Trading via Fix Financial Protocol: Advantages and Disadvantages
Category : Strategy
For more than 20 years, FiX financial protocol is used on the market to access data, which ensures the information actualization and access to up-to-date quotes. This protocol was the reason for brokers to transit from the telephone mode to the digital world.
Fix protocols a streaming data that all financial institutions use in their calculations, including fixapi brokerage companies.
However, even today an ordinary trader has the opportunity to trade using this protocol! After all, there is a number of brokerage companies that connect their customers to these data.
Who uses the financial protocol?
- Hedge funds;
- Brokerage companies;
- High frequency traders.
I focus my attention on the latter kind. Since the protocol displays the relevance of the information that is changedin every split of second, it is difficult for a normal trader to do this. Neither, I think it is sensible to do so. The relevance of quotes will be an advantage only in one case – if a trading robot is used.
Let’s look at some specific examples.
- Let the trading strategy of the trader consists of trading on the basis of Bollinger Bands – http://metatrader4expertadvisors.com/.Its entire system is based on sales when the quotes have reached the top line of the technical indicator, and on purchases, when the quotes have reached the bottom line of the indicator. Even if a robot is used, the advantages of fix api will not be noticeable, asthe analysis doesn’t require the streaming data with FiX, but instead the position of quotes compared to the indicator.
- The second trading strategy will be based on fixing arbitrage trading. Let’s take for example software that already completes trading operations via fixapi – http://forexzzz.com/product/forex-zzz-lock-arbitrage-10per/.Arbitration algorithm is already laid in the basis of this software. We all know the principle of this strategy – to make transactions based on the exchange rate difference of the same asset, but on different stock exchanges. After all, the difficulty was that fix apiforex is the only market and it is impossible to make arbitrage transactions here. And what about the brokers? It is thanks to them that this process can be implemented. Returning to the program, the robot takes quotes as a basis via fix api from the prime brokers, thereby obtaining more timely information for a fraction of second, which gives it an advantage over the prices in the brokerage company. Thus, when there is a significant exchange rate difference, the robot opens deals in this backlash simultaneously in two brokers. Purchase is made at low prices and sells at high prices. When the quotes return to their regulatory area, the deals are closed.
Like any trading principle, trading via the FiX protocol has its advantages and disadvantages:
- Fast flow of up-to-date information to any spot in the world;
- Fast flow of up-to-date quotes;
- Possibility to integrate the external systems of data analysis and forecasting;
- Synergy with algorithmic fix api trading;
- The possibility of trading without spreads and mark-ups of brokerage companies;
- Trading without slipping.
- No need to use manual trading;
- Only financial institutions have an access to information (then they can give an access to the trader);
- Brokerage companies may require an additional fee or a portion of the deposit to open access tothe fix api.
Taking into account this fact, I would like to mention the principle of trade, which is based on an algorithmic approach. It is a kind with combination of trading via FiX protocol that allows you to earn steadily.
I highly recommend you to conduct an analysis of your trading strategy. If it can be automated and to create a robot that would trade via FiX with a large positive difference from the up-to-date results, then you can safely implement fix api in your trade.