Contract for Difference (CFD) trading has gained immense popularity among forex enthusiasts across the globe, with traders in the UK being no exception. Many of these traders have grown interested in scalping, a trading strategy that involves making numerous small trades in a short period.
CFD brokers operating in the UK have recognised the increasing demand for scalping. As scalping requires a brokerage that can provide the necessary tools and conditions to execute trades quickly and efficiently, UK-friendly trading brands now offer services tailored to scalpers, including low spreads, fast execution, and advanced trading platforms.
IG
CMC Markets
Pepperstone
Axi
Eightcap
Plus500Below, you can find more information about the best CFD brokers for scalping in the UK:
- IG is a scalper-friendly broker thanks to its low forex spreads from 0.6 pips, superior order execution with average speeds of around 13 milliseconds, and little to no slippage. According to the broker, it fills 98.97% of all client orders.
- CMC Markets delivers spreads from zero pips for Spread Betting, CFD, and FX Active accounts. The broker charges nominal commissions from £9 for UK shares, but customers can trade all other asset classes commission-free. Scalpers benefit from fully automated, lightning-fast order execution.
- With ultra-fast execution speeds and low raw spreads from 0.0 pips, Pepperstone is an ideal choice for scalpers from the UK as it offers reliable order execution and advertises 99.92% fill rates without any dealing desk intervention. The broker executes client orders with an average speed of under 30 milliseconds.
- Axi caters to UK scalpers with a range of over 140 markets, offering spreads as low as 0.0 pips with Pro and Elite accounts. It ensures maximum precision by providing five-digit pricing. Additionally, scalpers can take advantage of the broker’s VPS hosting services.
- Eightcap is geared towards the needs of UK scalpers, with spreads from 1 pip and the absence of commissions across all asset classes bar stocks. Hedging is also allowed here. Execution speeds vary but generally average around 140 milliseconds.
- Plus500 attracts scalpers with its swift and reliable order execution, absence of commissions, and narrow spreads of around 0.01%. The broker offers guaranteed stop losses, greatly improving risk management for clients.
For UK traders, scalping offers a unique opportunity to capitalise on small price movements in the market. By executing multiple trades in a short period, scalpers can accumulate profits over time, making it a popular strategy among traders. In this article, we will delve into the world of UK CFD brokers that cater to scalpers, exploring the specifics of scalping, the factors that make a broker suitable for scalpers, and how to choose the best broker for this trading strategy.
Definition and Specifics of Scalping in CFD Trading
Scalping is a trading strategy that involves making multiple small trades in a short period, typically within minutes or even seconds. This approach aims to capitalise on small price movements, taking advantage of the bid-ask spread and other market inefficiencies.
Scalping is characterised by quick trades, smaller gains, and a high frequency of trades. To be successful, scalpers need to trade instruments with higher liquidity, such as major currency pairs, indices, or commodities.
The key features of scalping include the ability to execute trades rapidly, often using automated trading systems or expert advisors (EAs). Scalpers also rely on technical analysis, using charts and indicators to identify potential trading opportunities. Furthermore, scalping requires a deep understanding of market dynamics, including order flow, liquidity, and volatility.
Traders should keep in mind, however, that scalping also comes with its own set of challenges, including the need for precise risk management, as there is a potential for significant losses if the strategy is not executed correctly. UK traders must also be aware of the market hours, as scalping is typically most effective during periods of high liquidity, such as during the European or US market sessions.
Some of the most popular trading instruments for scalping in the UK include:
- Major currency pairs, such as GBP/USD, EUR/USD, or USD/CHF
- Indices like the FTSE 100 or the Euro Stoxx 50
- Commodities, such as gold, oil, or natural gas
Brokers by Number of Tradable Instruments
Factors that Make a UK Broker Suitable for Scalpers
When it comes to choosing a UK CFD broker for scalping, there are several factors to consider. First and foremost, a UK brokerage should have no restrictions on scalping, allowing traders to execute trades without limitations or penalties.
Low spreads are also essential, as they directly impact the profitability of each trade. Moreover, since scalpers need to enter and exit trades quickly to capitalise on small price movements, fast execution is crucial as well.
ECN (Electronic Communication Network) order execution is preferred because it allows for direct access to liquidity providers, reducing slippage and improving execution speeds. Additionally, traders should look for brokers with demo accounts, which are essential for testing trading strategies and familiarising oneself with the broker’s platform.
A powerful trading platform with advanced charting tools that enable scalpers to analyse markets and make informed trading decisions is also necessary. Some of the most popular trading platforms for scalping in the UK include:
- MetaTrader 4 or 5: Both offer advanced charting tools and automated trading capabilities.
- TradingView: This platform provides real-time market data and advanced technical analysis tools.
- NinjaTrader: NinjaTrader is suitable for individuals seeking advanced trading tools and strategies for scalping and other trading styles
MetaTrader 4 Brokers by Order Execution Speed
MetaTrader 5 Brokers by Order Execution Speed
Additionally, demo accounts are essential for testing trading strategies and familiarising oneself with the broker’s platform. Perhaps most importantly, a UK broker should have no restrictions on scalping, allowing traders to execute trades without limitations or penalties.
How Scalping Brokers are Regulated in the UK?
The Financial Conduct Authority (FCA) in the UK does not have specific regulations that directly target scalping as a trading strategy. However, the FCA oversees financial markets and trading practices to ensure they are fair, transparent, and in the best interest of consumers.
The FCA prohibits market manipulation, which includes actions that distort market prices or mislead other participants. If a particular scalping strategy involves such practices, it could be deemed illegal.
The FCA emphasises protecting retail investors from fraudulent practices and warns investors to be cautious of unsolicited investment tips or recommendations, as these could be part of manipulative schemes. While the FCA does not explicitly ban scalping, it enforces strict rules against unfair trading practices under the UK Market Abuse Regulation (MAR), aiming to ensure market integrity and transparency by prohibiting activities that could mislead investors or distort market conditions.
Moreover, licensees are required to segregate client funds in secure banking accounts and offer negative balance protection to retail traders. Last but not least, all FCA-regulated brokers are members of the Financial Services Compensation Scheme (FSCS), which means traders are entitled to £85,000 (per person, per firm) should their broker of choice file for insolvency.
How UK Scalping Brokers Earn Profits
UK CFD brokers that cater to scalpers earn profits through various means:
- Spreads are a primary source of revenue, as brokers charge a small fee for each trade executed. Said fee is often built into the spread, which represents the difference between the bid and ask price of the underlying asset.
- Commissions are also common, particularly for ECN accounts, where brokers charge a fixed fee per trade.
- Inactivity fees may be charged to traders who do not meet certain trading volume requirements, encouraging traders to remain active.
- Another way in which UK brokers earn profits from scalping activities includes currency conversion fees, which are charged to traders who trade in multiple currencies.
- Data feed fees, which are charged to traders who require access to real-time market data, are also potential sources of profit.
Additionally, UK brokers may offer complimentary services, such as VPS (Virtual Private Server) hosting, which allows traders to run automated trading systems 24/7. This type of service is usually available once traders opt in for a paid VPS subscription. VPS products can generate significant revenue for brokers, particularly among scalpers who rely on automated trading systems.
By offering a range of services and charging competitive fees, UK CFD brokers can maintain a profitable business model while catering to the needs of scalpers.
Advantages and Disadvantages of Trading with a Scalping Broker
Trading with a scalping broker in the UK offers several advantages, including the prospects of high profits, low capital requirements, and the ability to trade a wide range of instruments. Scalping brokers also provide advanced trading platforms, enabling traders to analyse markets and execute trades efficiently.
However, there are also disadvantages to consider, such as the high risk of losses, particularly if traders fail to manage risk effectively. Scalping can also be stressful and demanding, requiring traders to remain focused and alert for extended periods.
Scalping may also be affected by market volatility, which can result in significant price movements and, in some cases, losses. Furthermore, scalping brokers may charge higher fees or commissions, which can eat into profits. Another potential disadvantage of this trading strategy is that it can lead to overtrading, which can result in notable trading costs.
To summarise, we can conclude that the advantages of UK brokers facilitating scalping include:
- Potential for High Profits
- Wide Range of Trading Instruments
- Advanced Trading Platforms
- Competitive Spreads and Commissions
- Access to Educational Resources
- Fast Execution and Reliable Connectivity.
- Opportunity to Trade in Multiple Markets
As for the disadvantages of brokers suitable for scalpers, those may include:
- High Risk of Losses
- Stress and Pressure
- High Leverage
- Market Volatility
- Overtrading
- High Trading Costs
How UK Traders Can Choose the Best CFD Broker for Scalping
Choosing the best CFD broker for scalping in the UK requires careful consideration of several factors. UK traders need to start by researching reputable brokers, reading reviews, and comparing fees and services. It is essential to evaluate the broker’s trading platform, ensuring it provides advanced charting tools, fast execution, and reliable connectivity.
Demo accounts can be used to test the platform and familiarise oneself with the broker’s services. Additionally, UK traders should consider the broker’s regulatory status, ensuring they are licensed and regulated by a reputable authority, such as the FCA.
Some other factors to consider when choosing a UK CFD broker for scalping include:
- Customer support, as the broker must provide reliable and responsive support to traders
- Educational resources, including written guides, webinars, and training programs
- Market analysis that ensures traders have access to real-time market data and analysis tools
- Good trading conditions such as competitive spreads, leverage limits, and reasonable margin requirements
By evaluating these factors and considering their individual trading needs, UK traders can choose a CFD broker that provides the necessary tools and conditions to succeed in scalping.
FAQ
How do FCA-regulated CFD brokers in the UK handle scalping during periods of high market volatility (e.g. major news events or economic crises)?
FCA-regulated brokers generally permit scalping, but during high-volatility periods, they may apply risk controls such as wider spreads, increased margin requirements, or temporary leverage restrictions. Some brokers may also limit or reject orders if market conditions are significantly unstable. It is important to check the broker’s terms of service, as a few may place specific restrictions on scalping techniques like high-frequency trading or latency arbitrage.
Can UK traders use social trading or copy trading platforms to follow successful scalpers? How do these services work?
Yes, many FCA-regulated brokers offer or integrate with copy trading platforms that allow UK traders to mirror the trades of experienced scalpers. These platforms typically display performance statistics, risk levels, and trading history, allowing users to evaluate traders and automatically copy them in real-time. While scalping strategies can be replicated, they are fast-paced and high-risk, so traders should use available risk controls and allocation limits when following such strategies.
How do UK CFD brokers protect trader data and ensure platform security, especially against cyber threats?
Reputable UK CFD brokers employ robust cybersecurity measures such as SSL encryption, multi-factor authentication (MFA), firewalls, and real-time intrusion detection. They are also required to comply with FCA regulations and UK GDPR standards to ensure the secure handling of personal and financial data. Many brokers also conduct third-party security audits to verify platform integrity.
Are UK traders allowed to use AI or machine learning algorithms for scalping strategies, and what are the pros and cons?
Yes, UK traders are free to use AI or machine learning tools to develop and execute scalping strategies, provided they comply with the broker’s terms of use and FCA rules. Benefits include faster execution, pattern recognition, and automated risk controls. However, these systems require extensive testing, high-quality data, and ongoing monitoring to avoid overfitting or unexpected trading behaviour. Not all brokers support automated high-frequency scalping, so platform compatibility should be checked in advance.
How can UK scalpers resolve disputes related to trade execution, pricing errors, or account issues with their CFD broker?
FCA-regulated brokers must have a clear complaints procedure, typically starting with an internal review. If the issue is not resolved within 8 weeks or the trader is dissatisfied with the outcome, the next step is to escalate the complaint to the Financial Ombudsman Service (FOS), which is a free, independent dispute resolution body in the UK.
The FCA does not resolve individual disputes but can take regulatory action if systemic issues are reported.