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What is Forex Scalping

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There’s over $5 trillion of currency traded on the market daily so there’s little question why the forex market attracts investors looking for quick, short-term profits. If you’re interested in short-term trading, forex scalping can be a viable strategy. But what exactly is forex scalping, and is it the right strategy for your needs? Let’s take a closer look at some of the pros and cons of this common trading strategy. 

Commissions
$10 value per pip
Account Minimum
$0
Get started securely through IG Group’s website
Commissions
$10 value per pip
Account Minimum
$0
1 Minute Review

IG is a comprehensive forex broker that offers full access to the currency market and support for over 80 currency pairs. The broker only offers forex trading to its U.S.-based customers, the brokerage does it spectacularly well. Novice traders will love IG’s intuitive mobile and desktop platforms, while advanced traders will revel in the platform’s selection of indicators and charting tools. Though IG could work on its customer service and fees, the broker is an asset to new forex traders and those who prefer a more streamlined interface.  

Best For
  • New forex traders who are still learning the ropes
  • Traders who prefer a simple, clean interface
  • Forex traders who trade primarily on a tablet
Pros
  • Easy-to-navigate platform is easy for beginners to master
  • Mobile and tablet platforms offer full functionality of the desktop version
  • Margin rates are easy to understand and affordable
  • Access to over 80 currency pairs
Cons
  • U.S. traders can currently only trade forex
  • Customer service options are lacking
  • No 2-factor authentication on mobile
Account Minimum
100 of your selected base currency
Pairs Offered
80+
Get started securely through FOREX.com’s website
Account Minimum
100 of your selected base currency
Pairs Offered
80+
1 Minute Review

FOREX.com is a one-stop-shop for forex traders. With a massive range of tradable currencies, low account minimums and an impressive trading platform, FOREX.com is an excellent choice for brokers searching for a home base for their currency trading. New traders and seasoned veterans alike will love FOREX.com’s extensive education and research center that provides free, informative forex trading courses at multiple skill levels. While FOREX.com is impressive, remember that it isn’t a standard broker. You can’t invest in the stock or bond market through your FOREX.com and you cannot open an account with tax advantages. The confusing pricing and margin structures may also be overwhelming for new forex traders.

Best For
  • MetaTrader 4 users
  • Beginner forex traders
  • Active forex traders
Pros
  • Impressive, easy-to-navigate platform
  • Wide range of education and research tools
  • Access to over 80 currencies to buy and sell
  • Leverage available up to 50:1
Cons
  • Cannot buy and sell other securities (like stocks and bonds)
  • Confusing margin requirements that vary by currency
  • Limited customer support options
  • Cannot open an IRA or other retirement account
Account Minimum
$50 USD
Pairs Offered
47
Get started securely through eToro’s website
Account Minimum
$50 USD
Pairs Offered
47
1 Minute Review

Though Australian and British traders might know eToro for its easy stock and mobile trading, the broker is now expanding into the United States with cryptocurrency trading. U.S. traders can begin buying and selling both major cryptocurrencies (like Bitcoin and Ethereum) as well as smaller names (like Tron Coin and Stellar Lumens).

eToro offers traders the opportunity to invest their assets into premade portfolios or cryptocurrencies, similar to services offered by robo-advisors through traditional brokers. Though eToro isn’t a one-stop-shop for everything an investor needs, its easy-to-use platform and low spreads is a great way to enter the cryptocurrency market.

Best For
  • International Forex/CFD Traders
  • New cryptocurrency traders looking for an easy-to-use platform
  • Traders who want to buy and sell cryptocurrencies on-the-go
Pros
  • Simple platform that is easy to master
  • CopyTrader feature that allows new traders to copy the same strategies used by professionals
  • Virtual dummy account that gives you $100,000 to practice trades
Cons
  • U.S. traders currently limited to cryptocurrencies
  • Only 15 major coins available to trade
Account Minimum
$100 USD (or equivalent)
Pairs Offered
69
Get started securely through HYCM’s website
Account Minimum
$100 USD (or equivalent)
Pairs Offered
69
1 Minute Review

HYCM is 1 of the world’s leading forex brokers, offering investors access to over 69 unique currency pairs. However, forex isn’t the only thing the broker offers — HYCM also offers high rates of leverage, stock and ETF trading, commodity investing and much more. Getting started with HYCM is quick and easy, and most investors can open an account in as little as 10 minutes.

HYCM offers a varying fee structure, which allows investors to choose the spread option that’s best for them. A wide range of educational and investing tools are available, which can be equally beneficial to both experienced and novice traders. Though HYCM isn’t currently available in the United States, it can be a great choice for residents of the other 140 countries where it offers service. 

Best For
  • Investors who want a customizable fee schedule
  • Traders comfortable using the MetaTrader platform
  • Islamic traders who need swap-free accounts that don’t build interest
Pros
  • Wide range of currency pairs available
  • Excellent selection of educational tools
  • $0 deposit and withdrawal fees
Cons
  • Not currently available to traders based in the U.S.
Account Minimum
100 EURO
Pairs Offered
50+
Get started securely through AvaTrade’s website
Account Minimum
100 EURO
Pairs Offered
50+
1 Minute Review

A fully regulated broker with a presence in Europe, South Africa, the Middle East, British Virgin Islands, Australia and Japan, Avatrade deals with mainly forex and CFDs on stocks, commodities, indexes, forex, cryptocurrencies, etc. This brokerage is headquartered in Dublin, Ireland and began offering its services in 2006. It offers multiple trading platforms and earns mainly through spreads.

Best For
  • Beginners
  • Advanced traders
  • Traders looking for a well-diversified portfolio
Pros
  • Controlled by regulatory agencies of multiple countries
  • Choice offered in terms of trading platforms
  • Support available in 14 languages and trading platforms in 20 languages
  • Practice/demo account available for trying out
  • Breadth of trading assets
Cons
  • Does not accept customers from the U.S. as it isn’t regulated in the U.S.
  • Transferring funds to the account may take up to five days; withdrawals could take up to 10 days

What is Forex Scalping?

Forex scalping involves quickly buying and selling currencies in order to turn a small profit multiple times. Forex scalpers usually don’t hold their positions for more than a couple of hours, and many forex scalpers take their profits as soon as their trades become profitable. The aim of forex scalping is to see these tiny profits add up throughout the day and total a larger, more worthwhile investment.   

Unlike longer-term strategies, most forex scalpers don’t rely heavily on fundamental analysis or GDP reports when they choose which currencies to buy and sell. Instead, they often use technical analysis to determine which currencies are likely to change in value on a minute-to-minute basis. Many forex scalpers also rely on automated software offered through their brokerage to execute their trades.

Keep in mind that in order to turn a large enough profit to make their time investment worthwhile, most forex scalpers need to use leverage. Leverage helps you place a trade larger than the amount of money you have in your brokerage account. Leverage can be a crucial asset to compound profits, it can also compound losses as well. You should be very careful not to invest more money than you can afford to lose if you decide to use leverage. 

Pros and Cons of Forex Scalping

The forex scalping strategy has both benefits and drawbacks. Let’s take a look at some of the factors you’ll want to consider before you begin. 

ProsCons
Faster profits. If you hate the anticipation of holding a trade for a long period of time, forex scalping might be right for you. Trades close faster, which means you get your profits sooner.

Easier for newcomers. Have you ever traded stocks? Many of the same technical analysis strategies are used by both day traders and forex scalpers. This can make scalping a more comfortable entry into the forex market for stock market migrants. 
Can be riskier. Unlike longer-term trading strategies, the profits you’ll see when forex scalping will be small. This means that a single bad trade can wipe out the profits from a series of successful trades.

Requires more leverage. To see significant profits in forex scalping, you’ll need to use more leverage. Using high levels of leverage can quickly wipe out your initial investment if you aren’t careful. 

How Can I Scalp Forex?

Do you think that forex scalping might be the right strategy for you? Let’s take a closer look at how you can get started.  

Choose a Trading Strategy

The basis of successful forex scalping is a solid trading plan. Sit down with a few of our best articles on forex trading and create a plan. Your plan should include information on:

  • The currency pair or pairs you want to trade
  • Your broker’s fee schedule and how you’ll overcome it to turn a profit
  • The technical indicators you’ll look for to know when it’s time to buy or sell
  • The amount of leverage you’ll need and how you’ll avoid major losses using leverage

Once you understand how you’re going to trade, it’s time to open a forex brokerage account.

Choose a Broker

You need a forex broker to begin forex scalping. Not every brokerage firm offers access to the forex market. Before you commit to a broker, take a look at these key characteristics:

  • Fee structure: Margins for forex scalpers can be razor-thin. If you choose a broker with high fees, your broker’s commission will begin to seriously cut into your profits — you might even end up losing money.
  • Available leverage: High leverage is often crucial for forex scalpers, especially if you begin with a lower dollar balance in your account. Inquire about your broker’s leverage availability before you open an account.
  • Scalping status: Some forex brokers have banned scalping on their platforms. Before you open a brokerage account, check to see if your broker of choice has instituted a limit on the number of trades you can execute in a day, hour or month.

Not sure where to begin? Check out our list of the best forex brokers available to U.S. traders. 

Commissions
Spreads start as low as $1 But vary based on trading volume
Commissions
$10 value per pip
Best For
  • MetaTrader 4 users
  • Beginner forex traders
  • Active forex traders
Best For
  • New forex traders who are still learning the ropes
  • Traders who prefer a simple, clean interface
  • Forex traders who trade primarily on a tablet
Pros
  • Impressive, easy-to-navigate platform
  • Wide range of education and research tools
  • Access to over 80 currencies to buy and sell
  • Leverage available up to 50:1
Pros
  • Easy-to-navigate platform is easy for beginners to master
  • Mobile and tablet platforms offer full functionality of the desktop version
  • Margin rates are easy to understand and affordable
  • Access to over 80 currency pairs

Fund Your Account and Make a Trade 

Once you open your brokerage account, you’ll need to add some funds before you can make your first trade. These funds may take a few days to transfer from your bank account into your brokerage account. Use your broker’s leverage and your trading strategy to determine how much money you’ll need to get started.  

Once your account is funded, you can finally make your first trade. You’ll usually want to set your charting software to display a shorter time frame for each candlestick. When your indicator appears, you can place your first buy order. Begin with smaller dollar-balance trades until you fully get the hang of using your broker’s unique platform. 

Get Started in Forex

No matter which forex trading strategy you decide to use, successful trading begins with a solid basis of market understanding. Start by reading more about some of our favorite forex brokers or taking a deeper dive into forex charting. There’s no way to deny that knowledge is power in trading — and profits!

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