Forex Arbitrage Trading
Today, in the network and in reality, you can notice a huge amount of announcements that “Playing on the stock exchange is simple.” Such advertising is distributed mostly by new companies providing brokerage services. In fact, the game on the stock exchange is not a simple matter and it is necessary to learn it no less than when receiving any other education.
Any action in the foreign exchange market or market with any other assets carries a risk, since a trader can only assume the most possible scenario, but do not know for sure. Everyone who has achieved success in this field knows how often the price of error is high
But do not forget that a large number of companies that offer brokerage and other services in the sphere of exchange trade generates and decent competition, which leads to a reduction in commissions, spreads, and an increase in the quality and speed of service. Against this background, a completely new currency trading strategy emerged, which reduces the standard risks from an incorrect decision to the minimum values – this is forex arbitrage.
Forex arbitrage trading became possible due to the imperfection of the systems of quotes in terminals between different DCs and, as a consequence, some “slowing down” of the rate of displaying quotations of the same trading instrument from different brokers. The result of this is the price advance in one of its terminals in the second, which is what the trader uses when working on an forex arbitrage system.
As soon as there is a discrepancy in the price of the spread, the transaction opens in the direction of the price movement, which is kept open until the quotations are equalized. Such a scheme is called “one-legged” arbitrage.
There is also a “two-legged” arbitrage on forex, which involves opening deals in opposite directions when there is a difference in quotes and closing them when the price is equalized.
The second type of transactions is the most risk-free, but in the first case, the statistics of transactions can act as the second “leg”, which will show all the correct and incorrect (the essence of profitable and unprofitable) transactions.
Since forex arbitrage works on volatile pairs, the person will not be able to respond in time to the appearance of the difference in quotations, therefore, for a full study of all incoming signals, a special adviser was developed that quickly monitors and processes all signals around the clock, which brings the profitability of the strategy to a decent level , and given the fact that the risks associated with these transactions are extremely low (very rarely they reach the spread level), arbitrage trading is becoming very attractive not only for beginners or fans of hardware trading, but also for well-established players who previously claimed that the hardware game will not bring such a weighty profit as the experience and endurance of man. More about arbitrage trading read here.