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What is scalping?


Scalping is a trading strategy which is utilised by many traders. The tactic of scalping involves opening many trades at once, or at least on a single day, to access many profits on minor price changes. Traders that use this strategy are known as scalpers. They often place tens or even hundreds of trades on a single trading day in the belief that smaller moves in stock price will be easier to catch than larger ones. Many scalpers actively trade the Forex market.

Professional scalpers can compound many smaller gains into big profits by using strict exit strategies. Without the right exit strategy and risk-to-reward ratios, scalping doesn’t work. A typical scalper is an intraday trader who fills many larger position sizes and only holds them for very short periods of time. By quickly opening and liquidating positions in a time frame that does not usually exceed five minutes, scalpers hope to make small amounts of profit without subjecting their accounts to the market uncertainties. These market uncertainties can hit trades who are left open for a longer period of time. Forex and CFD trading are both very popular among scalpers.


Why do some brokers not allow scalping as a trading strategy?


One should think that a Forex broker is always happy for business, but when it comes to scalping, some broker models are better suited than others.

There are a couple of reasons why some brokers do not allow scalping on their trading platforms. A broker that applies the traditional market maker brokerage model generally operates a commission-free trading structure and usually makes its money from spreads and spread mark-ups. Some also act as counterparties to losing trade positions. Therefore, when scalpers keep making small profits on their trades, it will also lead to small losses for the broker.

ECN brokers, on the other hand, are commonly very supportive of scalping and allow this trading method. The ECN broker model benefits from scalping as the greater number of trades taken by scalpers will lead to more commissions being earned from both trade entries and trade exits. ECN brokers are also more suitable for scalpers since execution speeds are typically faster and the risk of slippage is almost eliminated.

Who are the best brokers that allow scalping on their trading platforms?


As always, a trader should make sure that the Forex broker of choice is properly licensed and regulated. The best brokers are typically those that are registered with strong regulators and industry watchdogs such as the FCA (Financial Conduct Authority) in the UK, the ASIC (Australian Securities and Investments Commission) of Australia or the CySEC (Cyprus Securities and Exchange Commission) of Cyprus.

Traders who wish to use scalping as a trading strategy should also seek an ECN Forex broker for the best trade execution and trading environment to cut out dealing desk intervention and access a low-to-no slippage risk.

Top Forex brokers, like IC Markets, allow scalping and offer the world’s best true ECN trading environments. IC Markets also has the best trading platforms available, such as MetaTrader 4 (MT4) and MT5 as well as cTrader, which is especially famous among professional traders.

Rather than offering fixed spreads or applying spread mark-ups, IC Markets charges low commission fees and offers ultra-low spreads starting from 0.0 pips. They are licensed and regulated by the ASIC and located in Sydney, Australia. 60 currency pairs are offered for trading Forex with a maximum leverage of up to 500:1. Other tradable financial markets include commodities, indices, bonds, cryptocurrencies (such as Bitcoin), stocks and futures.

Another big plus for IC Markets is their excellent customer service and professional account managers team. A well-equipped help, education and research section is also available to IC Markets’ clients.

Conclusion


There is a range of decent Forex brokers for scalping but please feel free to check out our comparison table and ranking above to help find the best Forex brokers that are best suited to your needs. If you need more in-depth information or are looking for more brokers to choose from, check out our detailed individual broker reviews and other comparison tables.