While it is true that a lot of money can be won by dealing in currency pairs, in order to create a steady stream of profit, you need an effective strategy. After entering the Forex market, you have to choose between long-term and short-term trading schemes. The former requires you to hold a position for long periods extending to several weeks or months, whereas positions are usually closed within a few minutes in the case of short-term strategies.
If you are a novice trader, it may be a good idea to learn about short-term schemes like scalping. Since this strategy focuses on the stability of the position as opposed to earning huge gains, you get to know a thing or two about trading signals and indicators. In this strategy, small profits are made from each trade.
In scalping, you take advantage of the small price differences between currency pairs. No matter how safe this strategy is, it requires you to be alert at all times, and monitor the market conditions carefully, since you need to take action in the blink of an eye. There are some Forex brokers that allow scalping, while others cannot handle the high trading volume. Let’s take a look at some of the best scalping Forex brokers.
Top 5 Forex Brokers That Allow Scalping
Currency Pairs: 60+
EURUSD Spread: 0.1 pips
Leverage: Up to 1:500
Since its inception in 2005, Australian broker FP Markets has built a good reputation for itself. When it comes to leverage, the regulatory bodies in Australia are not so strict compared to the authorities in the European Union, The United Kingdom, and the USA. Thus, here you can enjoy high leverage of 500:1 with Pro account.
This is considered one of the best brokers for Forex scalping owing to its high execution speed and low latency. As a result of sourcing prices from several market makers, the spreads offered on currency pairs are quite tight. Moreover, it has strict policies in place that prevent the manipulation of prices.
At this brokerage firm, you can open a VIP account that will offer you added functionalities specially designed for scalpers. Intensive scalpers can enjoy features like the economic calendar, correlation matrix, sentiment trader tool, and more. Forex merchants can get access to interbank rates and enjoy enhanced liquidity through the DMA model.
Currency Pairs: 21
EURUSD Spread: 0 pips
Leverage: Up to 1:2000
With its dedicated platform for Forex merchants, you can certainly find all the latest features at FXTM. It is suitable for both novice and seasoned traders, thanks to the copy trading functionality. This makes it possible for the newer players to consult the trades placed by the veterans, who on the other hand can make some gains by sharing their trading schemes.
Although this brokerage is based in Cyprus, it has expanded to Mauritius and the UK too. One of the reasons why it is highly favored worldwide is that it allows for extremely high leverage of 1:2000 for some currency pairs.
Here, you can perform hedging, and start with a deposit as low as $200 for the ECN Zero account. With low spreads of 1.5 pips, scalpers will definitely find FXTM well-suited to their needs. If you are an experienced trader, you can go for the ECN account offering spreads of 0.1 pips.
Currency Pairs: 65
EURUSD Spread: 0.1 pips
Leverage: Up to 1:500
IC Markets, one of the world’s most popular online brokers has its headquarters located in Sydney. The spreads offered by this brokerage firm are as low as 0.1 pips for the EUR/USD pair. When using this broker with the MT5 trading platform, you don’t need to worry about order restrictions, which is truly convenient for a scalper.
The execution speed offered by IC Markets is less than 40 ms, and this is ideal for scalping trades that require lightning-fast execution. With the Raw Spread account, users can capitalize on spreads beginning for 0.0 pips. Furthermore, you can start trading with a low balance of $200 and enjoy a leverage of 500:1.
Owing to the 0 freeze level and the lack of minimum distance between orders, you can place the orders near the market price. Hedging is also allowed due to the lack of the FIFO rule.
Currency Pairs: 49
EURUSD Spread: 1.2 pips
Leverage: Up to 1:1000
Founded in 2010, HotForex has established itself as one of the brokers most favored by Forex merchants. Since it offers six types of trading accounts, trading with different trading styles and experience levels can find what they need at this brokerage firm.
It provides multiple payment modes and leverage as high as 1:1000. Trading with such high leverage carries a sizeable amount of risk, nevertheless, unless you know your way around the market. Here, you can launch an account with $5 only, thus being able to earn gains while taking only small risks.
Scalpers are drawn to this broker because of the wide range of trading tools it provides. These allow them to analyze the market with enhanced efficacy. It also utilizes Artificial Intelligence technology and allows traders to perform hedging. Another great feature is the ability to display the market sentiment in multiple formats.
Currency Pairs: 45
EURUSD Spread: 0.6 pips
Leverage: Up to 1:500
This broker is unique in the sense that it contributes to the environment by planting 10 trees for each trader lot. It created a solid reputation in the Forex brokerage industry through the no-commission account which let traders deal in currencies without paying any charges whatsoever. This company allows for same-day withdrawals with Bitcoin as well.
With CedarFX, you can access an unlimited demo account offering unlimited virtual money and time. If you wish to get familiar with the broker and test some of the trading schemes, you can easily do so with this feature. The customer support team will assist you 24*7, in case you face any problem with your trades.
Scalpers generally favor this broker because of the 1:500 leverage, the extremely swift withdrawals, and the narrow spreads. You can deal in currencies 24 hours a day, five days a week using this brokerage with the MT4 trading platform.
What is scalping in Forex?
Dealing in Forex is all about making good use of the differences in exchange rates between currencies in order to extract gains. The exchange rates depend on several conditions, including the import and export carried out by a country, its industrial output, inflation, etc. In the scalping scheme, several trades are placed every day, and small gains are extracted from the micro price shifts.
What makes scalping fundamentally different from regular currency trading is that other traders generally look to make larger profits, which requires them to keep the positions open for longer. Scalpers, on the flip side, quickly enter a trade, take the profit, and dive into another one.
This trading scheme requires an individual to closely observe the shifts in value for the pairs they wish to trade in. Simultaneously, they need to create purchasing and selling points. After the buying condition is satisfied, the particular pair is bought, and when the value reaches a certain point, it is sold.
Normally, only minute losses and gains occur in scalping trades, but very rarely, substantial profits and gains can also be seen. The general strategy is to place the maximum number of trades as possible and to generate minute gains from each.
Compared to investors, scalpers have to be much more attentive. While applying this scheme, you may want to consult some trading signals that can aid you with your decision. Scalpers need to stay alert at all times and be prepared to modify their trading criteria.
Why should you consider Forex scalping strategy?
Currency trading comes with a high degree of uncertainty, and big events can sometimes cause drastic movements that can make or break a trader’s career. If you don’t wish to expose yourself to too much risk, scalping is a trading scheme you ought to take into consideration. Since this strategy does not involve you spending too much time on the market, it is highly unlikely that you have to face the repercussions caused by the big movements.
Scalping follows the principle that it is easier to detect and track small moves as compared to large ones, and that the former occurs more frequently. In this regard, you should keep in mind that scalping requires you to carry out the trades extremely fast, which in turn demands a greater amount of liquidity. As a general rule, you ought to stick to the major pairs offering high liquidity and vast trading volumes.
One of the biggest benefits of scalping is that it places you in a position to go head to head with large financial institutions and hedge funds. If you are feeling unwell or unable to concentrate due to some reason, you should not continue any further. Conducting scalping trades can be tiresome, and if you desperately try to recover your losses by placing revenge trades, it may lead to disastrous consequences.
Thus, if you wish to maintain a decent win-to-loss ratio, scalping is a great trading scheme to try out. But if you are too occupied to place hundreds of trades on a daily basis, you would be better off without it.
What is required for a scalping Forex broker?
The first thing you need to look for in a scalping broker is its trading policy. A decent scalping broker will employ measures to shield itself from bankruptcy in case huge gains or losses are made by the customers. In order to reduce the market exposure, brokerages have to place trades in opposition to the clients. If a broker cannot handle scalping trades, it may result in a deactivated account or an extremely slow server.
Some jurisdictions do not allow scalping trades to be carried out, so you should always find out which one your brokerage firm belongs to. Forex brokers that allow scalping often run ECN platforms that allow for faster execution. These brokers also allow for additional trading time and do not demand exorbitant fees.
They are also quite transparent about the price history, which lets you analyze the marketplace effortlessly and avert the manipulation of prices. ECN brokers also offer high execution speed that is of paramount importance for scalpers. Their spreads are also quite low, and you only need to pay a certain amount as a commission for each trade.
If a broker has a good reputation, it will explicitly state its policies on scalping. There shouldn’t be any confusion regarding the company policies, and if you come across any grey areas, it is better to avoid the broker altogether.
What are the best conditions for scalping?
The first you need to look for is a price range that appears due to sidewise movement. Even though there is no definite direction for such a market, a hardworking scalping trader can take advantage of this condition. To find a range, you must point out the support and resistance levels by joining the peaks and trough with horizontal lines.
After a range concludes, there is a high probability of encountering a breakout, where the value of pairs passes through support and resistance zones. Because of the momentum gained by the market, these events allow scalpers to make decent profits. The process can be made simple via entry orders that are executed when the chosen price is available.
When a breakout occurs, we know that a new trend is about to take place in the market. In currency trading, prices are known to advance in the same direction for extensive periods. Once you figure out this direction, you can easily start placing your scalping trades.
To identify a trend, you should look for consecutive swing highs and lows. If you notice the price line making consecutive higher highs, it is an indication of a bullish trend. This tells you that it is a great occasion to buy the pair.
In this regard, you should note that the probability of a bearish trend is more or less the same. If such a trend is noticed, you ought to go short in the direction of the price.
Pros and cons of Forex scalping
- It doesn’t require you to invest too much capital, owing to the small lot sizes.
- Due to the small stature of the positions, the risk is effectively minimized.
- You can easily achieve your profit objectives, because of frequent small price shifts.
- Traders don’t need to invest too much time in planning and strategizing for each trade.
- You can place a number of trades every day, which makes it exciting for traders.
- It allows you to make small, regular profits since scalping is a consistent trading method.
- Compared to other trading schemes, the number of orders submitted by a scalper is usually more, which leads to higher cumulative expenditure.
- You need to diligently manage your positions because you can only gain small profits from your trades.
- Because of the higher trading volume, it is more likely that you will make some mistakes.
- Scalping trades can be conducted only during the right hours, which makes it a bit difficult to manage your schedule.
We carry out extensive research that takes up hundreds of hours. Each broker is evaluated in terms of safety, education, customer support, accounts, fees, regulations, and more. After collecting the data, we summarize the benefits and downsides in simple terms so even novice traders can make sense of them.