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Open a Free Forex Trading Account with Capital Grow Solutions Today!

The Capital Grow Solutions forex demo account is the ideal practice environment for clients to perfect trading strategies, check real trading conditions and for EA users and developers to test the performance and efficiency of automated trading tools.

Start testing or practising forex trading with a $100,000 balance using real market conditions on your new Capital Grow Solutions demo account.

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Demo Advantages:

  • Get $100,000 and practice real trading
  • Real time indicators and Forex charts
  • No Dealing Desk - No Re-quotes
  • Forex, CFD, Commodities, Oil & Gold
  • Tight spreads & flexible leverage
  • Hedging & Scalping friendly
  • Expert Advisor compatible
  • Cash Rebates - up to 10/lot
  • 40% welcome bonus up to $10,000
  • iPad, Galaxy & Nexsus welcome gift

Important Forex Scalping Factors

Based on the growing community of scalping clients at Capital Grow, the unique and beneficial trading conditions that our brokerage offers forex scalpers, scalping systems and Expert Advisors, we are delighted to provide our clients and potential clients a series of educational articles to give traders an insight into scalping the forex markets from a traders perspective as well as the view point of the broker.

In this article, we will try to highlight the most important aspects of scalping, things that a potential scalper should look out for and what makes scalping successful and profitable.

A successful scalping system requires fast order execution, low spreads and a stable MT4 platform. The bid and ask price (the spread) is central to successful scalping strategy and can affect the trading profits. A scalper needs volatile market conditions to generate trading profits.

Low Spreads

Traders that don’t use scalping or day trading systems open and close only a few orders each day. Spreads are important in any currency trading, scalping systems will open and close many orders during the day, the cost of the spread can limit profits.

A scalping robot opens 30 orders during one day on EURUSD, which has a spread of 3 pips, the volume of each order is consistent and each winning trades generate a profit of 5 pips. All losing trades generate a 3 pip loss, what will be the net gain/loss for day trading?

Winning Positions Losing Positions
20 * 5 pips = 100 pips 10 * 3 pips = - 30pips
Total Gain is 70 pips  
The scalping system has generated valuable gains. If we now include the cost of the spread, and repeat the calculation, let’s see the results.
Winning Positions Losing Positions Cost of Spread
20 * 5 pips = 100 pips 10 * 3 pips = - 30pips 30 * 3 pips = 90 pips
Total loss is now - 20 pips in total    

The cost of the high spreads has generated an overall loss day trading. Profitable trades were double the losing trades and still generated trading losses.

If we repeat the calculation using a broker where the spread is 1.5 pips, we can see a forex trading profit.

Winning Positions Losing Positions Cost of Spread
20 * 5 pips = 100 pips 10 * 3 pips = - 30pips 30 * 1.5 pips = 45 pips
Total profit is now + 25 pips in total ($250)    

A low spread when day trading equals more profits, always choose a scalping friendly broker. A profitable scalping system needs a broker that offers a low forex spread on the currency pairs traded.

Forex Brokers Scalping Policy

The forex scalping strategy is a trading strategy that not all brokers except, most forex brokers refuse to allow scalping strategies. Brokers delay order execution, re-quote to make scalping forex unprofitable. These are dealing desk or market making brokers and rely on clients that lose money.

Traders’ positions are hedged against each other without risking the broker. Since scalpers enter many small, fast forex orders, a broker is unable to cover its financial exposure efficiently and sooner or later terminates the scalpers account or slows down order execution, re-quotes to make sure the scalping system leaves the broker. Scalping systems are a nightmare and puts a dealing desk broker at financial risk.

These reasons are a factor to the massive growth of STP/DMA and ECN brokers for forex scalping systems. All orders are sent directly to the liquidity providers to ensure that there is no longer a conflict-of-interest. This makes the no-dealing desk broker model a must for any scalping system.

Slippage, no re-quotes and timely execution

Fast order execution and accurate prices quotes are essential for a successful scalping strategy. Since the scalping system trades many times during day trading, it must receive accurate quotes on a system and allow rapid execution.

Slippage (unavoidable fast moving markets) can cause difficulty in generating profits using scalping systems. If there are re-quotes, the trader will suffer losses so often that trading is useless. At Capital Grow, we believe that we deliver leading trading conditions, order execution and low spreads that are ideal for all forex scalpers and scalping systems.

We hope that the series of valuable articles will help you to decide whether forex scalping strategy is right for you.

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The brand is a Financial Services Company, authorised and regulated by the FSC under the Securities and Investment Business Act, 2010 License#: SIBA/L/11/0964. Forex commodities and CFDs (OTC Trading) are leveraged products that carry a substantial risk of loss up to your invested capital and may not be suitable for everyone. Please ensure that you understand fully the risks involved and do not invest money you cannot afford to lose. The information provided can under no circumstances be considered as a recommendation to engage in any trade.