Arbitrage operations in the foreign exchange market

The number of trading operations over the past few years has rapidly grown. This phenomenon is caused not only by the increase in the number of new players on the market, but also by the current feature of the fix api forex market. As you know, when there is demand, you need to make an offer. The brokerage companies perfectly cope with this function, and the currency brokers prevail in number today.

High market volatility provokes the search for more and more methods of currency pair analysis. Given the fact of the technical environment we live, the automation of fix api trading processes has reached the market segment as well. So, there are HFT algorithms and trading robots in the market that are able to conduct analysis and perform trading operations without the direct involvement of the trader. Also, the methods of trade that were previously impossible to apply in this market were widely used. One such method is the fix api arbitration approach, which got a second breath by automation of this process.

Arbitrage trading is a kind of trading system that is based on a speculative algorithm, opening trading transactions at the time of the largest exchange rate discrepancies in price quotations for the same financial asset, but on various exchange platforms. Thus, this type of trading analyzes not the movement of the price or predicts its future marks, but compares it with the identical value of the price at another broker. A trading operation is carried out if this discrepancy exists. It is necessary to consider each of its forms to understand the logic of this system.

Today, the market has implemented three main types of arbitrage transactions for the currency market:

  1. Fix api 2-leg Arbitrage. The logic of this principle is the most common in traditional markets ( ). According to this principle, the trading robot analyzes the value of the same financial asset, but on different stock exchanges (thus, fix api forex brokers). When the exchange rate discrepancy returns to the regulatory range, the two transactions are closed and the total positive result is fixed ( ). The peculiarity of this principle is that transactions can be held for a long time, which reduces the possibility of the broker’s influence on the trading result.
  2. Fix api Latency Arbitrage. This type of trading is very similar to the previous one based on the logic of its work: analysis is carried out between the same financial asset, however, the trading is performed only at one of the brokers. To do this, the fix api trader should analyze and determine which broker is faster in terms of quotes, and which one is slower. Transactions should be made on the slow side in the direction to the faster one, based on the temporary exchange rate delays.
  3. Triangle Arbitrage. This principle of operation is based on opening several trading operations on the fix api forex market. Such an algorithm uses imports by large companies (banks and hedge funds). The logic of the algorithm is based on the exchange rate divergence of three currency pairs simultaneously. Arbitration is transformed into a form of mediation. The trading algorithm analyzes the situation on the market and opens deals to ensure two market orders. Thus, when the market has an application for the purchase of EURUSD, and the second one holds the EURJPY position and at the same time expects the necessary entry point, this arbitration algorithm provides the first transaction, then converts it into USDJPY and provides the second transaction. To implement this principle, there must be some “gap” in the cost, which will ensure the profitability of the trading operation.

Today, these trading approaches can be used with the help of special auxiliary programs ( ). Arbitrage is a trader’s tool that allows him to form a passive source of profitability in the fix api forex market. Moreover, arbitrage can be perfectly combined with other trading systems of the trader due to its unique approach, which increases the diversification of investment capital and overall profitability.

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