Scalping is a trading method where a trader will attempt to open positions frequently, where each position is small in size and only last for a few moments in order to earn small, stacked up profits. With that in mind, a scalper may subject himself to many advantages and disadvantages associated with trading terms and conditions.
Forex broker usually provides trading facilites for its clients based on several specific criteria, which may or may not suit the need of a scalper. If you are a scalper or want to trade by scalping, here are some things that you need to take note:
1. Allowing Scalping Methods.
In practice, opening and closing trades repeatedly in high frequency will eat up server resources. That's why, not every broker allows scalping due to limited server capacity, especially on high seasons where trading volumes can be hectic. Alternatively, you can simply look for any broker that explicitly allows scalping practices.
2. Fair Market Quotation
Due to the nature of scalping, every single pip matters. In that case, requotes and slippage can be your worst nightmare.
You need to make sure that your broker provide fair market quotations (price listing). Such broker usually uses NDD (non-dealing desk) or ECN (Electronic communication network) model with no requotes and fairly acceptable slippages.
No one wants to do scalping with cheating bucket-shop broker. They can manipulate trades and drains your account's equity. Conversely, a broker under strict regulation will be required to follow the rules applied by its regulator. Therefore, a scalper need regulated broker.
The safest way you can do is by checking the broker's regulatory status. Every jurisdiction has its own regulator, such as CFTC and NFA in the US, FCA in the UK, ASIC for Australia, and so on. Just like broker, some regulator are well-regarded in the industry by applying bonafide monitoring, while some other are considered less favorable. Make sure you know your broker's regulatory status and the quality of services it guarantees.
4. Providing High Leverage
Scalping can be demanding when it comes to profitability, because each small trade may turn in either profit or loss. In order to increase profit gains, scalper may engage in higher risk to boost their reward. Therefore, they'll use higher leverage.
Even so, high leverage can either lead to ecstatic winning streaks or self-defeating series of losses. Always be wary whenever you're trying to employ any strategy involving higher bets than you can actually chew.
5. Low Spread
Spread is simply the cost that every scalper has to take into account every time they open a position. Imagine a case where a scalping method employs more than one or even hundred of positions at a time. In that regard, total cost may be higher than potential gains.
With that said, low spread is mandatory for scalping. Needless to say, avoid trading in illiquid assets (crosses, commodities and futures) or illiquid situations (news trading) due to high floating spread gap.
List Of Best Forex Brokers For Scalping
This CySec-regulated broker (license:178/1) comes with many advantages, including leverage up to 1:2,000 and floating spread from 0.0 pip for their ECN accounts. In short, Exness is one among few brokers suited for scalping. Additionally, there's no trading restriction for EAs and scalping strategies.
2. IC Markets
IC Markets is an ASIC-regulated broker (license 335692) that provides ECN account with leverage up to 1:500 and floating spread from 0.0 pip. Also, there is no trading restriction; hedging and EAs are welcomed.
Pepperstone is also an ASIC-regulated broker that offers standard STP account with leverage up to 1:500 and floating spread from 1 pip. No trading restriction regarding hedging and EAs as well. Furthermore, Pepperstone accepts various currencies for deposit, including USD, EUR, GBP, CHF, JPY, AUD, CAD, NZD, SGD and HKD.
ThinkMarkets is regulated by both ASIC and FCA, some of the most bonafide regulator in the world. It provides NDD accounts with 0.01 spread and leverages up to 1:500. Like other aforementioned brokers above, Thinkmarkets is fully compliant with every scalping strategy. Plus, trading signal by Autochartist is available.
FXTM is regulated by CySEC Cyprus. Scalping is only allowed on ECN accounts, whereas it is prohibited on standard accounts. Most importantly, FXTM offers floating spread from 0 or from 0.5 depending on ECN account type and leverage up to 1:500.
6. Hirose UK
Hirose obtained regulation from FCA as Hirose Financial UK Limited (license no. 540244). This broker promotes their cutting-edge "made-in-Japan" technologies with their no-requote STP accounts. Scalping is clearly allowed and supported with leverage up to 1:300 and low spread from 0.7 pip (for USD/JPY).
FXPro offers fair trading under regulation of FCA and CySec. Scalping is fully allowed and supported with floating spread from 0 pip and leverage up to 1:500. Additionally, FXPro also offers multiple trading terminals, such as; MT4, MT5 and cTrader.
It comes to no surprise that this world class broker also supports scalping. FXCM grants leverage up to 1:400 and floating spread from 1.3 pip.
Orbex supports scalpers with leverage up to 1:300 and spread as low as 0.6 for their ECN accounts. Furthermore, this broker is regulated by CySec.
FXOpen grants leverage from 1:100 to 1:500 and floating spread starting from 0 pips. That makes them one among best brokers for scalping. Also, if you like some form of competition, FXOpen provide trading contests periodically.