If you want to engage in the fast-paced world of scalping, a quick computer with fast internet connection is a must. As a scalper trader, you need your charts to display the most up to date price possible. Also, you need your trading platform to execute a trade as fast as possible. You don’t want to work on a slow computer, with little RAM, just to see your PC frozen when you want to enter a trade.
Also, a slow Internet connection speed could make the difference between a successful scalping trade and a bad one. Remember, you want to get in and exit the market promptly and 1-2 seconds could be crucial to your results.
You might think that 1-3 points lost on a trade due to Internet connection are not a big deal. But what if you add all your market entries in single day of trading? This can add up to hundreds or thousands of dollars of missed profits.
And it’s not only the entry point you have to worry about. Imagine you’re in a profitable trade and you want to exit, just to see the profits diminishing because your Internet connection is not responsive enough. Believe me, it could be pretty frustrating.
Good and Reliable Broker
If you practice scalping with a poor broker, it is very likely that they will not allow you to make short-term profits. Most brokers use dirty practices to stop scalper traders such as:
Stop-loss hunting and spread widening: If the market price is close to your stop-loss orders, the traders could witness an increase in the spread for a couple of points, and that will cause the stop-loss activation
Slippage: this happens when a trader gets a different price than expected on an entry or exit from a trade.
In order to be successful while scalping, a high-quality broker must offer instant execution, because scalping trades happen fast, so your execution needs to be done at a very high speed.
Low–Spread Instruments
Because of the nature of scalping you need to trade only the instruments with the lowest spread. Why you need low spreads? Because as scalper trader you open and exit a number of positions in a day. The cost of the trades will become an important factor.
As a scalper, by default you’ll use tighter stop-losses, aiming for small profits. The higher the spread, the lower your stop-loss will become.
For example, if you scalp with a 10 points stop-loss order, a spread of over 3 points will leave room only for 7 more points in order to exit the trade. That’s a small margin. In scalping, every point counts so you need to trade with low-spread instruments.
I personally never scalp an instrument that has a spread higher than 2 points. The risk/reward ratio is not worth it.
My favorite low-spread instruments on which I apply scalping techniques are Dow Jones Index, Dax 30 Index, EUR/USD, GBP/USD, EUR/JPY and USD/JPY.
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