XM scalping method features and rules

XM does not prohibit scalping. Some FX brokers prohibit scalping due to concerns about liquidity and high load on trading servers, but XM does not prohibit scalping, so you can scalp without any restrictions.

What is scalping?

Scalping is a trading method in which trades are repeatedly entered and closed in a very short period of time . Because it is an ultra-short-term trade, the risk of loss due to large price fluctuations is reduced, but the profit per trade is also small. Therefore, when scalping, it is important to keep trading costs, which are the sum of spreads and trading fees, low .

Although scalping requires quick trade decisions, it is a trading method that beginners can use to quickly gain trading experience. Another attractive feature of scalping is that because positions are held for a short period of time, you can make speculative profits by using leverage even with a small amount of capital.

XM allows scalping without limits

XM officially permits scalping , and although there are some restrictions, there are no restrictions on trading instruments or lot sizes for scalping. Therefore, XM allows scalping of cryptocurrency CFDs, which have the highest volatility, without any restrictions. Regarding lot size, the same minimum and maximum lot sizes are allowed for all trading methods, including day trading, swing trading, and scalping. With a standard account, you can place orders from a minimum of 0.01 lots (1,000 units) to a maximum of 100 lots (10 million units) at a time.

XM officially permits scalping, but prohibits scalping that violates certain terms of use. Please be aware that if scalping that falls under prohibited transactions is deemed malicious, you may be subject to penalties such as account freezing or refusal to withdraw fraudulently obtained profits. Prohibited transactions related to scalping at XM are as follows:

XM scalping-related prohibited transactions

Hedging between multiple accounts

XMTrading prohibits scalping involving hedging between multiple accounts. Hedging between multiple accounts also includes the following transactions:

At XM, hedging is only possible within the same account, so scalping using hedging between multiple accounts is prohibited. Hedging between accounts with other companies other than XM is also prohibited, and hedging between accounts with other companies may be discovered during the process of orders flowing to liquidity providers (LPs), so please be careful if you also have accounts with other companies.

Trading using rate errors and connection delays

XMTrading prohibits scalping that targets only the moment when a rate error accompanied by a connection delay occurs. Rate errors accompanied by connection delays, such as shock market conditions that cause sudden market fluctuations, can occur with any FX broker. Please note that intentionally targeting such timing for trading is prohibited.

Transactions aimed at fraudulently obtaining bonuses

XM prohibits trading with the purpose of fraudulently obtaining bonuses. For example, trading methods such as hedging multiple accounts with bonus credits, zero-cutting one account, and securing unrealized profits in the remaining accounts fall under this category.

Trading aimed only at opening windows

The phenomenon of large rate movements over the weekend causing a large divergence between the closing price on Friday and the opening price early on Monday morning when the main market begins to move is called a “gaps.” XMTrading prohibits trading that targets only the timing of gaps, and scalping limited to these timings is also prohibited, so please be aware of this.

Scalping is a trading method that aims for small price fluctuations by repeating short-term buying and selling, so by its nature it requires three essential conditions: low cost, high execution power, and high leverage. XMTrading provides a trading environment that is well-balanced in terms of these three conditions, making it ideal for beginners as well as advanced traders who combine small amounts of capital with high leverage to get started with scalping.

There are six benefits to scalping with XM. XM not only offers narrow spreads and high execution power, which are important for scalping, but also high leverage and generous bonuses that can increase capital efficiency.

Advantages of scalping with XM

Advantage 1. Industry-leading execution power

XM has an industry-leading execution rate of 99.35% on average . With no contract rejections or requotes, you can comfortably trade scalping with this execution rate that ensures you don’t miss any market opportunities.

Here we will introduce two recommended account types for scalping with XMTrading, divided by trading style. The account types recommended for scalping with XM are as follows:

“Standard Account” for scalping beginners

We recommend the “Standard Account” for scalping beginners who want to gain experience in scalping trading or who want to use leverage with a small amount of capital. The Standard Account allows scalping with a small amount of capital with a maximum leverage of 1,000 times.

In addition, with a Standard Account, you can take advantage of not only the account opening bonus (trading bonus), but also deposit bonuses and loyalty programs, so you can increase your trading capital by taking advantage of all of XM’s bonuses. XM’s loyalty program allows you to earn XM Points, which can be exchanged for credits equivalent to approximately $6 per lot trade. XM Points are awarded regardless of whether the trade is successful or unsuccessful, so even beginner traders can benefit from the bonuses and scalp with reduced effective spreads. Furthermore, while the spreads on the Standard Account are wider than those on the Zero Account, there are no trading fees for the Standard Account.

We will introduce three scalping methods that are easy to understand even for beginners and are tailored to the trading conditions of XMTrading.

Range trading using channel lines

Range trading using channel lines is one of the simplest scalping methods. In channel scalping, a trend line is drawn based on high-high or low-low prices, and a channel line is drawn by duplicating the line at the same angle.

With XMTrading’s MT4/MT5, you can easily duplicate trend lines of the same angle by holding down the Ctrl key while dragging and dropping. After drawing a channel line, you can enter and exit positions based on the upper and lower limits of the channel line. Position direction is short if the channel line is sloping downwards, and long if it is sloping upwards, which is trend-following. Scalping techniques using channel lines offer many entry opportunities, so it’s important to focus on accumulating profits by maintaining a high win rate with tight stop losses rather than making a big profit in one go.

Hourly trend following

Hourly trend following is a scalping technique that involves checking the trend on the hourly chart and making trend-following trades on a minute-by-minute basis (1 to 15 minutes).

If a clear trend can be seen on the 1-hour to 4-hour charts, buy on dips if the trend is up and sell on rallies if the trend is down. Conversely, if the trend is unclear on the hourly chart, it’s important to avoid forcing trades to stabilize your win rate and reduce unnecessary losses. We recommend establishing simple criteria for entry points for buying on dips and selling on rallies, such as the classic Dow Theory or displaying a moving average and entering when it overlaps with the rate. Additionally, if you’re using XMTrading’s MT5 trading platform, you can display a mini chart by going to “Insert” → “Objects” → “Graphics” → “Charts” in the top menu. Using the mini chart allows you to view the minute chart while checking the trend direction on the hourly chart.

Contrarian trading using horizontal lines

Contrarian trading using horizontal lines is a scalping technique similar to day trading. You draw a horizontal line that is clearly visible at the daily chart level, and enter a long or short position when the rate reaches the horizontal line.

Regardless of the trend direction on the daily chart, if the rate reaches below the horizontal line, consider going short, and if it reaches above, consider going long. While trend following that does not go against the daily trend is ideal, the aim of scalping using horizontal lines is to target a temporary rebound through scalping. To avoid losses when the market reverses, we recommend setting a settlement standard, such as taking profits before the 1-hour chart is confirmed. Once you become more familiar with the technique, a good tip is to carry over positions that look like they could increase profits using trailing stops, regardless of scalping.

Because scalping is a trading method that requires a short trading time, trading costs such as spreads and trading fees have a greater impact on trading profits and losses than other trading methods such as day trading and swing trading. By understanding the points to be careful of when scalping in advance, you can take measures to avoid unexpected losses and missing profit opportunities.

Timings when spreads tend to widen

Scalping is a trading method that is more susceptible to the influence of spreads than other trading methods. Spreads fluctuate according to market conditions, so when scalping, be aware of times when spreads tend to widen. Spreads generally tend to widen as trading activity increases between the Tokyo and New York markets.

Additionally, during the above time period from 9:00 PM to around 1:00 AM the following morning, the London and New York markets, which are larger in size, overlap, and spreads tend to be the widest.

There are some transactions where XM Points (XMP) cannot be received

XM Trading’s loyalty program rewards you with XM Points (XMP), which can be exchanged for credits or cash, with each trade. However, XM Points are not awarded for cryptocurrency CFD trades or trades with a position holding period of 10 minutes or less . Please note that XM Points may not be awarded for some trades when scalping with short holding periods. If you want to ensure you receive XMP, choose products other than cryptocurrency CFDs and trade with a position holding period of more than 10 minutes. Please also note that XM’s KIWAMI and Zero accounts are not eligible for the loyalty program.

Sudden fluctuations in the market due to economic indicators and statements by important figures

Spreads tend to widen when important economic indicators or important statements are released. When market surprises occur due to the release of highly anticipated economic indicators or important statements, be aware of the widening of spreads as well as the occurrence of slippage. Slippage refers to the difference between the order rate and the execution rate. Slippage can occur in a favorable direction for your position. However, slippage can also occur in an unfavorable direction for your position, so you can take measures by setting an “acceptable slippage.” You can set the acceptable slippage in XMTrading’s MT4/MT5 by going to “Tools” → “Options” → “Signals” in the top menu.

The maximum leverage for Zero accounts is 500x

If you are looking for tighter spreads with XMTrading, we recommend using the “KIWAMI Account” or “Zero Account.” However, the Zero Account has a maximum leverage limit of 500x , so those who want to trade with high leverage or trade with small amounts of capital should be careful.

Comparison of required margin per lot

The required margin fluctuates depending on the exchange rate, so please check the latest figures when trading.

Due to the difference in maximum leverage, the margin required for a Zero Account is twice that of a Standard Account or a KIWAMI Account. In terms of spreads, a Zero Account allows trading under tighter conditions than a KIWAMI Account, but because external trading fees are incurred, the total cost of trading is also lower with a KIWAMI Account. Additionally, a Zero Account is not eligible for bonus campaigns other than the “New Account Opening Bonus (Trading Bonus).” Like a Standard Account, trading funds cannot be increased with “Deposit Bonuses” or “Loyalty Programs,” so a Zero Account requires a large amount of trading funds, taking into account the leverage limit.