Introduction
To become successful in Forex trading requires having a strategy that you are familiar with. Scalping is one of the most used strategies in Forex trading. Searching for a reliable Forex broker that offers scalping can be difficult because there are a few things to consider when choosing the best US or non-US broker that allows scalping. Some traders prefer using scalping as their primary trading strategy which means such traders will have to seek Forex brokers who are willing to embrace a trader closing hundreds of positions with near-zero profit or loss.
Adjusting positions during trading when a trader no longer believes that a trade is going to be profitable is actually an act every trader would seek out for which is why a lot of traders believe that US Forex brokers who do not allow scalping occasionally have a wrong way of conducting business. Not every Forex broker allows regular scalping which means it is essential to check a broker’s scalping policies or even reach out to the broker customer service to find out about their scalping policies. Forex brokers that allow scalping only allow it on accounts that are operated on ECN platforms. This article will discuss what Scalping is, how to choose the best Forex brokers for scalping as well as the top 5 best US Forex brokers for scalping
What is Scalping?
Scalping is one of the shortest of the short-term Forex trading strategies. Scalping can be defined as a Forex trading strategy that targets small profits on a frequent basis throughout the day. It involves the opening and closing of hundreds of trades daily based on real-time technical analysis. The main goal of scalping is to make profits as quickly as possible, gaining a few pips at a time rather than holding a position for longer periods.
Scalping has different meaning to different brokers, what this means is that what will be permitted or not permitted by different brokers that allow scalping will be slightly different since each broker have their different rules and guidelines. It is therefore important for a trader to find out how his broker defines scalping to see how this affects your own individual scraping strategy.
In summary, a trader who uses scalping strategy needs to understand the chart patterns, candlesticks, financial factors, and economic indicators. Scalping is not advisable for beginners because it is a high-risk strategy despite it being used as ashort-term Forex trading strategy.
How to Scalp in Forex
There is no best time for scalping even though most traders usually scalp currency pairs using a time frame between 1 and 5 minutes. For traders who scalp within 1 minute they probably earn profit of around 5 pips per trade, while for 5 minutes scalp it should provide you about a profit of around 10 pips per trade. Therefore, for a trader who would love to scalp, you will need to develop a trading strategy that is based on technical indicators as well as a currency pair with high volatility and good trading conditions.
Additionally, it is important to pick up a pair that is volatile when you are selecting currency pairs for your scalping strategy. However, volatility should not be the only thing to consider when choosing a currency pair. You should equally look for a cheap currency pair to trade on. This means currency pair with the lowest spread.Also, it is important for you to select a broker that offers STP or ECN execution because they accommodate scalping.
PROS & CONS OF OANDA.COM Pros Ability to make frequent gains Scalping is compatible with major Forex pairs that benefit from high liquidity When stop-losses are installed scalping is a low-risk strategy Scalping is an effective strategy for traders who are more of an expert in a particular currency pair It limits the potential liability of each trade Cons Gains are usually ultra-small Takes a lot of time to master the strategy of scalping Scalping allows a trader to continuously miss out on trends and huge profits
Pros
Cons
Best Forex currency pairs for Scalping
It is important for traders to know the currency pairs that are best suited for their scalping strategies. Also, it is recommended for traders interested in scalping to use the most traded currencies as they have the highest liquidity in the market. Additionally, the most traded currency pairs are not prone to very sharp movements and this makes them more predictable.
Consequently, for the inexperienced traders, major currency pairs such as EUR/USD, GBP/USD, AUD/USD, as well as minor currency pairs including the AUD/GBP, should be considered for scalping. This is because these currencies have the tightest spreads to minimize losses and the highest trade volumes. Contrarily, most experienced traders may prefer to scalp minor or exotic pairs, simply because they have higher volatility than major currency pairs but the exotic pairs often carry greater risks.
Things to consider when choosing the best US broker for scalping
ü Broker’s Policy: There is no established broker without an official policy that allows scalping techniques to be practiced by traders. Some brokers refuse scalping techniques while others even make scalping unprofitable for traders. This makes it very important to find out the broker's policy on scalping before investing with them if you want to make scalping your trading strategy.
ü Broker’s jurisdiction: A broker’s jurisdiction is quite important to consider when choosing the best Forex broker for scalping. This is because there are regulations as regards scalping that are already set by the regulating bodies which determine the extent to which a broker allows scalping.
ü Broker’s Platform: Brokers who use ECN platforms (Electronic Communication Network) are known to allow scalping. ECN brokers are usually among the fastest in the Forex world. ECN brokers offer scalping and lower spreads as well as lower fees. Similarly, brokers who also make use of the ECN platform also have a high level of transparency as they have access to price information which helps to prevent what can be termed as price manipulation. There are other things to consider about ECN brokers which include:
- Execution
- Spreads
- Account size
ü Execution Speed: Scalping involves trading multiple times in a short time frame. Hence, a trader needs to receive the latest quotes as timely as possible. Therefore, it is important to consider how fast the price feeds of a broker are. Traders using scalping need to be able to trade smoothly without any delay or slippages. This is because scalping is a high intensity trading strategy that requires a good platform and an efficient brokerage firm.
ü Spread: As a trader, you need to assess the types of spreads that the broker charges. For beginners, this is the difference between the ‘buy’ and ‘sell’ price of a particular Forex pair. The larger the spread, the more you need to make to get your trade-in the green. Therefore, it is important for you to go with a broker that offers tighter spreads. This could not be more important in the case of scalping, as you will be looking to make ultra-small gains. Kindly take note that the spreads charged by brokers can vary considerably depending on the type of Forex pair you’re trading.
ü Leverage: Leverage basically affects all trading strategies, including scalping. When it comes to scalping, leverage is an important factor to consider. Scalping requires using a bit more than the regular leverage, that is, it requires higher leverage. Leverage can either boost your profit or at the same time magnify your losses.
Other things to consider when choosing the best Forex broker for scalping are:
· It is important to know if a broker charges any trading commission. This is because some brokers might offer commission-free trading but might likely have a high spread. Trading commissions is usually charged as a percentage of the trade size. As a trader, you will need to make considerations as regards trading commissions.
· Scalping requires good research and analysis to be successful in Forex trading. Since scalping involves being able to predict the markets on a minute’s basis and this requires you to understand how advanced charting tools and technical indicators functions.
Scalping Trading Tips
Forex scalpers pay attention to precise movements that occur in the currency market. You need to have the appropriate tools, strategy, and discipline to take advantage of these movements. Volatility and unpredictability help to determine successful scalping. Here are some trading tips for a successful Forex scalping:
1) Trading Discipline
Making a profit in the Forex market is dependent on a trader’s ability to control their emotions, maintain their composure as well as have mental endurance. Lots of times when traders have made bad trading decisions it has been attributed to poor emotional responses.
2) Defined Goals
Understanding that scalping will bring you small profits matter a lot, which is why you should select a style that you are comfortable with it. Being successful with scalping requires having a well-defined and flexible strategy.
3) Market Conditions
Currency trading is dependent on market conditions. Scalping occurs within difficult market conditions which makes it important for a trader to study and understand the ever-changing nature of the market.
4) Risk management
Scalping requires using a bit more than the regular leverage, that is, it requires higher leverage. Leverage can either boost your profit or at the same time magnify your losses. Using leverage higher than the regular leads to higher risk and this, therefore, calls for risk management.
Successful scalping requires a trader to understand the market conditions as well as the risk involved in Forex trading. Traders should not take huge risks while trading, it is better not to risk money you cannot afford to lose.
FX Choice is well known for allowing best practices in their dealings. Fx choice is a MetaTrader-only broker regulated by the International Financial Services Commission (IFSC) of Belize. It offers the popular MetaTrader 4 (MT4) and MetaTrader5 (MT5) platforms. FX Choice offers 50 instruments, which include 38 forex pairs, and CFDs on seven indices, two energy contracts, two metals, and on bitcoin.
IC Markets is a Forex broker situated in Australia and founded in 2007. The broker is regulated by the Australian Securities and Investments Commission (ASIC), the Cyprus Securities and Exchange Commission (CySEC), and the Seychelles Financial Supervisory Authority (FSA).
IC Markets offers to traders the MetaTrader 4, MetaTrader5, and cTrader trading platforms. These platforms are available both on the web trading platform and mobile platform. The broker offers to customers over 60 currency pairs, indices, stocks, CFDs, gold, silver, and cryptocurrencies for trading and investment. Also, you can choose from 10 base currencies for your account, which is: USD, EUR, GBP, CAD, SGD, NZD, JPY, CHG, KHD, AUD
The broker provides three account types, which are: Standard, True ECN, and cTrader ECN. Additionally, on IC Markets, you can use trading styles that include: Scalping, Hedging, and News Trading.
Talking about one of the best Forex brokers for all-round scalper, Pepperstone is definitely a force to reckon with. Situated in Australia, and established in 2010, Pepperstone has carved its niche in the Forex trading industry. The broker is regulated by the Australian Securities and Investments Commission (ASIC) and the UK’s Financial Conduct Authority (FCA).
Pepperstone offers three trading platforms to customers, which are; MetaTrader4, MetaTrader 5, and cTrader. Traders can choose from 9 base currencies on this platform and operate on two different account types (standard and Razor). Additionally, the broker offers over 60 currency pairs, cryptocurrencies, CFDs, gold, silver, and other commodities.
By offering a number of useful risk management features, such as stop losses (with trailing stops), limit orders, negative balance protection, price alerts, and much more,
It must be noted that Pepperstone accepts customers from all over the world. However, the US, Canada, New Zealand, and Japan are exempted.
This broker is an excellent choice for scalpers as a result of its tight spread and fast execution speeds.
Hugosway provides a secure ECN trading environment that permits traders to trade exclusively online. The broker offers the trading of over 150 assets which includes Forex, indices, metals, stocks, commodities, and cryptocurrencies. Hugosway offers an impressive asset index, which includes cryptocurrencies. They also offer the MetaTrader 4 Forex trading platform, over 50 Forex currency pairs, CFDs, stocks, indices, gold, silver, oil, and cryptocurrencies for your trading options and personal investment.
Related: The Top 5 Forex Brokers for Crypto Trading
If mastered perfectly, scalping can be a profitable strategy to scalpers as long as the scalper understands the concept, and have a strict exit strategy
Any broker that offers “tight spread, fast execution, and no requote” is suitable for scalping.
This is mostly a result of low leverage, high spread, and US regulation.
A scalper needs a huge amount of money in order to handle the leverage amount needed to make substantial profits in the short and small trades.
Adopting Scalping as a Forex trading strategy requires the need to understand the chart patterns, candlesticks, financial factors, and economic indications. While beginners are not advised to adopt scalping as a trading strategy, nevertheless, it can be adopted if such a trader has sufficient knowledge of it.
It is important for a trader to choose a US Forex Broker that has the policy, and platform that supports scalping. Additionally, the broker commission charges should be put into consideration as well when choosing the best US Forex Broker that allows scalping.