Introduction – first latency arbitrage robots
The idea of Latency Arbitrage for the Forex market appeared quite a long time ago and the first algorithms were rather simple. They were latency arbitrage robots – MetaTrader Expert Advisors that consisted of two parts. The first part is a latency arbitrage feeder – an Expert Advisor that was installed on the MetaTrader terminal of a broker who had fast quotes calculated them and passed them to the second Expert Advisor – latency arbitrage ea that was installed on the MetaTrader with slow quotes. The latency arbitrage compared slow and fast quotes and, when the difference appeared, sent an order.
Since Forex brokers mostly earn not only on markups on prices and commissions but also on traders’ losses, mt4 expert advisors for latency arbitrage became a big problem for such Forex robots. This led to the emergence of the virtual dealer and all sorts of plug-ins allowing the broker to slow down the execution time of order.
With the emergence of new platforms such as MT5, cTrader, jForex respectively there appeared mt5 latency arbitrage expert advisors, latency arbitrage cTraders bots, and jforex latency arbitrage bots. The same fate awaited them – plugins.
A few years ago trading via FIX API became available not only for institutional traders but also for only traders with medium-sized deposits. Mainly from $10,000. But even programmers from the other side of the trench did not disappoint us and developed all sorts of plug-ins for rejecting or slippage of orders opened on arbitrage signals.
So, the basic idea of the foregoing is to explain that the use of standard arbitrage algorithms in the present realities is very difficult because of the conflict of interests between a Forex broker and Forex traders.
Improvement of Latency Arbitrage Software algorithms 2019-2021
Around 2016 several companies such as westernpips, newhope, bjftradinggroup as well as our HFT Arbitrage Platform development group are developing an improved latency arbitrage algorithm which they have different names but have the same idea. The idea is the following. After the arbitrage robot opens the order and profit reaches the profit level, instead of closing the order the program opens the opposite order on the same instrument of the same size, thereby fixing profit. Then there is a difference in the algorithms. For example, HFT Arbitrage Platform and BJF Trading Group have several algorithms for opening and closing orders. The westernpips company calls such algorithms as two-legged arbitrage, New Hope calls its algorithm Hidden arbitrage, BJF Trading group calls Lock Arbitrage, and HFT Trading platform calls 2-legged latency.
With almost identical algorithms particularities win. And such special features are professional programming of terminators for transmitting fast feeds, methods of opening orders, and additional masking of orders. In 2020 it became clear that the most effective products for arbitrage on the Forex, CFDs, and Indices markets are the HFT Arbitrage platform and Deep Analysis Arbitrage software from BJF Trading Group (DAAS). These programs or I would even say arbitrage platforms, have built-in connectors to MT4, MT5, cTrader, jForex, FIX API, Rithmic, and various crypto exchanges and allow you to do cross-platform arbitrage.
I would leave the third place for Westernpips private 7. Analyzing rating sites and customer comments in various resources such a company as new hope has completely lost its reputation and is not a competitor for the above products.
New most effective latency arbitrage algorithms -2022
The year 2021 showed the effectiveness of arbitrage products of 2 top companies described above, but programmers on the other side of the trench also took steps to develop an improved anti-arbitrage plugin. At this stage, not all of the Forex brokers have retooled their tools and used the old ones, but as experience shows, it is better to improve your tour system sooner, without waiting for all brokers to learn about it. For this reason, the latest 3rd generation product was developed, which allows hiding the arbitrage trade even if the broker is using the most advanced plugins. The use of non-arbitrage signals market entry and multi-level exit points, as well as the imitation of manual trading, makes the HFT Arbitrage Platform 2-legs latency 3 the most disguised and hence the most effective arbitrage strategy on the Forex market.
A little bit about cryptocurrency arbitrage in 2022
Since cryptocurrency exchanges do not use plugins, there is no need to create sophisticated algorithms to disguise arbitrage trading for cryptocurrency arbitrage, but with the growing popularity of arbitrage trading in the cryptocurrency market, the volume of arbitrage bots also grows which leads to natural slippage. Therefore, it is most important to assess the availability of volumes at various book levels for a given cryptocurrency before opening an order. In the absence of the necessary volume at the top of the book, some of the requested volumes will be taken from the following levels, which will lead to slippage. The most popular strategies for arbitrage trading in the cryptocurrency market are latency arbitrage bot and hedge arbitrage bot. One must be cautious when trading hedge strategies in an unstable cryptocurrency market as a fall in the traded cryptocurrency relative to the base currency, can cause much larger losses than the profit from arbitrage trading cryptocurrency bot. For this reason, latency crypto arbitrage is the safest provided that you only enter long positions for a short time on crypto altcoins secured by real volume. HFT Arbitrage Platform with the purchase of a one-leg arbitrage built-in strategy and hedge arbitrage built-in strategy allows you to trade not only on MT4, MT5, cTrader, jForex, FIX API, Rithmic platforms but also on numerous crypto exchanges.