Best FX Broker for Scalping and High Frequency Trading (HFT)
Yadix allows any kinds of trading strategies including High Frequency Trading and Scalping.
Scalpers, News Traders, EAs and Auto-clickers can take advantage of Yadix’s low spreads, high capacity bridge and ultra-fast order execution.
Table of Contents
- High Frequency Trading and Scalping with Yadix
- Why you should trade FX with Yadix?
- How to perform Scalping in Forex?
- "Real Spread" matters for Scalping
- Merit of Scalping Trade in Forex
- Demerit of Scalping Trade in Forex
- Tips and Merits of Scalping and Day Trading
- 1. Scalping Method Idea - Aiming for market overshoot
- 2. Scalping Method Idea - Follow the flow that occurred
High Frequency Trading and Scalping with Yadix
It is certainly a difficult task to find a broker that is confident enough to confirm its traders, that ‘the broker allows all kinds of trading strategies on the platform‘.
But here it is, we Hercules Finance found a broker which allows:
- Scalping
- HFT (High Frequency Trading)
- Hedging
- Any kinds of EAs (Expert Advisers)
and confirms that there is:
- No Stop hunting
- No re-quotes
- No Broker intervention
with STP and ECN execution environment.
The broker is “Yadix”, a regulated Online FX and CFD broker with MT4 trading platforms.
Why you should trade FX with Yadix?
Yadix offers STP/ECN Execution Using MT4 Platform, and it comes with the following advantages for traders.
1. No Scalping Restrictions
Execution benefits include no restrictions for scalping.
Scalpers are able to open and close orders within the same millisecond with no penalties or limits and this allows them to maximize profit making opportunities.
2. EA Trading Benefits
Expert Advisers rely on low spreads and execution accuracy.
Prices are feed from 15 liquidity banks and spreads start from 0.0 pips, with accuracy delivered by the use of the Equinix LD4 exchange, co-located and cross-connected liquidity providers and global data-centres with fibre-optic lines.
3. No Trading Restrictions
Operate any trading EA, Auto-clicker or algorithm without limitation or restriction.
No matter the strategy, Yadix has solutions to fully support the most profitable and high frequency trading strategies.
4. High Frequency Trading
Low latency, millisecond execution speeds, excellent trading conditions and supporting technologies are in place to support high frequency trading.
High spec and reliable VPS facilities are available for Expert Adviser trading and the Yadix FIX API can benefit high frequency algos.
How to perform Scalping in Forex?
Scalping is one of the most popular trading methods of FX.
However, it is generally said that it is a difficult method and can be a struggle for beginners.
In this article, we will get into more about the “Scalping” trading method and important points of such scalping.
1. Use 1 minute price chart
Scalping is a trading style in which you do not have a long-term position but you complete orders in minutes.
Therefore, the mainly used time bar is the “1 minute bar”, which is the shortest time axis for most trading tools (chart).
If you don’t normally display the 1-minute bar chart, first get accustomed to the speedy feeling of the 1-minute bar chart.
A new candlestick stands up every minute, so you need to make decisions and operate in a very short time.
Yadix’s MT4 has also 1 minute bar chart for all account types.
2. Know long-term market trend
It is also essential to grasp the overall picture of the market in a longer time frame.
Since the period that can be displayed on the 1-minute bar chart is short, it is not possible to judge whether the market price at that time is facing upward, downward, or there is no flow.
Therefore, it is necessary to have a concept called multi time-frame, which simultaneously checks the upper charts such as 15-minute, 1-hour and 4-hour charts.
Also, in order to understand the high and low prices that many investors are aware of, it is essential to check the chart over a long period of time.
On a working horizontal line, price movements may stagnate, reverse, or accelerate after breaking through, so you must be aware of it in scalping, which is an ultra-short term trading.
On Yadix MT4, you can switch the time axis of price chart by just clicking on buttons on the menu.
3. Know the important economic indicators
Scalping does not require fundamental market analysis.
Rather than aiming for medium- to long-term price movements due to economic policy, interest rates, political conditions etc, it is a style to cut out a small part of the wave of the market price, so you will almost trade only by looking at the chart.
However, it is necessary to understand the major economic indicators and the schedule of dignitaries.
This is to prevent the price from being caught up in the momentary movement in the market price.
Most economic indicators and dignitaries have their time fixed in advance, so check them before you trade.
To follow major economic news and events, you can also use Yadix’s economic calendar on the Official Website.
“Real Spread” matters for Scalping
The shorter the time axis of the trading chart, the smaller the profit of the winning trade and the loss of the losing trade.
Scalping, which trades in 1-minute intervals, has small profits and losses.
On the other hand, the transaction costs are the same regardless of the trading style.
For scalping strategy, the impact of transaction costs is relatively large.
1. What is a real spread?
When trading Forex with Yadix, there is almost no commission for each trade, so spreads are the real and only transaction cost.
The spread is the price difference between the buying price and the selling price.
For example, the buying price is 1.01 USD and the selling price is 1.00 USD.
The buying price is high and the selling price is set low for investors.
It is not always possible to buy and sell at the price indicated by the spread displayed at that time.
The element of execution power is involved here.
Execution power is a term that describes how well an order will pass according to the displayed spread.
There are differences between each FX company, and Yadix is one of these brokers which provider deep liquidity with high order execution quality, and Yadix even allows positive slippage for traders.
In this way, it is better to consider the displayed spread + the slippage that occurred = the actual spread and judge the transaction cost.
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2. Order Execution Quality for normal times, off-hours and emergencies
Also keep in mind that real spreads can vary significantly over time.
During times when trading is active, there are a lot of orders for selling and buying, so large slippage is unlikely to occur.
On the other hand, during periods of light trading, slippage is more likely to occur than during active hours, and there is a greater possibility of buying and selling at a rate less favorable than the listed price.
However, when the market is moving rapidly, such as immediately after the announcement of economic indicators, it becomes difficult to execute orders, and as a result transaction costs tend to increase.
In case of Yadix, the broker allows both negative and positive slippage, thus such market situation can both benefit or work against you.
Merit of Scalping Trade in Forex
Here are some of the benefits of scalping strategy in the Forex market.
1. You can almost completely ignore the fundamentals analysis
In principle, the longer the trade, the greater the impact of fundamentals (economic indicators and international affairs) on trades.
On the other hand, scalping is a very short term trade, so fundamental analysis is almost unnecessary.
You can trade only by analyzing charts if you know the schedule of major economic indicators.
Thus Scalping trade is suitable for those who are not good at reading news.
2. The loss per trade is small
Since the time from the start of a trade to the end is short, the time to hold a position is short, thus it is suitable for making a trade by leveraging each trade.
With Yadix, you can utilize up to 1:500 leverage to trade Forex currency pairs.
In addition, if you make sure to cut the loss properly, you can keep the loss of one trade low which is also a reason to easily invest a lot of lots.
In other words, scalping is financially efficient if it is accompanied by technology.
Scalping is also a feature that makes it easy to challenge because the amount of money you win or lose in one trade is small.
However, this is a case of a good trader, and if you trade with leverage while your technology is low and you can not win, on the contrary you will run out of money.
Yadix does not have restrictions on trading strategies, so you can use your EAs (Expert Advisers) and trading programs as much as you want.
3. There are many trading opportunities
Since scalping is a style that cuts off small market fluctuations, there is no doubt that there are trading opportunities almost every day.
Of course, many opportunities lead to profitability, and because you can experience many trades in a short period of time, you can expect technical improvement.
Demerit of Scalping Trade in Forex
There are also some disadvantages of scalping.
1. You are bound to the chart
Since there are many trading opportunities, the timing to make use of it is very short, so you must make an entry on the spot immediately to make trades.
In addition, it is difficult to automate trading and manual labor is required.
2. Loss can sum up to large
Scalping is more important than any other trading style.
Since the profit obtained from a single trade is small, if the market goes backwards, if you do not escape immediately with a narrow cut of the price range corresponding to it, you will suffer irreparable large damage.
Instead of forcing your immediate victory, give up the trade as soon as you go backwards and have the mentality to wait for your next chance.
3. Reflexes and dynamic vision are required
Scalping trade needs to be fast because it has to keep trading in seconds.
In addition, dynamic eyesight is also required to keep up with the rapidly changing 1-minute changes in the foot.
Also, since there is no time to think carefully and you have to make decisions on the spot, judgment and determination are also important.
Scalping has a sports-like aspect.
Tips of Scalping and Day Trading
Are you thinking of applying short term strategies to make profits in the Forex market?
Here are some tips for traders like you.
- Market prices deal with price movements. Especially, in short-term trading, pay attention to the immediate price movement and react accordingly.
- Ignore commissions and spreads as much as possible so that trading decisions are not affected by them. In other words, as long as you are a safe trader, choose a broker with a low fee like Yadix in advance or a product with high liquidity to trade.
- Pay special attention to liquidity when trading individual stocks. Choose a stock with a low fee. For FX, choose a safe trader and trades liquid currency pairs.
- Don’t lose big. Investment is business and business is the accumulation of profits. To do so, we must thoroughly manage risk and avoid swaying the business model for one or two failures. The more you lose, the greater risk you will have to recover. Then, the business will be hit. You should implement thorough risk management from the beginning stage.
- The stop out is performed to prevent the loss from spreading. Initially, it may be done mechanically, but if you develop the ability to decide whether it is likely to expand or not, the profitability will increase dramatically.
- Think of the loss cut point as having a width rather than a single point. If it exceeds that range, in principle it will be lost.
- Whether you win or lose, settle that day and don’t carry over to the next day.
- You cannot win every day. Consider the profit target on a weekly basis.
1. Scalping Method Idea – Aiming for market overshoot
The essence of FX is the tug of war of the two types of currency pairs that make up a currency pair.
If it’s a EURUSD, like a seesaw, the EUR or USD go up, and the other goes down.
As a result, a currency pair will not keep rising unilaterally, but will eventually fall. Similarly, if it continues to fall, it will eventually rise.
In this way, excessive price movements are corrected at some point and returned to their original state, so the idea is to aim for this movement.
1. Aim for times when price movements are small
This way of thinking is easy to implement especially during Tokyo time.
During the so-called Tokyo time zone where strong trends are unlikely to occur, it is easy for a return from an excessive point to occur.
On the other hand, when he markets in Europe and the United States have opened, price movements have become active, and there are also economic indicators that have a strong influence, so it is easy for the flow to leave once.
If this happens, it will not return much from where it went too far.
2. Don’t do Scalping when there is a long-term trend
Scalping trade is dangerous if there is a clear trend in the longer time-frame.
For example, if the hourly rate or daily rate is continuously rising or falling, it is easy to proceed in that direction even in Tokyo time zone, so there may be cases where the market does not return much from the point.
2. Scalping Method Idea – Follow the flow that occurred
There are two types of trend followers in Forex.
- Traders who aim for a temporary decline while rising and a temporary rise during falling.
- Traders who aim for Breakout, and buy at rising highs and sell at falling lows.
Both have merits, but it is the first one that make it easy to control the amount of loss.
1. Target before the London market
Trend follow is to follow the trend of the market price, so it is more suitable before the London market, when price movements tend to show momentum.
The push or return is to aim for the second and third waves of the trend.
However, if the trend is not strong, it will not last long and it will reverse, so the push and return will not work.
2. Aim when there is a trend in the long-term chart
It is important that there is a clear trend in the hourly charts too.
As for the price movement of the chart, there is a principle that the long-term chart is prioritized, so if the upward trend continues at the 1-hour chart, it is judged that upward pressure is strong even at the 1-minute chart.
The Bollinger Bands are a very informative indicator.
The moving average line in the center determines the latest trend by the slope, and also serves as support and resistance.
In addition, the upper and lower bands are often used as a guide for reversal, and when the price movement gets momentum, the width widens, and when the price movement calms down, the width narrows.
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