High-frequency approach in trading

Fix api Latency Arbitrage is a high-frequency approach in trading, which consists in opening trading positions based on the exchange rate delays. This approach is implemented through trade both in the faster and in the slower broker. Thus, the trading robot conducts a constant analysis of price quotes and, in case of maximum delays, it commits a trading operation on the side of the slower broker towards the faster one. The logic of the automatic trading strategy consists in an implemented parameter, which is analyzed in an online mode. As soon as the price quotes for the same currency pair reach a certain (given) value in points, the robot will open the deal and close it after reaching the price marks that were for the asset on the side of the faster broker at the time of opening the transaction.

However, this simplicity of the algorithm has its hidden pitfalls, of which not every fix api trader knows:

  1. Most brokers prohibit the arbitrage principle of trading, so if the broker determines your trading style, he may not pay you the profit from the trading positions.
  2. Continuing the first point, the broker can easily identify this algorithm, because it also contains algorithms that automatically monitor such operations.
  3. Since all the operations on the transactions were carried out on the side of the slower broker, it is possible that the trader will go to a company that operates by the “kitchen” scheme. Therefore, he can lose not only his profit, but his capital as well.

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