker. In forex scalping, you should expect to make dozens or even hundreds of trade positions in a day so it only makes sense to find the broker with the lowest spreads in the particular forex pair that you are interested in trading.
Do take note that most forex brokers offer different types of accounts that come with different details, including spreads. You must take a close look at the details of these accounts and determine the one that is best for scalping before you decide on which one to open.
Obviously, you should cross out the brokers that do not allow scalping in their platforms. This still leaves you with several brokers to choose from but some of them, while legally allowing the practice of scalping, are not very supportive to the traders. On the contrary, some brokers purposely trade against their clients in order to minimize their losses. Others may have systems that are not fast enough to support the rapid pace of scalp trading.
You can avoid such situations, though, by looking for a broker that has the right technology to support scalping. The broker should also be able to accommodate the massive influx of trades that is typical of scalping. The best kind of broker to use for scalping is a no-dealing desk or NDD broker because their systems have basically no human intervention. Everything is automatic and the transactions are executed instantly with zero delays.
Time is of the essence in forex scalping so it is very important for the broker to give accurate quotes because this is the only way to avoid slippage, which can cause traders to lose valuable time that they can otherwise use for trading. These problems have nothing to do with the trader’s skills but when they happen, they can make even the most competent scalper become frazzled, causing them to eventually suffer more losses as the day goes by.
Working with forex scalping brokers is essential if you want to succeed as a scalper. This method is exciting and can be very profitable if you have the right knowledge, the right instincts, and the right broker to provide you with all the assistance you need.
The excitement that surrounds forex scalping makes it one of the most interesting trading strategies around. It is, therefore, no surprise that people have a lot of questions about it. Here are some of the most frequently asked questions about forex scalping.
Like any other day trading strategy, all positions in scalp trading close at the end of the trading day.
Not all day but you do have to keep your eyes glued to the monitor if you have any active trades so that you can get the most profits possible.
Traders who are into excitement and can dedicate a lot of time to monitoring the charts for hours at a time are the most suitable for scalping. It might not be the best trading strategy to use if you easily get stressed or if you like to spend a long time analyzing the market before making any move.
You can get the most advantage by trading the pairs with the highest liquidity, like the EUR/USD, USD/JPY or the GBP/USD. These pairs get traded a lot and thus have very tight spreads, which you would need because you will make hundreds of trades in a day.
Trading experts recommend that you take advantage of the times of the day that are most liquid, which are typically during the overlaps of trading sessions between 2 AM and 4 AM EST and between 8 AM and 12nn EST.