Best forex platform for scalping

The Best Forex Brokers for Scalping.

This article is part of our guide on how to use scalping techniques to trade forex. If you haven’t already we recommend you read the first part of our series on forex scalping.

As important as basic concepts like leverage and spreads are for forex scalpers, they are still secondary subjects in comparison to issues related to the broker, his attitude and preferences. Quite simply, the broker is the most important variable determining the possibility, and profitability of a scalping strategy for any trader. A scalper has control over his strategies, stop loss, or take profit orders, as well as his time frame for trading, but he has no say in matters such as server stability, spreads, and the attitude of the broker to scalping.

There are hundreds of brokers operating in the retail forex market today; naturally, each has a technical capability, and business model suitable to a different trader profile. These differences are immaterial to most long term traders, for swing traders they are meaningful but not that significant, but for day traders and scalpers they are the distinction between profit and loss. At the very basic level, the spread is a tax paid on profits and losses to the broker for his services, but the relationship goes a lot deeper than that. Let’s take a look at the various issues related to the scalper-broker relationship. (Once you’ve read this article make sure to stop by our forex broker review section to find more informations on the most popular retail forex brokers and compare features.)

Low Spreads.

A trader who doesn’t use the scalping or day-trading strategies will open and close may be one or two positions, at most, in a single day. Although the cost of the spread is still an important variable, a successful trading style can easily justify the relatively small fees paid to the broker. The situation is quite different for the scalper however. Since the scalper will open and close tens of positions in a short period of time, the cost of his trades will be a very significant item on his balance sheet . Let’s see an example.

Suppose that a scalper opens and liquidates 30 positions on a day in the EURUSD pair, for which the spread is commonly 3 pips. Let’s also suppose that his trade sizes are constant, and that 2/3 of his positions are profitable, with an average of 5 pips profit per trade. Let’s also say that the average size of his loss is 3 pips per trade. What is his net gain/loss without the cost of the spread included?

(Positions in black) – (Positions in red) = Net profit/loss.

(20*5)-(10*3) = 70 pips in total.

Which is a significant gain. Now let’s include the cost of the spread, and repeat the calculation.

(Positions in black) – (Positions in red + Cost of the Spread) = Net profit/loss.

(20*5)-(10*3+30*3) = -20 pips in total.

A nasty surprise awaits our hypothetical trader in his account. The number of his profitable trades were twice the number of his losing ones, and his average loss was about half his average gain. And in spite of that remarkable track record, his scalping activity gained him a net loss. To break even, he would need an average net profit of 9 pips per trade, all else remaining the same.

Now let’s repeat the same calculation, with another hypothetical broker where the spread is just 1 pip in the EURUSD pair. The 5 pips per win, and 3 pips per loss (the same scenario which was examined in the beginning) with a one-pip spread would bring us an outcome of.

(20*5)-(10*3+30*1) = 40 pips in total profit.

Why is there such a large discrepancy in our results? Although the numbers do speak for themselves, let’s remind the reader that while we earn money only on our profitable trades, we pay the broker for every position we open, profitable or not. And that is the problem.

In sum, we need to ensure that we choose the broker with the lowest spread for the currency pair we’d like to trade. A scalper must scrutinize the account packages of different brokers thoroughly before deciding to become a client of one of them.

Scalping Policy.

What is a scalping policy? Although the majority of well-established firms with a history and a significant client base have an official policy of allowing scalpers freedom with their decisions, some brokers quite simply refuse to allow scalping techniques for clients. Others process client orders slowly, and make scalping an unprofitable endeavor. What is the reason?

In order to understand the cause of this, we should discuss how brokers net out their client’s positions before passing them to the banks. Supposing that a majority of a broker’s clients are losing money while trading, what would happen if at a time these losses were to reach such a large size that some triggered margin calls which could not be met? Since forex brokers are liable to liquidity provider banks for the profits or losses of their clients, they would have faced periodic crises of liquidity and even bankruptcy. In order to prevent such a situation from arising, brokers net-out the positions of clients by trading against them. That is, as a client opens a long position, the broker takes a short position, and vice versa. Since the result of two orders in the opposite direction is that the total exposure to the market is zero, the liquidity issue is resolved, and the firm is unimpacted by losses or profits in traders’ account.

But there’s a problem with this situation. We mentioned that the broker countertrades its clients’ positions, and what if the client makes a profit by closing a long position, for instance. The broker then has to close the short trade which had been opened to net out the trader’s long trade, and while doing so he incurs a loss. And well, isn’t this a great incentive for forex brokers to ensure that their clients are constantly losing money?

Well, not so much. First of all, most of the netting is done internally, where individual traders’ positions are netted out against each other without the broker having to commit any of its own funds. And the small remaining net position (the net long short or position that remains after the broker has netted out client orders against each other), is usually a losing position which can be counter-traded by the broker safely, because it is a well-established fact that the overwhelming majority of forex traders lose money.

Now that we understand that scalping does not necessarily constitute a problem for a competent broker (just like the occasional winners are not problem for casinos), we are ready to understand why some brokers dislike scalpers so much. As we said, the broker needs to net out trader positions against each other to guarantee that its liability against banks is minimal. Scalpers disrupt that plan by entering trades all over the place, at awkward times, with difficult sizes which not only forces the broker to commit its own capital at times, but also ensures that the system is bombarded with crowded trades. Add to that the possibility that the broker’s servers are not exactly lightning-fast, or modern enough to cope with the rapid flow of orders, and there you have profitable scalpers as the worst nightmare of a broker with a slow outdated system. Since scalpers enter many small, rapid positions over a short period of time, an incompetent broker is unable to cover its exposure efficiently, and sooner or later kicks the trader out by terminating his account, or slows down his access to the system so much that the scalper has to leave by his own account, due to his inability to trade.

All this should make it clear that scalpers must trade with innovative, competent, and technologically alert brokers only, who possess the expertise and the technical capability to handle the large volume of orders arising from scalping activity. A no-dealing desk broker is almost a must for a scalper. Since trades are mostly automated in the system of a no-dealing desk(NDD) broker, there is little risk of external tampering as the system is left to sort out client orders on its own (still profitable of course).

Strong technical tools.

Scalping involves technical trading. In the very short time frames preferred by scalpers, fundamentals have no impact on trading. And when they do have, market reaction to them is erratic and entirely unpredictable. As such, a sophisticated technical package which supplies an adequate number of technical tools is a clear necessity for any scalper.

In addition, since the trader will spend a considerable amount of time gazing at the screen, reading quotes, opening and closing positions, it is a good idea to choose an interface that is not too wearying on the eyes. A bright, graphically intense platform may be pleasant to use and look at at first, but after long hours of intense concentration, the visual appeal will be more of a burden than a benefit.

Also, a platform that allows the simultaneous display of multiple time frames can be very useful for a scalper as he monitors price movements on the same screen. Although scalping involves short term trading, awareness of the price action on longer timeframes can be beneficial for money management, and strategical planning.

No slippage, no misquotes, timely execution.

We have mentioned in the section on brokers’ scalping policies that a scalper must always seek a competent, modern broker in order to ensure that his trading style and practices are welcome. But timely execution, and precise quotes are also important for ensuring that a trader can profit with a scalping strategy. Since the scalper trades many times in the short time frame of an hour, he must receive timely, correct quotes on a system which allows rapid reaction.

If there’s slippage, the scalper will be unable to trade most of the time. If there are misquotes, he will suffer losses so often that trading will be impractical. And we should not neglect the emotional pressures which will be caused by such a stressful, difficult, and inefficient trading environment either. Scalping is already a burdensome activity on one’s nerves, and we should not agree to suffer the added trouble of broker incompetence on top of all the other problems which we have.

To conclude this section, we’ll add that scalping is a high-intensity technical trading method which requires a highly competent and efficient broker with state-of-the-art tools. Anything less will diminish your profits, and increase your problems.

Risk Statement: Trading Foreign Exchange on margin carries a high level of risk and may not be suitable for all investors. The possibility exists that you could lose more than your initial deposit. The high degree of leverage can work against you as well as for you.

Best forex platform for scalping.

There are many trading strategies in the forex market suitable for different traders depending on personal preferences. One of those trading strategies is the scalping trading strategy. You can think of scalping as a fast paced, thrilling, and action filled events. Scalping is for traders that has high level of focus and attentiveness in a short period of time. In this article, we will discuss more about scalping and the best trading platform for it.

WHAT IS SCALPING IN FOREX TRADING?

The very first thing to understand here is that scalping is a forex trading strategy (a set of analyses employed by a forex trader as guidelines on when to buy or sell a currency pair). For traders that employ this method of trading, it involves buying a currency pair and holding it for a really short period of time in hopes that it will result to small profits. If the trader is able to favorably trade with this method for a number of times, all of the profits added up will amount to a substantial gain.

Like has been earlier mentioned, scalping demands a high level of undivided attention to the charts, in addition to putting in several hours of work at a time. It is really a demanding method of trading, and traders are advised to be sure there are psychologically endowed enough to trade the forex market this way; otherwise there are other wonderful methods to try.

THE BEST FOREX TRADING PLATFORM FOR SCALPING.

As is always the case with currency exchange business, there is really not a particular platform that can be said to be best for a strategy. The MT4 trading platform for instance, is assumed to be the best trading platform, but it is not right to think that it is the best trading platform for scalping because that will be like sidelining other strategies that are equally good on the MT4. However, since scalping comes with certain demands, it is important to make sure that the broker on board offers some features that are helpful for traders that are into scalping.

Scalpers should patronize brokers that offer low spreads.

There is need for strong technical tools as a scalper in the forex market. Tools that can precisely tell what needs to be known in a very limited time range.

Any platform/broker that takes care to avoid slippages and misquotes is good for scalping.

Since scalping does not take so much time, there is need for a timely execution of trade orders on the path of the broker to ensure that the aim of the order in the first lace was achieved.

The content of this article reflects the author’s opinion and does not necessarily reflect the official position of LiteForex. The material published on this page is provided for informational purposes only and should not be considered as the provision of investment advice for the purposes of Directive 2004/39/EC.

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best scalping platform?

best scalping platform?

This is a discussion on best scalping platform? within the Discretionary Trading forums, part of the Methods category; hi, i've just been reading this old thread about a scalper who got 55000% return in one month. trade2win/boards/gene. - month-34.html apparently .

What is the huge difference between demo and live accounts as i was about to open a live account with GFT to scalp the FTSE with a regual 2 point movement?

What is the huge difference between demo and live accounts.

one of the best metaphor I've ever heard on the subject.

Best Forex Brokers that Allow Scalping 2017.

This article outlines the world of scalping in the forex market. We have created a list of the ultimate forex brokers that allow scalping through our objective user reviews and expert research. Looking for a broker that allows scalping? Look no further.

Best Brokers for Scalping 2017.

Introduction to Scalping.

In this article we delve into what scalping is at its core. Learn about the regulations and firms who allow scalping. Discover the technology and methods involved, and we’ll look at what it takes to be a competent firm allowing the investment practice of scalping.

What is scalping?

When it comes to trading, scalping is the quickest investment practice regarding opening and settling positions. It’s considered to be a trading strategy unlike any other. For instance, typical traders will follow trends in the market, hold stocks for days, weeks, even months at a time. Even day traders will trade far less, focusing on the latest stock market news, events affecting markets, economic outlook, etc.

Scalpers on the other hand use a strategy based on technical analysis and short-term price fluctuations. A typical scalper will trade anywhere from 10 to a couple hundred trades in a single day. It truly is the shortest form of short-term trading. It’s a popular method among traders with the potential of making many small profits leading to large gains. However, scalping is considered a high-risk style of trading due to the frequent use and large amount of leverage.

What are the Regulations Concerning Scalping?

Scalping, like other forms of trading has its own set of rules and regulations that firms put in place to protect themselves and the clients trading needs. However, scalpers do have a lot of freedom and control over their strategies. They get to choose their stop loss or take profit orders, as well as their time frame for trading. What a scalper does not have any say over is; the server stability, spreads, and the brokers attitude toward the investment practice of scalping.

Some firms don’t even allow scalping techniques to be used by their clients - we’ll get to that in the next section. For the firms who do allow scalping, they are generally using ECN platforms due to their high speeds in terms of performance and the ability to create a no slippage atmosphere (the expected price of a trade will be the same as when the trade is executed). This also benefits ECN brokers by leading to more trade commissions. In other words, as a rule of thumb its important for investors interested in scalping to trade within firms that have proper regulations in place for scalping to be executed smoothly.

5 Important Aspects of Brokers to Consider for Scalping.

What is the broker’s policy towards scalping?

Most well-established brokers have an official policy allowing scalping techniques to be practiced. Others make scalping very difficult or unprofitable for traders. Some out right refuse scalping techniques within their firm. That being said, it is very important to understand your brokers policies before taking part in this potentially lucrative endeavour.

For instance, a broker allowing scalpers to trade have a system set in place to protect themselves from becoming bankrupt in the event of large profits or losses of their clients. (Forex brokers are liable to liquidity provider banks for the profits or losses of their clients). Brokers trade against the clients, which sets the total market exposure to zero. This allows the firm to be unimpacted by losses or profits by the clients. If a firm is incompetent with scalping practices and how to handle them, the trader can run into many problems such as slow servers, or accounts being deactivated. That being said, it’s best to understand your firms’ policy so you know they can handle the large amount of trades and leverage involved in scalping.

What jurisdiction is your broker in?

You may not think it matters where your broker is located, but this couldn’t be farther from the truth. The forex exchange market has jurisdictions that strictly prohibit scalping. It is important to know what jurisdiction your forex broker is in. For instance, many offshore brokers prohibit scalping. These same brokers are often unregulated and considered unsafe. Regulations regarding money, compensation schemes, and scalping are set in the US, Japan, Australia, UK, Cyprus, and among others.

Is your Broker using an ECN platform?

Brokers who allow scalping are generally using ECN platforms for their traders (Electronic Communication Network). These brokerages are among the fastest in the Forex world, and they provide a marketplace where market makers can place competing bids against the trader and vice versa. This makes it possible for brokerages to allow scalping and offer lower spreads. ECN brokers offer many other benefits too. Trading with brokers using ECN often offers lower fees and extra trading time, which is great for traders who prefer the flexibility over normal market times. Also, a great deal of privacy is available for those who want it. Another strong point for ECN brokers is the level of transparency. All the ECN brokers have access to the price information and history, allowing for easier analyzation of the marketplace and helping to prevent price manipulation.

Some additional things to consider about ECN brokers are:

Account Size - Higher deposits are usually required. Execution - The high speeds of this platform is unparalleled compared to other systems. Sometimes spreads are non-existent and can even be inverted by a second or two. Spreads - Are much lower than those used by regular brokers, because of this ECN brokers charge their clients a fixed commission per trade. However, spreads will vary a lot as they are based more precisely upon market supply and demand.

Does the broker have fast speeds in terms of execution?

We’ve talked about how important it is to have a reputable broker with a regulated policy allowing scalping within the marketplace. But what’s equally important, is how fast the price feeds are. Since a scalper is trading many times in a short time frame, it is important to receive the latest quotes in a timely manner, and at the same time execute decisions without delay. Slippage is not an option for scalpers. They need to be able to trade constantly without delay, or trading this way would be impractical. I conclusion, scalping really is a high intensity trading method and requires state of the art tools, and a highly efficient brokerage firm.

What does your broker specifically say about scalping?

If your broker is a highly reputable and competent broker, they should have no problem providing you with an absolute statement on weather or not scalping is permitted in the marketplace. Their statement should be concise and understandable, not with any grey areas or uncertainty. If a broker is hesitant about scalping, they are not the ones to use. Brokers who allow scalping and provide an excellent atmosphere and platform to do so will welcome scalpers with open arms.

Terms & Conditions: What to Look Out For?

The terms and conditions are very important to a scalper. By trading in an unconventional way there are certain terms and conditions that affect and apply specifically to scalpers. Some of these terms and conditions are as follows:

Make sure to check the amount of time you have to close your trades. Many well established and reputable brokers offer scalpers additional trading time outside of normal market hours. This can be important to a scalper who enjoys more flexibility. Be sure that the broker definitively states that scalping is a viable trading method on the platform. You don’t want to be confused after reading whether its allowed or not. It should be concisely written in plain language. If it says some where in the terms and conditions that price arbitrage is not aloud, then it might as well say scalping isn’t aloud either.

Reasons for choosing a broker that allows scalping.

Brokers who allow scalping is not a bad thing, in fact it’s a very good thing. Brokers who allow scalping are more often than not, very established and reputable brokers. They are required to be competent and efficient which allows them to handle large amounts of orders. Scalping brokers also use modern and fast technology, which allows them to be very efficient at what they do.

Technical Tools for scalpers.

Scalping relies heavily on technical software. Which is why it is of the upmost importance for the system to be fast and efficient. Not only are the performance requirements important, but the visual aspect of the software is of high priority to scalpers. A dedicated and experienced scalper will spend hours a day staring at the screen. Therefore, an interface that is easy on the eyes is very important. Also, a platform that allows the display of multiple time frames simultaneously is very important for keeping up to date with the latest price movements.

FAQ’s 3 questions and answers related to the topic matter:

Why do traders scalp?

Scalpers can make a large profit from many small profits. The technical analysis aspect of scalping draws attention to scalpers as well. A forex scalping system can either be manual or automatic - looking for signals on whether to buy or sell. The use of real-time charts is a scalpers best friend, and this method of analysis and trading attracts scalpers.

Why do some brokers disallow scalping?

Scalping requires a lot of technical power, techniques, and competence from a brokerage firm. If the brokers technological platform is out of date or too slow to handle large amount of trades in a short period of time they will run into issues. As well, brokerages need to have a system in place on how to deal with scalpers or they could lose money and become bankrupt - this often scares firms away from allowing scalping. Also, not all jurisdictions allow scalping - it depends where the broker is located.

Is scalping legal?

Yes, the practice of forex scalping is perfectly legal. However, you need to be in the right jurisdiction - some do not allow it. Scalping.

Conclusion.

Finding a broker that offers scalping is hard. But don’t worry we have saved you the time and effort by creating a list of the very best scalping brokers. Our list is compiled as the result of user reviews and our expert research.