Forex scalping platform

Forex scalping platform

Posted: grandia Date of post: 20.07.2017

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This article is part of our guide on how to use scalping techniques to trade forex. 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.

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.

Suppose that a scalper opens and liquidates 30 positions on a day in the EURUSD pair, for which the spread is commonly 3 pips. Which is a significant gain.

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.

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. Why is there such a large discrepancy in our results?

And that is the problem. A scalper must scrutinize the account packages of different brokers thoroughly before deciding to become a client of one of them.

Forex Brokers for Scalping — Best Brokers for Scalpers

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.

Forex Trading Best Broker With Very Low Spread for Scalping-forex trading strategies

What is the reason? 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. Well, not so much. 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. 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.

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.

best scalping platform?

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. 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 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. Anything less will diminish your profits, and increase your problems.

forex scalping platform

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. OptiLab Partners AB Fatburs Brunnsgata 31 28 Stockholm Sweden Email: You are using an outdated browser. Please upgrade your browser to improve your experience. World's best forex deals and strategy. Scalping Policy What is a scalping policy? Strong technical tools Scalping involves technical trading.

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