Hi @LaughingCharlie, @Peter_Siddle, @Logan_Gabriel and @LukasVisser,
We won’t speak for other forex brokers, but FOREX.com welcomes scalpers with competitive spreads and even offers volume-based rebates.
On the contrary, consider Investopedia’s definition of a counterparty:
A counterparty is the other party that participates in a financial transaction, and every transaction must have a counterparty in order for the transaction to go through. More specifically, every buyer of an asset must be paired up with a seller who is willing to sell and vice versa.
All trades require some sort of counterparty, so for example, the counterparty to an option buyer would be an option writer. One of the risks involved in any transaction is counterparty risk, which is the risk that the counterparty will be unable to fulfill his duties.
The last point above highlights why a retail forex trader always has a retail forex broker as his counterparty. While retail forex brokers are willing to assume the counterparty risk of retail forex traders (the risk that these retail traders are unable to cover their losses), the largest banks in the world (those which trade forex with each other in the interbank market) are not willing to assume the counterparty risk of individual retail forex traders or even the counterparty risk of smaller retail forex brokers.
However, big banks are willing to assume the counterparty risk of retail forex brokers like FOREX.com. These retail forex brokers will in turn act as counterparty to the trades of smaller retail forex brokers and individual retail forex traders. Therefore, by offering to be your counterparty, forex brokers provide retail traders with an important service.
As in any industry, whether it’s cars, clothing, hotels or restaurants, what matters is the quality of your service provider. What matters when trading forex is the quality of your broker. Choosing a broker that is regulated by a reputable government authority where you live can go a long way to addressing the concerns you raised about scalping.
Key advantages of trading with well-regulated brokers are:
- minimum financial and trading standards they must meet,
- ongoing monitoring by the regulators to ensure compliance,
- a framework for handling complaints from customers, and
- the power to enforce actions against regulated brokers for violations.
For example, the CFTC and NFA set the requirements a broker must meet in order to offer forex trading to US residents. Though not an exhaustive list, this membership application will give you an idea of some of those requirements: Compliance Requirements for Retail Foreign Exchange Dealer (RFED) Applicants | NFA