Scalping Forex Brokers

Posted by Deb | Forex,Guest Post | Wednesday 17 October 2012 7:04 pm

The term scalping is referred to a trading style which consists of executing many single trades with the sole purpose of making small profits for a short period of time. Usually, forex brokers do not welcome this type of trading because they are not able to hedge this exposure elsewhere. By accepting the risk against scalpers forex brokers simply lose money. However there are a handful of brokers which easily accept this trading style because they have a large pool of orders and can manage the risk properly. These brokers are classified as scalping forex brokers and are highly valued by forex traders.

After you read this article let me know was it interesting for you and how it contributed to your trading knowledge?

What is Scalping?

Many traders, especially beginners rely on this trading style because they see quick and easy profits in it. However, once identified as a scalper you will hardly get a good execution.

The reason is that forex brokers usually don’t welcome scalpers. Although they will accept you as a client, sooner or later you will experience significant difference in the execution. To trade with this method you certainly need an automatic trading robot.

The most well known trading platform in the world offers the opportunity of using such robots, they are called expert advisors. By using such program you eliminate the risk of emotions trading and also human mistake. The robot executes trades regardless of the result. It always follows the rules.

For example you can set a fixed + 3pips take profit rule and -1 pips loss. It is clear that one of three trades must be successful in order to don’t lose money (if you trade with the same quantity). You can ask a developer to write this algorithm for you but remember that what I just offered is an example and is not in any way a recommendation of a trading strategy. You should create your own scalping strategy which is based on facts and technical analysis.

Is scalping profitable?

This question is exactly the same as the question: “What is first: the egg or the goose?” Nobody can say 100% if a certain strategy is profitable because of few important factors:

Markets change

The only thing you can sure of is that nothing is sure. While your scalping trading strategy might work today, tomorrow the market will react in a completely different way because of major economic events or clearly because of market sentiment. That is why every strategy, no matter scalping or long term, cannot be relied on for a long time. You have to adjust it all the time when this is needed.

Scalping is stressful

The more trades you make the more is the stress and the frustration of the unprofitable ones. This can create inconsistent stykle of trading and can ruin your trading career. The easiest way to end it up is to wipe out your account in a single trade with not well managed risk. That is why scalping requires high level of discipline and excellent knowledge of the trading platform you are operating with. However, if you manage to trade with a scalping strategy it means that you already mastered the forex trading.

How to find a scalping broker

Brokers do not state they accept or reject scalping. There is no way to see such brokers classified in official reviews site, neither you will receive a “yes” or “no” answer from their customer support. Instead, you should read forum threads and share opinion with people who experienced a real live account execution over the time.


1 Comment »

  1. Comment by GoWest — December 11, 2012 @ 7:26 pm

    Most brokers cater for scalpers these days. The important thing is to find one with great charts to help with your short trades, so looking for 1 mins and 5 min charts with good historical data also.

    It’s also important to choose one with tight spreads, as with scalping, every pip counts.
    GoWest recently posted..MahiFX Top 10 Tips For Christmas – Tip Number 2

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