stock brokers<\/a> that offers tight spreads.<\/p>\nHigh Trading Volume<\/h4>\n
A byproduct of high trading volume is a platform that benefits from sufficient liquidity levels. In simple terms, this means that there is enough money being traded on the market to enter and exit a position with ease.<\/p>\n
As UK scalping traders are working with such small profit margins, it is imperative that you only trade assets with large trading volumes.<\/p>\n
This might include blue-chip stocks, commodities like gold and oil, and major forex pairs. Similarly, you should also restrict your scalping trading endeavours to standard market hours, as this is when trading volumes are at their highest.<\/p>\n
Avoid Market Orders<\/h4>\n
By placing a market order, you are instructing your chosen broker to execute your position at the next available price. The key problem with this is that you will often suffer from \u2018slippage\u2019.<\/p>\n
This is when the execution price is different from the market price that you were hoping to get. In turn, this is likely to make your scalping strategy unviable.<\/p>\n
![\"\"](\"https:\/\/learnbonds.com\/uk\/wp-content\/uploads\/sites\/2\/2020\/09\/Neuro-Scalper-Metatrader-4-Forex-Indicator.png\")
<\/p>\n
Instead, always opt for limit orders. This is where you get to specify the exact price that you want your order executed at. Your position will only go live when the limit order price is triggered. Until then, the order will remain pending until cancelled.<\/p>\n
Leverage is Required<\/h4>\n
Leverage allows you to amplify the value of a trade. For example, if you apply the leverage of 1:20 on a \u00a3500 buy order on gold, you are effectively trading with \u00a310,000. Although newbies should avoid high leverage limits when first starting out, the exception to this rule is scraping.<\/p>\n
This is because you will be targeting super-low profit margins. In other words, making average gains of 0.1-0.2% per winning trade is not going to earn you enough money to make trading worthwhile. Of course, this won\u2019t be the case if you have a substantial bankroll.<\/p>\n
But, if you are looking to deposit less than \u00a350,000, you will need to consider applying leverage. The good news is that with the right risk management tools in place, leverage doesn\u2019t have to be a high-risk manoeuvre.<\/p>\n
Scalping Trading Strategies<\/h2>\n
Although scalping itself is a trading strategy popular with UK investors, there are many different ways to approach it.<\/p>\n
Consolidation Strategy<\/h3>\n
One of the popular scalping trading systems for entry-level investors is that of a consolidation strategy. When an asset trades within a tight range, this is known as a consolidation period.<\/p>\n
![\"consolidation](\"https:\/\/learnbonds.com\/uk\/wp-content\/uploads\/sites\/2\/2020\/09\/consolidation-zones-based-on-zz-screen-8889.png\")
<\/p>\n
For example, let\u2019s suppose that Facebook stocks have been trading between $250 and $255 for several weeks. This means that the stocks have not moved below $250 or above $255. Amounting to a pricing range of just 2%, this is highly conducive for a seasoned scalping trader.<\/p>\n
The trader would look to target two particular positions over and over again until Facebook stocks break out of the aforementioned consolidation period.<\/p>\n
\n- A buy order would be positioned just above the bottom end of the range at $250<\/li>\n
- A sell order would be positioned just below the upper end of the range of $255<\/li>\n<\/ul>\n
In theory, for as long as the range remains in play, the scalping trader will continue to capitalise. Of course, the trader will need to ensure that they are protected from the eventual break out that will occur. As such, stop-loss orders would need to be positioned just below the bottom end of the range, and just above the upper end of the range.<\/p>\n
Low-Risk, High-Reward Ratios<\/h3>\n
An additional UK scalping strategy that is worth considering as a newbie investor is that of a low-risk, high-reward ratio strategy. In simple terms, when you set up both a stop-loss and take-profit order (which you should always do when scalping trading in the UK, there will be a ratio in how much you can potentially win and lose.<\/p>\n
For example:<\/p>\n
\n- Let\u2019s suppose that you are trading oil \u2013 which is currently priced at $40.14 per barrel<\/li>\n
- You place a buy limit order at $40.16<\/strong><\/li>\n
- Your take-profit order is set to $40.36<\/strong><\/li>\n
- Your stop-loss order is set to $40.14<\/strong><\/li>\n<\/ul>\n
As you can see from the above example, if your stop-loss order is triggered at $40.14, you will make a total loss of 2 pips. However, if your take-profit price is triggered, you will make a profit of 20 pips. In this example, your ratio is 2-20.<\/p>\n
One the one hand, it is all-but-certain that are going to encounter more losing trades than winning ones. After all, your position will be closed as soon as it goes 2 pips into the red. On the other hand, you only need one winning trade to return 20 pips. In this sense, you need to win one trade for every 10 losing ones to break even. But, by winning 2 trades (40 pips profit) for every 10 losing ones (20 pips loss), you will be 20 pips in the green.<\/p>\n
Scalping Trading UK Risks<\/h2>\n
Although scalping strategies allow you to trade in a low-risk environment, there are several risks that you need to consider before taking the plunge.<\/p>\n
![\"scalping](\"https:\/\/learnbonds.com\/uk\/wp-content\/uploads\/sites\/2\/2020\/09\/forex-scalping-nedir-sistemi.png\")
<\/p>\n
This includes:<\/p>\n
Difficult to Implement<\/h4>\n
In truth, UK scalping trading systems can take many months, if not years, to deploy successfully. You will need to constantly run test-drives via a brokerage demo account on a trial-and-error basis.<\/p>\n
Even then, market conditions can change at the drop of a hat, so you will need to constantly rethink your strategy. As such, if you\u2019re a complete newbie in the world of online trading, scalping might not be for you.<\/p>\n
Large Bankroll Required<\/h4>\n
As we have noted throughout this guide, scalping traders will look to make ultra-small profit margins. With that in mind, a low-to-medium level trader likely won\u2019t have a large enough bankroll to make the process worthwhile. For example, let\u2019s say that you have a \u00a31,000 account balance.<\/p>\n
You would need to have a substantial number of winning positions throughout the trading day for scalping to be viable. The only exception to this rule is if you apply leverage to your trades. This in itself comes with additional risks if sensible exit strategies are not deployed.<\/p>\n
An Error can be Costly<\/h4>\n
Most scalping traders in the UK will enter dozens of buy and sell positions throughout the day. However, this can be somewhat overwhelming if the trader is inexperienced. As such, a single error could be extremely costly for the trader.<\/p>\n
For example, if you are looking to scalp profits of 3 pips per trade, but an error results in a loss of 30 pips, you will need to hit 10 winning trades in a row just to make the money back.<\/p>\n
If you want to benefit from scalping trading, you need to take particular care to ensure your chosen broker is suitable. As we covered earlier, you need to ensure that your choice of broker offers commission-free trading and tight spreads. Liquidity and trading volumes need to be high, and leverage facilities must be on the table.<\/p>\n
Taking all of this into account, below we have listed a selection of UK scalping trading platforms that are worth considering.<\/p>\n \n