Algorithm for creating arbitrage trading robots

Algorithm for creating arbitrage trading robots

You will not succeed in the financial market if you act without a specific algorithm or system. Every step you take must be weighed, based on the certain market patterns and sequences, according to which you also need to trade. All this sequence can be combined into a single algorithm of the trader’s fix api. In the world of information technology, such systems can be automated by creating a trading robot.

A trading robot is software interpretation of a trading strategy that consists of certain blocks of analysis of a financial asset and a search for entry and exit points from a transaction ( ).

I want to note that the robots began to be used in the financial market not so long ago, but they already gained the main share of the market in stock exchanges. All this shows that a properly implemented robot can and will demonstrate a sustainable profit.

The first robots were implemented for the US stock market and had an arbitration algorithm of actions. As for the fix api forex, for a long time to create software to work in this market was not possible. Today, everything has been changed dramatically, and we’ll figure out how to create an arbitration robot for stable earnings in the foreign exchange market.

Implementation of the arbitration algorithm consists of 4 key blocks:

1. Definition of trading platforms

2. Initial parameters for each platform

3. A set of necessary conditions for each asset

4. Parameters of position analysis and fixation.

1. Definition of trading platforms.

For a long time, implementation of the arbitration approach was not possible due to the fact that you need to analyze the same financial instrument for this strategy, but on different stock exchanges. If the stock market can monitor the dynamics of quotations for the same share in Chicago and New York, forex is a single platform. Here, the issue was solved with the help of fix api forex brokerage companies that supply their clients with quotations with exchange difference and give the opportunity to prove themselves to the arbitration algorithm. Therefore, you need to choose two different brokerage companies.

2. Initial parameters for each platform

For effective arbitrage, you also need to understand which of the two brokerage platforms supplies quotes more quickly to their fix api traders. Also, I recommend using fix api. Access to the financial protocol solved the issue and the need to determine a fast and slow broker. With fix api, it will be enough to load the trading account of the broker, where the trade will be conducted, and the robot itself will analyze between the financial protocol and the quotes on the account.

3. A set of necessary conditions for each financial asset

In order for the trading to be most effective, you need to understand first with what assets should be traded. To do this, you need to repeatedly test and adjust the parameters of the exchange rate differences between different assets. For example, the exchange rate difference between EURUSD on two platforms can be 3 points, and USDCAD – 6 points. And it needs to be analyzed and set in the logic of the robot.

4. Parameters of position analysis and fixation

Based on the data from the previous point, you need to specify the robot of these parameters and conditions under which the position will open and close. Most often, the following option is used: opening of a transaction at a course difference of more than n points and closing when the quotes return to the regulatory range.

If you implement these parameters, your trading strategy will have a stable algorithm based on the arbitrage approach. This implementation is very simple, but effective for use. The arbitrage principle allows the trader to fix about 30-40% per month, having zero risk parameters.


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