Yes, Pepperstone does allow scalping, in fact, it has an account that is specifically designed to appeal to higher frequency, short-term traders, such as scalpers. Pepperstone’s Razor account has narrow spreads, which in some cases can fall to zero.
The idea here is that narrow spreads make scalping and short-term trading strategies economically viable. After all, if you are trading on profit margins of just a few pips, then the less you pay away in the spread the better.
The Razor account offers access to 2400 trading instruments covering FX, commodities, equity indices and individual shares. Providing scalpers with a wide range of markets and instruments to consider. Of course, Pepperstone doesn’t provide its services for free, and clients who trade through the Razor account pay a commission on every lot they trade.
For example, If your account is denominated in Sterling, then you will pay a flat commission of £2.25 per lot ($100,000 of notional value).
Trade 100 lots and you will pay £225.00 of commission, which has to be weighed against the fact that you will have traded $10,000,000 of notional value.
What is scalping?
Scalping refers to any volume-driven trading strategy, that targets repetitive small profits.
Scalpers aim to grab a few ticks of profits, on multiple trades, in either direction, by going long or short of an instrument, as appropriate. Scalpers may trade dozens of times a day and can be in their positions for just a few moments, or until the market moves against them. Scalpers can trade in multiple instruments and markets.
Though typically, liquid FX pairs and crosses are preferred by scalpers, and other short-term traders.
That’s because these instruments are highly dynamic and have hundreds, if not thousands of participants active in them, at any point in time.
The dynamism, or continuous movement in the instrument’s price is important to the scalper because the more the price varies, the more scalping opportunities this creates.
Particularly, if those price movements occur within an identifiable range. In which case a strategy of buying at support and selling, and even shorting, at resistance, could serve a scalper well.
Scalping is quite a speculative strategy and that means that scalpers open many trades, some of which won’t work out.
Part of the skill involved in scalping is recognising when a trade isn’t working out, and cutting, or closing it, as quickly and cheaply as possible. Once again narrow trading spreads are helpful in this regard.
In today’s electronic markets scalpers often use scripts and trading bots to enhance their performance.
These programs can help to identify trading opportunities and manage open positions, and in some instances do this quicker, and more efficiently than a human trader can.
How can you scalp at Pepperstone?
Scalping at Pepperstone is best accomplished using the firm’s Razor account and electronic trading platforms; there are three platforms to choose from: MT4/MT5, cTrader and TradingView.
Commission charges vary slightly between them, but not enough to make scalping uneconomic on your preferred platform.
All three platforms allow traders to code scripts to support or enable their trading.
And if you are not a coder, then there are marketplaces and libraries of scripts and EAs (expert advisors), programs that can highlight and even implement trading opportunities for traders.
For example, a simple search for “scalping” on Meta Securities’ MQL5 Market Place brings up three pages of free EAs and 30 pages of EAs that you can purchase.
Of course, it’s very important to do your homework and research an EA, and its reviews (if any) before you part with your cash.
And, if possible you should thoroughly test an EA or other trading script in a demo trading environment, before going live, to ensure that A: it works, and B: that you understand its operation.
Is it hard to make money scalping?
The honest answer is yes it is hard to make money scalping because it’s an intensive trading strategy, that requires participants to be at the desk, watching the markets, looking for trading opportunities whilst managing their execution and running PnLs.
It’s hard to maintain the levels of concentration required in scalping for extended periods.
It’s also very easy to misjudge short-term moves in the market and to find yourself the wrong way around, multiple times on the trot.
What’s known as “top and tailing” yourself, buying when you should have sold and selling when you should have bought etc.
Experience and trading bots can help to mitigate this, but scalping is never going to be a “fire and forget” method of trading.
Whether it’s conducted manually or via automation, it will always be a hands-on discipline to some extent.
With over 35 years of finance experience, Darren is a highly respected and knowledgeable industry expert. With an extensive career covering trading, sales, analytics and research, he has a vast knowledge covering every aspect of the financial markets.
During his career, Darren has acted for and advised major hedge funds and investment banks such as GLG, Thames River, Ruby Capital and CQS, Dresdner Kleinwort and HSBC.
In addition to the financial analysis and commentary he provides as an editor at GoodMoneyGuide.com, his work has been featured in publications including Fool.co.uk.
As well as extensive experience of writing financial commentary, he previously worked as a Market Research & Client Relationships Manager at Admiral Markets UK Ltd, before providing expert insights as a market analyst at Pepperstone.
Darren is an expert in areas like currency, CFDs, equities and derivatives and has authored over 260 guides on GoodMoneyGuide.com.
He has an aptitude for explaining trading concepts in a way that newcomers can understand, such as this guide to day trading Forex at Pepperstone.com
Darren has done interviews and analysis for companies like Queso, including an interview on technical trading levels.
A well known authority in the industry, he has provided interviews on Bloomberg (UK), CNBC (UK) Reuters (UK), Tiptv (UK), BNN (Canada) and Asharq Bloomberg Arabia.
You can contact Darren at darren@goodmoneyguide.com
