How to choose a brokerage company for scalping?
Scalping on - is a short-term trading strategy where the trader tries to catch the best moment to enter a position and closes it as soon as the profit reaches the 5-20 pips level. It is a very active strategy and usually a scalper makes 20-100 trades in a day.
For such a strategies It is very important to choose the right dealing center, because not all companies support scalping. Some openly mention it in the contract, while others prefer to act in other ways: refusal to execute a deal, price slippage, requotes, false quotes, delays in order execution.
The majority of brokers and dealing centers (DCs) receive quotes from information systems (Reuters, Bloomberg, etc.). Usually several sources of quotes are used to form a consolidated flow. On their basis they form their own "smoothed" quotes and broadcast them to their clients.
Based on this we will highlight several important criteria for choosing a DC for scalping
- Floating spreads. If the spreads are fixed - the company is a dealing center and most likely does not encourage scalping.
- Low spreads. If spreads are high, price changes are very slow and losses are likely as a result.
- The broker must take commission. Otherwise, he makes money on spreads, and we want to make money on them!
- Price accuracy - preferably 5 decimal places.
- Fast execution and reliability of the trading platform.
- Availability of quotes and liquidity of at least the second level.
- Providing access to software interfaces. This allows you to write your own strategies and apply them automatically.
Usually, each company lacks something to the full list. Therefore, a trader needs to choose the most important criteria for him and to proceed from his experience scalping on .