Would you like to give scalping a go, or are you a veteran just looking for the best scalping forex brokers?
Then read on.
We have searched for, and compiled a list of the top 10 brokers for scalping 2020 (even encouraging it, in some cases).
But that’s not all.
To understand this all better, let’s see what scalping is, and what features and services should be offered by a broker to be one of the best.
Table of contents
What is Scalping?
Scalping is a trading technique which focuses on profiting from the subtlest price variations of a financial asset.
The Scalper, is the trader who, more than anyone else, can achieve returns regardless of the general trend of the underlying asset. An index which loses an overall 2% value in one day could mean quite a few percentage points of profits for a good scalper.
A scalper doesn’t care for the trend direction of the financial asset, as long as it keeps moving.
But now, let’s see the list of the best brokers for scalping. At the bottom of the post you can find other useful information on how scalping works.
(This post is part of the best forex brokers series)
Best Forex Brokers for Scalping 2020
This is why we have prepared a ranking of the 10 best broker for scalping. These brokers, besides not forbidding it, favour it through several services aimed at excelling in the above-mentioned features.
How does scalping work?
The old (and correct) adage “let profits run, cut losses short” isn’t particularly relevant to scalping, at least as regards letting profits run. The scalper takes advantage of the market’s micro-oscillations, which have a set duration in time, from a few seconds to a few minutes, which is why it bears slim profits.
People who use this technique settle for small, yet fast, profits, continuously opening new positions on the market, trying to exploit its many oscillations, cutting losses to a minimum.
To take advantage of the continuous price variations, scalpers must dedicate several hours of activity to graphs, keeping a steady and constant focus and carrying out many operations. It isn’t rare to see scalpers performing even more than 100 operations in just a day’s trading.
You can read here for more details.
How does the Scalper Trader earn?
As we’ve already mentioned, given the nature of scalping, the profits earned with just one operation are quite slim, ranging from a couple of pips to a few tens, at most.
So, for scalping to produce real profits, traders must focus on two things:
- finding many trading opportunities throughout the day;
- having a high percentage of trades closed with profits.
Other categories of professional traders, generally speaking, aim at having a good Risk/Returns ratio (from 1:2 up), which allows them to sustain even smaller percentages of success, even below 50%, still generating profits. However, this isn’t the case for scalpers. Taking profits after such short times, the Risk/Returns value tends to be quite low, which forces scalpers to keep an extremely high percentage of winning trades to constantly generate profits.
This activity isn’t for anyone. Besides having solid technology assets (such as PC, monitors, etc.) and a fast, stable connection, scalping requires extremely high self-discipline and concentration.
Furthermore, obviously, it is necessary to work with a good scalping Forex Broker, preferably one from the list below.
How much money does scalping require?
In addition to the high psychological capital, scalping normally requires a certain amount of financial resources. Having to profit from small market investments (a few pips or points at a time), to have noteworthy profits, the investment volume must be kept high.
Therefore, scalpers must have an appropriately funded account, or else work on a high financial leverage, which however does notably increase risks.
The best financial assets for scalping
High liquidity assets are among the preferred scalping markets, to avoid that the lack of buyers and sellers increases the spread between purchase and sell price to an excessive amount, making profits harder to achieve over the short term.
Highly capitalized and traded assets are therefore favoured, such as indexes, forex trades, and other assets which tend to have a good quantity of variations over the trading day.
The forex broker features for scalping
Given this peculiar activity, it is necessary to find a broker presenting the following basic features:
- Availability of high liquidity assets (high capitalized assets, index and exchange rates);
- Possibility to analyze markets with several indicators, possibly customizable;
- “Market depth” visibility;
- Direct market visibility, not an “artificial” version of it (dealing desk);
- Exclusive intermediation activity, possibly directly on the market;
- Swift order execution;
- High financial leverage;
- Bare-boned brokerage fees;
- Easy trading platforms, fast and intuitive.
Given the peculiarities of scalping, not all brokers encourage it. Some even forbit it.