So, you’ve decided to delve into arbitrage trading but are unsure where to begin. This article aims to concisely outline all the steps you need to take to kick off your arbitrage journey without hitting unforeseen obstacles. For clarity, all the steps will be presented in the order they should be undertaken. I’d also advise beginners not to make alterations unless they’re experienced in arbitrage trading.
5 Easy steps to start Arbitrage Trading on Forex and Crypto markets
Step 1. Selecting and Purchasing an Arbitrage Strategy
Our software offers several built-in arbitrage strategies designed for a specific purpose. You can delve deeper into each strategy in our dedicated article. However, to guide the novice arbitrage trader, I’ll select a strategy for you to simplify the decision-making process. If your trading interest is confined to the forex market, starting with the ‘HFT Arbitrage Platform with 2-legs latency 1’ built-in strategy is your best bet. This strategy is versatile, suitable for trading with most forex brokers on almost any forex platform, and can even aid you in passing a prop firm’s contest. Detailed insights on utilizing this strategy can be found in our dedicated article: “Comprehensive Guide to Advanced Arbitrage Strategies on HFT Platform: FAQs and Recommendations“.
Should you also wish to engage in the cryptocurrency market, you’ll require two additional in-built strategies: ‘one-leg’ and ‘hedge’. Upon your strategy purchase, we’ll recommend suitable forex brokers or prop firms to get you started. But remember, don’t rush into opening an account; follow the step-by-step guidance in this article: “Passing the contest and trading in a prop firm with latency arbitrage“.
Lastly, I strongly suggest investing in the ‘order source and size mixer’. This tool will help disguise your arbitrage trading activities, ensuring brokers can’t target you with plugins.
Step 2. Renting a VPS for Arbitrage Trading
If your broker’s server is in New York or London, you’ll require a high-quality VPS for high-frequency trading. I recommend HFT ultrafxvps. If your broker’s server is in London, opt for a VPS based in London: ultrafxvps in London. If in New York, choose one there: ultrafxvps in New York. We advocate for ultrafxvps.com. However, if your broker’s server is based in Asia, you’ll need a BeeksFX VPS in either Tokyo: BeeksFX in Tokyo or Hong Kong. While you can experiment with other VPS providers, the results might not be as favorable. A robust VPS is essential for cryptocurrency exchanges, but the requirements aren’t as stringent. If you plan to trade both in forex and on cryptocurrency accounts, select your VPS based on the aforementioned guidelines.
Step 3. Opening an Account with a Forex Broker or Cryptocurrency Exchange
To utilize the HFT Arbitrage Platform with 2-legs latency 1 strategy, you need two accounts. These can be from the same broker or from two different brokers, as long as their servers are in the same data center.
Case of Opening Two Accounts with the Same Broker:
In this scenario, you’ll need a partner or relative since the accounts must be registered under two different names. Each account should be opened from different IP addresses and at different times. For instance, if you open an account from your home computer today, your partner should do the same from a separate device a week or two later. This way, the account numbers won’t be consecutive, won’t originate from the same IP, and won’t share a surname—ensuring the broker doesn’t get suspicious. When setting up on the VPS, you’ll need an additional IP address, which can be requested from your VPS provider. Also, you might require the IP Changer program, which helps connect the primary account using the main VPS IP and the second account with the additional VPS IP. Alternatively, consider using a proxy: ultrafxvps proxy. In this case, the IP Changer with an added proxy add-on might be necessary. Our support team is always ready to help with the software setup.
Case of Opening Two Accounts with Different Brokers:
This situation simplifies the process. Both accounts can be registered under your name simultaneously using the same IP address. Additionally, there’s no need for the IP Changer when setting up the program.
For cryptocurrency exchange accounts, there’s no need for such precautions.
Step 4: Setting Up the HFT Arbitrage Platform
The HFT Arbitrage Platform comes with an installer, ensuring a hassle-free setup process. However, if you encounter any challenges, don’t hesitate to contact our support team – we’re eager to assist. Once installed, you can utilize the platform’s built-in configuration presets tailored to various scenarios: presets for brokers with narrow spreads, those with wider spreads, and for proprietary trading firms. I suggest starting your trading with the smallest lot size. This approach will give you a feel of how the software operates and set your expectations accordingly. It also reveals potential issues with a broker, such as whether the order execution time is unduly prolonged.
Testing on a demo account might not always reflect real trading conditions, as brokers often tailor demo environments to be ideal. The software also features built-in data feeders for London, Tokyo, and New York data centers. Use the feeder that aligns with your geographical preference. For instance, if you’re interested in trading indices and your VPS is located in Tokyo or New York, the London feed provides popular indices for arbitrage trading such as DAX (DE30), US30, US100, and US500.
Should you face any configuration issues, our support team is just a message away.
Step 5: Arbitrage Trading
Once you’ve completed your initial tests with a small lot size in arbitrage trading, it’s time to elevate your game and start earning! 😊 However, not ramping up your lot size too quickly is crucial. Increase in stages and remember that monthly gains exceeding 45% can quickly attract broker attention, potentially flagging your account for monitoring.
Gaining proficiency in reading the program’s log files is essential. It will enable you to promptly detect any issues and take the necessary action or consult us for guidance. Within these log files, you can determine the order execution time for both position opening and closing and the slippage for each. If you notice an increased slippage or longer execution times, there’s a high likelihood that the broker has applied a plugin. In such a case, halt your trading, reduce the lot size, and observe a few more orders. If the issue persists, consider taking a week or two off and then retrying. There might be instances where trading returns to normal, but if execution times and slippage remain high, switching accounts is advisable.
When opening a new account, refer to the information provided in Step 3. However, understand that if a broker has altered trading conditions for your existing account, there’s a strong chance that new accounts under your name might also face unfavorable conditions right from the start. Hence, consider opening an account in your partner’s name or with a new broker. Remember that setting up a new account under your partner shouldn’t be associated with your previous IP address. Request your VPS provider to change the IP address or utilize a proxy.
I sincerely hope you’ve diligently heeded my advice. If so, you’re well on your way to joining the ranks of professional traders who’ve turned arbitrage trading into a consistent revenue stream and a pathway to financial independence. Best of luck!