Scalping is a term that new forex traders may have encountered either on a broker’s website, social media post, or trading forum. At times trading forex can be overwhelming as there are many acronyms and terminology that brokers and more experienced traders throw around.
Today, we’ll define exactly what scalping is when trading forex so those who are new to the market have a better idea as to what this term is about.
What is Scalping in the Forex Market?
Scalping is simply a term used to describe a trading strategy that is very short term in nature. Those who have traded other markets might assume this means day trading, when it actually refers to even shorter time frames. Those who open and close forex trades within a matter of seconds are often referred to as scalpers.
Scalpers can either manually enter the market using their own discretion or rely in signals to provide guidance about entry points. Additionally, some scalping strategies involve the use of EAs or algorithms which will either fully or partially automate the strategy on behalf of the client. Because this term is rather general, all of the referenced examples can be considered scalping.
Is Scalping in the Forex Market Legal or Illegal?
No, there is nothing illegal or even wrong with having an ultra short term trading strategy. Some forex brokers, however, do not want these type of traders as clients and will often close the account or take measures to prevent these traders from using the strategy, such as widening out the spreads.
The reason some brokers do not like scalping strategies is that their risk management team cannot effectively handle the order volume. In many cases this is due to the fact that the broker is not operating on an STP basis. This doesn’t necessarily mean the broker is bad, it’s just not a type of business they wish to have.
Forex Consulting Services for New & Experienced Traders Alike
If you are currently running a scalping strategy but are facing difficult finding the right broker to trade with, we can help. Our team of expert consultants can connect you to several brokers that would be happy to onboard you as a client. In addition, if you are completely new to FX and don’t know where to begin, feel free to contact us. We are happy to discuss your needs in more detail and then recommend several reputable forex brokers to trade with.
To learn more, simply fill out the contact form below. We look forward to hearing from you!