A Forex traders looking to scalp the markets really needs to have as many factors tilted in his / her favor to have a chance in the long term. In addition to its short term the markets posing obstacles so many scalpers must worry about the firm they are trading with taking the other side scalping or imposing restrictions. The solution for most of these traders is to look for a Forex ECN provider. Which begs a two part question, what is a Forex ECN? Why is an ECN better for scalping?

What is a Forex ECN? The acronym stands for ECN Electronic Communications Network. A true forex ECN will have multiple liquidity providers giving their best

bids and offers on currency pair. The ECN will aggregate the best bid and offer on a pair for the forex trader. The more liquidity providers the better the spreads will be for the trader. Does this mean it will be the tightest spread? Not necessarily, as most traders are aware of "teaser" rates which imply a small but tight spread widen as a true non ECN environment Deems it necessary, such as off hours or volatile periods. A Forex ECN bona fide will have a better chance of showing tight spreads during off hours and volatile periods. An ECN will then provide anonymity for the trader. The bridge between the liquidity providers and the traders will allow for pending orders to not be seen by the liquidity providers. If you are trading in a dealing desk environment at the company you are trading is trading against you. Do you think it is human nature to "peek" and see where orders are? Do you think it is dealing desks in the best interest to make money for them?

This leads us to the 2nd part of our question, why is a Forex ECN is better for scalping? Liquidity = trader friendly spreads. When trading on an ECN and you buy a currency pair, one of the multiple liquidity providers takes the other side of your trade. The other liquidity providers have a vested interest Do Not on that trade. So when you go to close out that trade, there is a good chance that when you sell the currency pair you were long it will most likely be one of the other liquidity providers taking the other side. So at ECN liquidity providers with multiple keeps currency pair spreads more favorable for the forex trader.

If you are a Forex trader who scalps then you should look for the answers to the following questions

1) Does the Forex brokers take the other side of your trades? (If yes not an ECN)

2) Does the Forex broker hedge against your trades? (If yes not a true ECN)

3) If the broker has an ECN platform does it have more than a liquidity provider (If no then not a true ECN)

4) How many does the ECN liquidity providers have? (The more the better)

5) Is the Forex broker regulated in any capacity (If you have problems it is better for you if the broker is regulated)