Scalping strategy against arbitration trading: what brings more profit

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Scalping strategy against arbitration trading: what brings more profit

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There are many trade policies in the financial market. Because of the abundance of systems, some strategies resemble one another on the principle of work. One of these strategies is scalping fix api trading and arbitration.

However, I would note that, despite a small affinity, these strategies have clear differences.

Scalping trading is the speculative opening of many trading operations with a short profit capture level. That is, the trade algorithm is to analyze the historical data, usually through technical indicators, on the basis of which a decision is made to open a transaction with a capture of 5-10 points from the overall traffic potential. Thus, transactions are held in the market for a few seconds or not more than a minute. The yield is generated by the number of open transactions.

In turn, arbitration trading does not analyse the historical movement of currency pair quotes on the fix api forex, but analyses the actual value of the same currency on different stock sites. For example, the normal difference between the EUR/USD price of different brokers is 5 points. When the cost of EUR/USD from one broker is 1.0620, and the second 1.0610, the trade algorithm (robot) performs the sale of the first broker and the purchase of the second. Let him, after a while, have a 1.0625 and a second 1.0620. So the difference returned to normal values and the trade algorithm closes the transaction. As a result, one operation has -5 points and the second one +10. The financial result from both operations is +5 points. This is the method of fix api arbitration trading. The yield is also generated by a large number of transactions, and the holding of positions is limited to a few seconds.

We sorted out the main difference. But now another question appears: “What is the trade strategy that generates more revenue?”

You will never get an answer to this question, because, as I said, there are many algorithms for each strategy that yield a certain rate of return. And each trade robot will be different. Some scalping system would bring more profit than the arbitration, but at the same time the arbitration system would bring more profits than a certain scalping. I’ll tell you even more. Every trade strategy, independent of its kind, generates income.

However, it is worth noting that, given the trade specification, I can call arbitration trading less risky. The algorithm, however, opens two deals at the same time, thus locking its result, so that the transactions will always be closed with a small plus (as in the example below) and this is the key advantage of this strategy. But at the same time, I note that a number of fix api forex brokerage companies prohibit this type of trade. Therefore, it will be necessary to find a broker that does not prohibit trade according to arbitration, but even better, a brokerage company with trading capability through fix api.

Scalping is based on short-term forecasts based on technical elements of the analysis and may continue for some time, thus coming into the land. This may lead to the risk of losing not only the money earned but the investment.

Choosing one of the types of trade strategies always remains with you. Keep in mind that choosing a robot or system is not just about the rate of return, but on the basis of the statistics:

– Subsidence;

– Recovery factor;

– Profit factor;

– An expected value of the trade strategy;

– Sharpe coefficient;

– Ratio of profitable/loss-making transactions.


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