1. Find A Broker That Is Regulated By Government Institution.
*US Commodity Futures Trading Commission
(CFTC)
*Cyprus Securities & Exchange
Commission (CYSEC)
*Markets In Financial Instruments Directive
Of Europe (MIFID)
*National Futures Association Of The U.S
(NFA)
*Financial Conduct Authority Of UK (FCA)
2. Don’t Rely On Awards & Accolades
3. Check Out Their Analytical Tools
Before making a final decision, ask for a free demo account. That way you can test the trading platform & check for speed & ease of use for trading, setting up losses & changing your leverage.
4. Understand How Fees Work
Brokers fees are typically either:
*Spread
based Or
*Commission
based
5. Analyze Their Customer Service
Determine if a broker has good customer services by talking to its support center. Also evaluate broker's deposit & withdrawal option, the more options the better for you because it gives you more leeway in managing your capital.
6. Consider The Deposit Amount & Leverage
Broker deposit minimums range between $50 & $2000 and sometimes even more.
The amount of money you want to start off trading might affect which broker you choose.
7. Consider The Maximum Leverage Which Is Usually 1:200
- As important as basic concepts like leverage and spreads are for traders, they are still secondary subjects in comparison to issues related to the broker, his attitude and preferences. Quite simply, the broker is the most important variable determining the possibility, and profitability of a scalping strategy for any trader. A trader has control over his strategies, stop loss, or take profit orders, as well as his time frame for trading, but he has no say in matters such as server stability, spreads, and the attitude of the broker to trading.
- There are hundreds of brokers operating in the retail forex market today; naturally, each has a technical capability, and business model suitable to a different trader profile. These differences are immaterial to most long term traders, for swing traders they are meaningful but not that significant, but for day traders and scalpers they are the distinction between profit and loss. At the very basic level, the spread is a tax paid on profits and losses to the broker for his services, but the relationship goes a lot deeper than that. Let’s take a look at the various issues related to the scalper-broker relationship. (Once you've read this article make sure to stop by our forex broker review section below to find more informations on the most popular retail forex brokers.)
8. Low Spreads
- A trader who doesn’t use the day-trading strategies will open and close may be one or two positions, at most, in a single day. Although the cost of the spread is still an important variable, a successful trading style can easily justify the relatively small fees paid to the broker. The situation is quite different for the scalper however. Since the scalper will open and close tens of positions in a short period of time, the cost of his trades will be a very significant item on his balance sheet.
9. Strong Technical Tools
- Scalping involves technical trading. In the very short time frames preferred by scalpers, fundamentals have no impact on trading. And when they do have, market reaction to them is erratic and entirely unpredictable. As such, a sophisticated technical package which supplies an adequate number of technical tools is a clear necessity for any scalper.
- In addition, since the trader will spend a considerable amount of time gazing at the screen, reading quotes, opening and closing positions, it is a good idea to choose an interface that is not too wearying on the eyes. A bright, graphically intense platform may be pleasant to use and look at at first, but after long hours of intense concentration, the visual appeal will be more of a burden than a benefit.
- Also, a platform that allows the simultaneous display of multiple time frames can be very useful for a scalper as he monitors price movements on the same screen. Although scalping involves short term trading, awareness of the price action on longer time frames can be beneficial for money management, and strategical planning.
10. No Slippage, No Misquotes And Instant Timely Executions
- We have mentioned in the section on brokers’ trading policies that a trader must always seek a competent, modern broker in order to ensure that his trading style and practices are welcome. But timely execution, and precise quotes are also important for ensuring that a trader can profit with a trading strategy. Since the some traders can trades many times in the short time frame of an hour, he must receive timely, correct quotes on a system which allows rapid reaction.
- If there’s slippage, the scalper will be unable to trade most of the time. If there are misquotes, he will suffer losses so often that trading will be impractical. And we should not neglect the emotional pressures which will be caused by such a stressful, difficult, and inefficient trading environment either.
- To conclude this section, we’ll add that scalping is a high-intensity technical trading method which requires a highly competent and efficient broker with state-of-the-art tools. Anything less will diminish your profits, and increase your problems.
