Safe arbitration robot for the forex market: a myth or reality?
Category : Robots
Today, the modern trader’s arsenal consists in a huge number of auxiliary and automatic tools that allow him to optimize his fix api trading. These tools can be different asset analysis techniques and algorithmic programs. It all depends on the trading strategy that is used by the trader.
However, no matter how profitable a trading strategy is, its result can be improved by diversifying the trade. Personally, I reach this parameter when distributing my investment capital between the trading robot that trades using absolutely another method, and also directly by its trading strategy.
Why is it worth to use a robot based on a different approach of analyzing the financial instrument?
Everything is very simple. If you use an algorithm that has the same operating principle or is based on the same indicators as your strategy, then the trading signals will intersect. Crossing signals is the first sign of low diversification or even of its absence, because if you get a loss in your position, then the robot will also show a decrease in yield. To achieve this figure, I recommend using speculative algorithms that have short-term position holding parameters. In this case, you will have a minimal correlation with your strategy for the fix api forex market.
Today, I would like to consider one of the methodologies, which probably differs from your strategy, because it is almost impossible to perform it in a manual mode. Moreover, this approach is the most popular in HFT trading. We are talking about a fix api arbitration algorithm.
Arbitration is based on the performance of trading transactions due to exchange rate differences between an identical asset on different stock exchanges. This algorithm has a speculative nature, because according to its strategy, the trading robot must simultaneously analyze the same asset, but on different trading accounts or sites and in case of divergence of quotations, to make a deal depending on the direction of the market and the asset on a more relevant site.
However, the complexity of applying the arbitration principle is that if you analyze the assets of the stock market, it is enough to conduct an analysis on different exchanges (for example, the New York and Chicago one). But the fix api forex market is inherently one big platform, on which the trade is actually conducted. In view of this, most people had a question: how to trade on the exchange rate difference on one site?
Here the brokerage companies play a key role, which by their margins and markups (http://forexrobotshub.com/2017/08/23/spread-slip/ ) actually create exchange rate discrepancies and thereby all the necessary conditions for the arbitration fix api trading. If earlier this approach was really mythical for the forex market, today, with the help of modern technologies, arbitrage has become a reality.
How is arbitrage trading implemented in the forex market?
In order to implement arbitration, you will need two separate trading accounts, in which, in fact, analysis and trade will be conducted. To do this, you need to determine on which site the quotes come in more quickly and have the most relevant information. To solve this problem, you can use fix api – http://forexzzz.com/product/fixapi-zzz/ . This software allows you to connect directly to the financial protocol and receive the most update information without delay in the fix api forex brokerage companies. If you implement arbitrage in this way, you do not need to define a fast and slow broker. Therefore, without hesitation, open a trading account in a quality broker, on which to install a trading robot. In turn, the robot will view the value of currency pairs through the fix fix protocol and will compare them with the quotes on the brokerage site. The value with fix api will be taken as “true” and if there is a discrepancy given in the points, the robot will open speculative deals towards the more rapid data. Thus, a lot of speculative transactions are carried out and a great potential for profitability is formed. Yet, this approach does not have a risk indicator.
As you can see, this approach allows the trader to have a more diversified principle of the transaction, which reduces the risks to your investment capital and confirms the effectiveness and validity of the arbitration principle.