Scalping has always been a favorite strategy among traders to earn big bucks in mere a short period of time. Scalpers intend to open positions with large lot size and try to close them after gaining just a few pips profit, a scalper usually holds a position just around a couple of hours or less. Besides certain trading skills, a broker must also have some special features to execute scalping successfully. Here in this article, my focus will be on the broker i.e. what kind of features and qualities a broker must possess for scalping.
The prime requirement for scalping is either zero spread of theÂ lowest possible spread because scalpers canâ€™t afford high spreads. Ideally, scalping should be exercised on ECN accounts that offer the lowest spreads among different types of trading accounts. If I write about my personal preference, Iâ€™ll definitely go with FXOpen, they connect traders to big liquidity providers, and thus a trader may get his /her order filled at the best possible price. The environment of ECN trading offered by FXOpen is hassle-free. You will get the following information in FXOpenâ€™s ECN trading:
- A list of top five high prices (Bids) from traders willing to buy along with bid volume mentioned with each price;
- A list of 5 lowest prices from traders willing to sell along with ask volume mentioned with each price.
This is how a scalper can easily choose the best price in a very hassle-free manner.
The use of pending orders is very common in scalping as well as any other trading system. With FXOpenâ€™s ECN account, your pending order will be filled at an exact price or a price better than your desired price, whatsoever situation may be. For example, you place a buy limit order in GBP/USD at 1.6030, the current price is 1.6080, your order will be filled at 1.6030 or a lower price such as 1.6029 or 1.6028 depending upon the situation and available buyers. Similarly, in case of a buy stop, your order will be filled at either the exact price or higher price. Likewise, in the sell stop, the order will be filled at an exact price or a price lower than the desired price.
Instant Execution / No Re-Quotes
Another desirable feature in scalping is instant execution without any re-quotes. Keeping in view the large size of the lot and only a few pips profit, if your order is not filled instantly at an exact price, then you could not achieve the desired results through your scalping system. Again, FXOpenÂ provides re-quotes free trading at an exact price, thus allowing traders to maximize profits and minimize losses.
Best Charting Experience
Accurate data is another very important factor in scalping. Even a minor difference in price can prove to be disastrous. For example, GBP/USD gives a hammer sign on the daily chart at 1.6250, but your broker is showing the lowest candle value at 1.6251, consequently, you put stop at 1.6251, assuming it a critical support level. However in actual, the critical support level is 1.6250 instead of 1.6251, thus it may hit your stop loss because in scalping traders usually trade with very tight stops.