How to categorise good brokers for Scalping?
The main characteristics for a Trading platform to be considered suitable for Scalping are:
The Broker must offer competitive commissions (both the opening commission of the order and the spread) to keep the costs of each position to a minimum. The platform must allow opening orders with a particular setup. The setup is the pips at which the order will be closed, both in profit and loss.
The platform must have very fast order execution. Being a high-frequency Scalper is useless if the platform takes a second to open or close the order when the price varies widely. As a guide, the Broker should have Electronic Communications Networks (ECN) or Straight Through Processing (STP) for instant order execution.
The Broker must accept Traders who use Scalping strategies. Some brokers define in their terms and conditions that they do not offer their platform for Scalping.
The platform must provide good technical analysis indicators. For obvious reasons, a scalper requires good data that simplifies decision-making.
It must allow opening and closing orders with few clicks: A Scalping strategy loses all its power if many clicks of the type "Are you sure you want to open this order?" or "Confirm the operation by clicking" are required to trade an order.
The Broker must be regulated in a reliable jurisdiction. Brokers regulated in any strange country should be avoided at all costs. The proper execution of the order (in other words, the accounting of profits/losses) and auditing by a competent regulator is crucial. A scammer can quickly "eliminate" the scalper with incorrect, unaudited information. A Broker operating from a correct jurisdiction cannot scam its users because it would be quickly prohibited.
Below we present our Top 3 Trading Platforms for Scalping.
Scalping is widely used in Forex and Index Trading mainly because they are the most liquid markets and trade large volumes. That is to say, they allow Scalping strategies to be executed correctly. However, many stocks are also very liquid, particularly those of large corporations listed on the New York Stock Exchange. Check out our Top 3 ranking.
TOP BROKERS FOR SCALPING
What is the Scalping strategy, and why is it called that?
Scalping is a Short-Term Trading strategy. It is ideally completed in the shortest possible time: Holding the position open can last from seconds to minutes.
Scalpers complete many positions in a day to consistently profit from incremental price movements of the traded asset. They can trade manually or automate their strategies using specialised trading software. A scalper tries to profit from the bid-ask spread and exploit short-term price movements.
"Scalping" has a dark history: It was the reward paid to American settlers for each Native American scalp they cut off and delivered to authorities. The Natives later returned to the practice with even greater ferocity, and the English then paid the Natives for each "scalp" of American rebels. In other words, the term Scalping has a bad history, but in Trading, it represents being rewarded through small orders that will be completed quickly.
How to Scalp?
The characteristic traits that define a scalper are the following:
Analytical: Scalpers usually have a defined trading strategy. The number of pips they aim to "collect," the order's stop loss, the maximum time the order will be held open, the entry price, and the leverage level is well-defined in their Trading strategy.
Disciplined: Scalpers must be very disciplined to follow their Trading plan strictly. Most Scalpers set a daily loss limit and stop trading if that amount is breached. A daily loss limit prevents scalpers from continuing to lose money if they have a bad day (We all have them).
Combat-ready: Scalpers are often brutal by nature. They see the financial market as a battle zone and view other traders and platforms as enemies.
Decisive: There is little time to react to price fluctuations when making short-term trades. Scalpers often have to make decisions within seconds or lose the opportunity. They also need to decide quickly if they make a mistake. For example, do they close a wrong position immediately, or do they close half now and the other half when the profit is greater? Being a good decision-maker helps prevent a scalper from panicking.
AND THE WINNER IS...
Originally from Australia, Pepperstone is one of the largest brokers operating with MT4. Recommended for Scalping due to its fast execution and minimal margins (In its Razor account, trading with spreads between 0 and 0.3 pips is allowed). The platform encourages Scalping strategies, as even in the presentation of its Razor account, Pepperstone comments that it is recommended for Scalping and other algorithmic traders.