Key advantages and disadvantages of the arbitration algorithm

Key advantages and disadvantages of the arbitration algorithm

There are many different trading systems in the forex market, but only a small amount deserves special attention. These are working algorithms. Among this endless list, I would single out an arbitration algorithm.

Arbitrage trading is based on exchange rate differences between the price of the same asset, but on different stock exchanges. To put it simply, if the quotes of a currency pair for one fix apiforex broker deviate from the values ​​of an identical currency pair, this is a signal to open trading positions. Of course, it is very difficult for a trader to control this moment, which is why special automated trading algorithms i.e. robots are created ( They perform the function of monitoring and conclusion of trade operations.

Why arbitration is so popular?

The thing is that the logic of this trading strategy is based on a risk-free strategy. After all, trading operations are opened only in the presence of maximum discrepancies, which after a minimum time period, are closed, returning to the normal range. This is what guarantees risk control and safe trade, and for investors and conservative traders it is an ideal trade option.

However, not everything is so simple, because there are both “advantages” and “drawbacks” of using this technique. Let’s consider them.

Key “advantages”:

  • High profitability. Fix api arbitrage trading is able to demonstrate up to 40% of capital growth in the first month of trading. Due to the short retention of positions and by opening a large number of transactions, this yield is formed. Thus, this is one of the types of speculative trading, where the main portion of the revenue is formed under the means of quantity.
  • Minimum risks (or risk-free trading). Due to the short retention of positions, risks will also decrease. And if we talk about the logic of this algorithm, then when it comes to opening positions at maximum marks, there is a risk-free moment. I have already written above what makes it popular.
  • Simple algorithm logic. Due to the fact that the trading conditions consist of only three points (comparison of quotes, opening of purchases on aplatform where the cost is lower and sale where the cost is higher), this makes fix api arbitrage trading simply to understand even for the newcomers of the market.
  • A large list of brokers opens up additional opportunities. Over the past few years, a huge number of brokerage companies have been opened. This makes it possible to find the most optimal platforms for trading operations. After all, if we talk about arbitration in the fix apiforexmarket, then it will be realized precisely thanks to the brand-name of brokerage companies.

Key “disadvantages”:

  • Trade only with the help of a robot, because in the “manual mode” it is simply unrealistic to follow the entire market map and find the exchange rate differences. As you might have guessed, a simple person cannotanalyze the same asset on different terminals of brokers. But the robot copes with this the best possible way. Therefore, you need to either automate this process or use ready-made solutions that are available on the market.
  • Prohibitions of certain brokerage companies due to the risk-free nature of this strategy. A large list of brokers at this point is a negative component, because there are companies that earn on their customers. Given the fact that this algorithm has no risks, brokers limit its use on their accounts up to the point in the contract. So always study the contract!
  • Complexity of implementation due to different platforms. Trading robots for arbitration differ in their internal specifics, because the algorithm will analyze simultaneously two different platforms. For this purpose, separate programs are created, because the classical mql file will not be enough.

Given the advantages and disadvantages of arbitration algorithms, one can easily come to a conclusion that the popularity of this kind will continue to grow. I hope that the “advantages” and “disadvantages” that I have mentioned in this article will help you to weigh everything and take an effective decision.



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