Scalping involves buying and selling securities quickly to generate quick but small profits. Since scalping involves high-frequency trading, scalpers need specialized forex brokers that provide tight spreads and execute trades quickly without slippages that would cause orders to be fulfilled at unprofitable prices.
For this guide, we have created a list of the best forex brokers for scalping.
Our List of the Best Forex Brokers for Scalping
Our list of the best forex brokers for scalping — which should ensure you don’t lose out to price slippage — is:
What Is a Forex Broker for Scalping?
Forex brokers facilitate foreign exchange trading by connecting buyers and sellers to the over-the-counter network of the forex market. Forex traders execute a variety of trading strategies, such as day trading, swing trading, position trading, and scalping. For scalping, traders prefer electronic communications networks (ECN) brokers that provide the tight spreads and fast price feeds that are essential for executing high-frequency trading strategies like scalping.
Scalpers buy a currency pair on the ask price and sell it on the bid price in an effort to generate profit in excess of the bid-ask spread that the market makers charge. Because scalpers operate on thin margins, they require brokers that can ensure quick price feeds and instant trade executions on a platform that also supports automated trading.
How Does a Forex Broker for Scalping Work?
Forex brokers work by providing quick price feeds to traders so that those traders can generate profits from the small variations in prices by quickly executing their trades. Since scalpers indulge in high-frequency trading, they rely on forex brokers to provide them with one-minute charts and tick charts functionalities to clearly understand the price action.
Scalpers prefer ECN brokers that provide forex traders with quotes from the best liquidity providers with tight spreads. Forex brokers also provide scalpers with an advanced trading platform that supports automated and high-frequency trading features. Scalpers can automate their scalping strategies by implementing their trading strategies as algorithms that buy and sell automatically on the broker’s platform.
Key Features To Look For in a Forex Broker for Scalping
Scalping is a specialized forex trading strategy, so scalpers need brokers that will help them successfully execute scalping strategies. Let’s look at some of the features that are important to look for in a forex broker for scalping.
You should preferably choose a broker that offers fast price quotes and executes trades without any slippages. Scalpers operate on thin margins, so slippages resulting from delayed order execution can hurt their profitability. You can choose ECN brokers that provide the best quotes with tight spreads, or you can choose Direct Access Trading brokers that provide Level 2 quotes and fast trade execution.
Scalping involves executing a large number of trades, which translates into high trading commissions and trading costs. Because scalpers rely on small but regular profits, controlling the commissions and trading costs becomes critical for traders to remain profitable. You should look out for brokers that not only allow fast order execution but also brokers that charge low commissions and spreads on trades.
Scalpers need a trading platform that supports high-frequency and automated trading. Many brokers provide access to trading platforms that support automated, high-frequency trading. Also, you will be using one-minute and tick charts frequently when scalping, so the trading platform should make these charts available.
Pros & Cons of Using a Forex Broker for Scalping
How To Choose The Best Scalping Forex Broker For Me?
To profitably perform scalping, you must select a forex broker that facilitates scalping strategies. You should consider the following important points while choosing scalping forex brokers.
The broker should offer instant trade execution without slippages. Because the scalping strategy involves benefiting from small movements in prices, slippages can disturb the trading strategy and turn profits into losses. ECN or Direct Access Trading brokers can solve the problem as they offer quick trade execution.
Another point to consider before choosing a forex broker for scalping is commissions and spreads. Scalping involves regular, high-frequency trades that can accrue large trading costs and commissions. A broker that charges low commissions and tight spreads can be beneficial for scalpers in reducing trading costs.
Scalpers need high leverage to be able to make sizable profits from small price movements. A broker that offers high leverage and has low margin requirements can help traders execute their scalping strategies successfully.
Scalping requires monitoring the short-term movements of the market. To do this, traders constantly monitor one-minute and tick charts and take help from technical indicators. So, a forex broker that provides a robust trading platform with all the necessary technical indicators and price charts can be extremely helpful in executing scalping strategies.
How to Safely Use a Broker to Make Money Online Trading?“ Forex brokers give you a gateway into the forex market. Your broker will provide all the tools necessary to execute any forex trading strategy, including risk management tools. It is up to you to make use of the tools to minimise risk while maximising your profits. The best strategy you can use to trade safely is to employ money management techniques. Money management techniques involve risking only a small portion (usually 1%) of your trading account on any single trade. If you risk only 1% of your trading account on a trade, you will be able to control your losses and will save your account from adverse market moves. Your broker’s platform should also allow you to place stop-loss and take-profit orders that take away some of the damaging emotional aspects of trading because they execute automatically at the price points you specify. Taking automated stop-loss and take-profit orders a stage further, some brokers and platforms allow you to fully automate your trading by running algorithms. ”- Shahid Rehman
Traders who practise scalping need brokers that provide access to fast price quotes, low spreads and commissions, high leverage, and short-term charts with technical indicators. Not all brokers are suitable for scalpers, so you should evaluate the available brokers to find the ones that are.
As a beginner, high leverage in particular can be important for amplifying the effect of your limited funds, but beginners need to be aware that leverage also amplifies your losses and can wipe you out with little warning.
Frequently Asked Questions
For scalping, you should select only those brokers that offer fast price quotes and quick execution of orders because a successful scalping strategy depends on making a profit from only a few pips of price movement.
Your broker should provide you fast price quotes, quick execution of trades, low commissions, tight spreads, high leverage, and a robust trading platform that supports high-frequency trading.
During times of high volatility, your order can get executed at a worse price than what you expected due to a sudden change in order flow and volatility in the market.
You should target a 1- to 15-minute time frame to find opportunities for scalping.
Scalping can be risky, particularly when it involves leverage. However, because scalping is a short-term strategy, it is often considered less risky than long-term trading strategies.
In scalping, you enter and exit a trade in minutes based on short-term price action, so studying the fundamentals is not necessary or helpful.