Broker to Trading

Scalping is opening and closing positions in a short time frame, typically under a minute or so. Scalping is different from medium and long term trading as it seeks to exploit short term changes in direction in the movement in a Forex pair. Scalping is different from news trading (which can be very short term trading as well), as it it is not necessarily based around a data release.

As the name suggests scalping is a technique which aims to scalp small movements in value from the market. With larger trade sizes these small value can be magnified, but in all events, when added together the cumulative effect is intended to be worthwhile to the trader. The trader does not have to wait for retracements to move in the traded direction, which can be a motivation to scalp.

This said, at short term time frames, the market can be volatile and may change direction just as it does on longer time frames. When scalping the trader is aiming to exit away from retracements and stay in directional short term moves (the value scalp as it were). A scalping trade can also be turned into a longer term trade if the market continues to move in the traded direction. Thus scalping can be combined with trading on various time frames as part of a way to trade on varying market conditions.

Market conditions do vary considerably. Traders may look for some kind of constancy in the market, for example market opens and closes or news events and trade around these, but can find that the unpredictability is there even if some factors are kept constant (such as market events or market open and close). In scalping the trader aims to trade on movements itself, as the market produces increases and decreases in momentum and direction.

On short term time frames patterns are evident though with volatility which may be smoothed out on higher time frames. The trader may want to check higher time frames, as these can provide some kind of clue about why a move may be changing direction, but what is happening on higher time frames may not be that much help with short term trades on lower time frames. The trader may trade with an indicator but may find that there are issues using it on very short term trades, but can trade on patterns and by examination of the chart looking for increases in size of candles for example to indicate increased momentum (when using a candlestick chart, which is useful on shorter and longer term time frames).

So if a trader is interested in scalping they need to find a broker which supports it. Some brokers do not allow scalping and others may not support fully this approach. So one way out of this is to trade with a broker which has fast order processing, tight spreads, and does not intervene in the order process (hence allowing a wide range of trading styles). In general brokers like this allow and support scalping. The trader can use automated trading strategies to scalp for them. They may find that repetitive short term trades are tiring and may wish to use a program (robot) to trade on their behalf. The trader can automate their own scalping strategies or can use software designed to do this.

The brokers in the table above all allow scalping and provide online trading platforms which can be used to scalp the Forex market (for example user friendly but powerful cTrader and JForex). One thing to note is that when trading on an account with Forex commissions, the trader may be offered very low spreads for the more liquid Forex pairs, but the commission charge will be taken for each trade.

Best Forex Broker For Scalping

The pick of best Forex broker for scalping is Dukascopy Bank. This is a Swiss regulated Bank which is regulated by the FINMA. It does not restrict trading styles, allows scalping, has fast order processing and provides JForex with 500+ markets covering a relatively wide range including Forex pairs, as well as MT4. The trader may trade into their ECN (the Swiss FX Marketplace), operated by Dukascopy Bank, and run automated trading strategies and plan and execute their own trades.

One reason Dukascopy Bank is picked is that it provides JForex. This is a relatively user friendly platform, suited to both automated and non-automated trading. JForex has a relatively wide range of technical indicators, which the trader can try out when scalping. However the trader can also scalp on MT4 and can build or download EAs (Expert Advisors) to apply automated trading strategies.