The forex market is one of the largest financial markets which is an Over the Counter (OTC) market that determines the exchange rate of global currencies. Participants (traders) can buy, sell, trade, and speculate on the currency prices to make a profit.
What is forex trading?
Forex trading is referred to as an act of speculating the currency price in the forex market to make profits. Traders buy or sell the currency pair based on the speculations made. These speculations are basically drawn from the market analysis – both fundamental analysis and technical analysis.
The currencies are traded in pairs and the price of one currency pair is quoted against the other currency. The currency pairs are categorized into three types, owing to their volatility and liquidity.
Three types of currency pairs are:
Major currency pairs: Major currency pairs involve the currencies that are from economically stable currencies.
These currency pairs consist of the US dollar as one of the currencies in the currency pair. These major currencies are comparatively stable and highly liquid. They have tight spreads.
These currency pairs are EUR/USD, USD/JPY, GBP/USD, AUD/USD, USD/CHF, and USD/CAD.
Minor currency pairs: Minor currency pairs, also known as cross currency pairs are volatile and offer less liquidity than major currency pairs and have wider spreads. Minor currency pairs do not include US dollars.
These currency pairs are EUR/GBP, EUR/JPY, GBP/JPY, GBP/CAD, CHF/JPY, EUR/AUD, and NZD/JPY.
Exotic currency pairs: Exotic currency pairs are formed by the combination of minor and major currency pairs. They are the most volatile currency pairs with very little liquidity and have the widest spreads. Exotic currency pairs are EUR/HUF, EUR/PLN, EUR/TRY, USD/ZAR, USD/SEK, USD/RUB, USD/NOK, and USD/MXN. There are many trading strategies that are used by traders to trade currency pairs. One of the most popular and profitable trading strategies used is the scalp trading strategy.
What is scalping?
Scalping is referred to as high-frequency trading where the traders make small profits regularly by going in and out of the positions several times a day in order to make big overall profits. Traders who use scalp trading strategies are known as scalpers.
Scaping being high-frequency trading is risky and requires traders to have excellent technical trading skills and good trading psychology. Scalping can result in small losses that go unnoticed and are noticeable only when the losses become large. This is one of the main risks fraught with this trading strategy.
Prerequisites to choosing a forex broker for scalping:
High execution speed – Scalping aims at the opening and closing of several trading positions per day which requires a high execution speed to prevent any loss due to latency.
Tight spreads – Spreads are the difference between the buying price and the selling price of the currency pair. As the scalper places a higher number of trades per day, wide spreads can result in higher trading costs by the end of the day. Tight spreads ensure that the trading cost remains low.
Minimal slippage – Slippage is caused due to any delay in the execution of the trade where the set price is different from the execution price.
The high execution speed ensures that there is no change in the set price and the execution price and the best market prices are offered.
Fairly low commissions – Due to the higher number of trades being executed per day, the cost of trading can increase and profits might become negligible.
It is important for traders to consider forex brokers with fairly low commissions.
Customer service – No trader wants to lose due to any unsolved technical issue. To avoid such a situation, it is important that the trader also consider testing the customer service if it is responsive and well-disposed.
Top 5 Forex brokers for scalping:
1. Fxview Fxview is one of the leading brokerage companies that is headquartered in Cyprus. The broker offers multiple trading products along with various advanced trading tools, favourable trading conditions, and great client support. They offer three types of trading platforms:
MetaTrader4, MetaTrader5, and ActTrader.
Check out the detailed Fxview review here. Fxview offers a true ECN account that is best for traders who are scalping. The ECN account has high execution speed and offers low spreads and commission.
Features of ECN account offered by Fxview Minimum deposit – $50 (for global) and $200 (for EU) Commissions – $2 RT Spreads – starting from 0.1 pips Max leverage – 1:500 Execution type – Electronic Communication Network (ECN)
2. RoboForex
RoboForex is an international forex broker that allows trading in various financial assets that include forex, stocks, indices, ETFs, commodities, energies, metals, and cryptocurrencies. The team offers 24/5 customer care service which is highly responsive. They can be contacted by live chat or even email. RoboForex offers three highly advanced and user-friendly trading platforms:
MetaTrader4, MetaTrader5, and cTrader.
They offer an ECN account that has a low minimum deposit requirement and high execution speed, which is appropriate for scalping.
Features of ECN accounts offered by RoboForex Minimum deposit – $10 Commissions – $4 RT Spreads – starting from 0.2 pips Max leverage – 1:500 Execution type – Electronic Communication Network (ECN)
3. IC Markets
MetaTrader4,
4. Pepperstone
Pepperstone offers two types of trading accounts –
5. AAFx
The aAAfx is one of the most popular forex brokers that offer an array of trading assets like forex, commodities, indices, stocks, and cryptocurrencies. An
ECN account, ECN + account, and ECN ZuluTrade (copy-trading platform).
Features of ECN account
Minimum deposit – $10
Commissions- $1.98 RT Spreads – starting from 0.1 pips
Max leverage – 1:500 Execution type – Electronic Communication Network (ECN)
