I would like to share some information with you that is not widely available and that might help you in arbitrage trading and in trading in general. First of all, you should know that every MT4 broker is not only able to decline your orders, but can also fill them with delays, thereby using slippage. This is standard practice when working with an MT4 server that uses an MT4 manager, and even if the broker does not have advanced tools such as a virtual dealer and a bridge that utilizes dealing, the broker still has the means to interfere with your trading.
When a broker’s website claims that the broker is an ECM or STP broker, skepticism is in order since there are very few ECM brokers in the world – only the biggest companies, companies such as Bloomberg, can truly call themselves ECM brokers. Brokers who claim to be ECM brokers might perhaps be considered as STP brokers due to the fact that they send orders directly to the market, but even that might not be the case: most MT4 brokers employ a hybrid structure that utilizes an A-book and a B-book. Trading that is purely commission-based (e.g., the A-book) is rarely profitable: the broker has to pay commission fees to a liquidity provider, so it makes more economic sense to assign loss-making traders to the B-book, where there is no need to pay fees for liquidity and where a trader’s loss translates into the broker’s gain.
Neither is a FIX API broker an ideal solution to arbitrage trading. FIX API traders also resort to tactics that might be prejudicial to the trader’s interests. We have tested one such FIX API broker, one of the largest financial institutions of its kind, and we found that practically all the orders submitted through that broker had positive slippage. Moreover, when we used a special application (whiteshark ) to review the filled orders history, we discovered that some of the orders were filled at prices that were not the prices of the market at the time these orders were filled.
Why am I telling you all this? You have to understand that the forex market is a huge business and that there’s a lot of money involved. In that kind of environment, the broker is neither your friend nor your ally. In fact, the broker is often the counterparty to your trades, which means that your losses are the broker’s profits. Consequently, you should conceal as much from the broker as your resources allow you to. You should never use a VPS recommended by the broker you’re using; equally, you should not disclose the kinds of trading strategies you’re using or planning to use. If you open a demo account under your own name, at no point should you test the kind of strategy that you intend to use in that account; if you must do so, be sure to use a fictitious name to do your testing. Disclosure of information that should not be disclosed can ultimately be used by the broker against you. Claims that a broker is an ECM or an STP broker, or perhaps a direct market access (DMA) broker, should be treated with caution. You should only trust your eyes, your experience, and your test results. Do not share trading information with the broker, and conceal as much as you can. This will serve you in good stead.
Brokers often claim that arbitrage trading, among other things, is illegal and that its use damages their servers. I know how MT4 servers and the FIX Protocol work, and I assure you that it’s patently untrue. Arbitrage trading does not harm brokers in any way; it is only deleterious to those brokers who move trading accounts to the B-book and thus lose money when traders start to make some. Additionally, arbitrage trading is absolutely legal. You can easily verify that online by going to Investopedia or by confirming it with other available resources. The “illegality” of arbitrage trading is a myth.
Read more: https://www.investopedia.com/article...ding-legal.asp
Several things are required for successful arbitrage trading. (1) You need the right software. You need a good VPS – the VPS you’re using should be in the same data center as your broker, or close to it. You need a fast feed that will work with a fast protocol – the days when you could use an MT4 feed for arbitrage trading are over. You need a FIX API feed, which should also be unfiltered if it is to gain an advantage in terms of speed. The software should use camouflage – the broker should not be able to identify your system as an arbitrage system. Even if the broker does realize that you’re engaging in arbitrage trading, the software you’re using should make it impossible for the broker to prove that – e.g., your per-trade profit should be greater than one pip; your order duration should be in excess of two minutes, etc. Complying with these guidelines will make it impossible for the broker to prove you’re using arbitrage and, as long as the broker is a regulated one, the broker will not be able to withhold your profits.
Once you have the right software, (2) you need to find the right broker. We receive many requests for broker recommendations on a daily basis. We have shared this kind of information with our clients liberally over the years, falling back on our own experience or on recommendations provided by other clients. However, it’s worth bearing in mind that our primary objective, as a trading software developer, is to provide the best trading software on the market – and we’ve met this goal, having developed, among many other products, locking arbitrage, an application that offers order duration of more than two minutes (and up to several hours) and that fully conceals arbitrage activity from brokers. However, broker selection is not something that we specialize in, so you’d be better off using other channels for this kind of information.
Also, please remember that recommending the same broker to hundreds of traders will quickly alert the broker to what’s happening and give the game away. Last year we recommended a number of brokers to our clients, who were able to make millions of dollars; however, these brokers can no longer be used. The upshot is that the best broker is a broker that you find on your own. That way you can use our arbitrage product with that broker without having to worry about other traders coming to the same broker with the same product – this can help you stay with the broker for years and make money consistently. No one will know about this broker, and the effect of your own profitability on the broker will be negligible, so your arbitrage trading will not attract attention. We therefore advise you to look for your own broker (or brokers) and not rely on recommendations made by us.
(2.1) What should you look for in a broker? First of all, it is highly desirable that the broker is a regulated one. We find that the Australian regulatory environment offers the best client protection. While FCA-regulated brokers, for example, were ultimately unable to withhold profits in cases of disputes, correspondence was still required to prevail upon the broker to release the funds to the investor; no such cases have arisen under the oversight of the Australian regulator. Brokers operating in the Australian jurisdiction prefer not to wrangle with clients. When you find a broker, try to determine the liquidity provider as well as the technology provider used. Australian regulations make it obligatory for brokers to disclose their liquidity providers; once you identify the liquidity provider, you can look for similar brokers for your trading. For example, if you find that your broker’s PrimeXM bridge through liquidity provider ABC is working well with your arbitrage trading, your arbitrate trading will probably work well with another broker using the same bridge and the same liquidity provider.
Many of our clients tell us that they do not want to use arbitrage trading, that they prefer other trading strategies, that they don’t want to spend time on broker selection, and so on. While it’s true that arbitrage trading is not as simple as it might seem and that broker selection takes time, once you find the right broker, you’ll find that your high profits and low risk put any forex advisor to shame. Having developed thousands of expert advisors, often based on algorithms provided by our clients, we can say with confidence that, when applied correctly and with the right software that allows you to camouflage your orders, arbitrage trading is the best trading strategy from the standpoint of profitability and risk.
We help our clients adjust the application to ensure that’s optimized for successful performance and remains off the broker’s radar. We also assist our clients in installing our products, and we provide free lifetime support. Our clients need only find a good broker.
One final word of advice: you do not have to invest a lot of money; you can open small accounts and monitor the speed at which brokers fill your orders, gauge slippage levels, and so on. If you see that your orders are being filled quickly and there’s no slippage, you can then open an account with a deposit of several thousand dollars; until then, to test brokers, you can use small amounts (under $100) that will not drain your financial resources.
Source from BJF Trading Group
When a broker’s website claims that the broker is an ECM or STP broker, skepticism is in order since there are very few ECM brokers in the world – only the biggest companies, companies such as Bloomberg, can truly call themselves ECM brokers. Brokers who claim to be ECM brokers might perhaps be considered as STP brokers due to the fact that they send orders directly to the market, but even that might not be the case: most MT4 brokers employ a hybrid structure that utilizes an A-book and a B-book. Trading that is purely commission-based (e.g., the A-book) is rarely profitable: the broker has to pay commission fees to a liquidity provider, so it makes more economic sense to assign loss-making traders to the B-book, where there is no need to pay fees for liquidity and where a trader’s loss translates into the broker’s gain.
Neither is a FIX API broker an ideal solution to arbitrage trading. FIX API traders also resort to tactics that might be prejudicial to the trader’s interests. We have tested one such FIX API broker, one of the largest financial institutions of its kind, and we found that practically all the orders submitted through that broker had positive slippage. Moreover, when we used a special application (whiteshark ) to review the filled orders history, we discovered that some of the orders were filled at prices that were not the prices of the market at the time these orders were filled.
Why am I telling you all this? You have to understand that the forex market is a huge business and that there’s a lot of money involved. In that kind of environment, the broker is neither your friend nor your ally. In fact, the broker is often the counterparty to your trades, which means that your losses are the broker’s profits. Consequently, you should conceal as much from the broker as your resources allow you to. You should never use a VPS recommended by the broker you’re using; equally, you should not disclose the kinds of trading strategies you’re using or planning to use. If you open a demo account under your own name, at no point should you test the kind of strategy that you intend to use in that account; if you must do so, be sure to use a fictitious name to do your testing. Disclosure of information that should not be disclosed can ultimately be used by the broker against you. Claims that a broker is an ECM or an STP broker, or perhaps a direct market access (DMA) broker, should be treated with caution. You should only trust your eyes, your experience, and your test results. Do not share trading information with the broker, and conceal as much as you can. This will serve you in good stead.
Brokers often claim that arbitrage trading, among other things, is illegal and that its use damages their servers. I know how MT4 servers and the FIX Protocol work, and I assure you that it’s patently untrue. Arbitrage trading does not harm brokers in any way; it is only deleterious to those brokers who move trading accounts to the B-book and thus lose money when traders start to make some. Additionally, arbitrage trading is absolutely legal. You can easily verify that online by going to Investopedia or by confirming it with other available resources. The “illegality” of arbitrage trading is a myth.
Read more: https://www.investopedia.com/article...ding-legal.asp
Several things are required for successful arbitrage trading. (1) You need the right software. You need a good VPS – the VPS you’re using should be in the same data center as your broker, or close to it. You need a fast feed that will work with a fast protocol – the days when you could use an MT4 feed for arbitrage trading are over. You need a FIX API feed, which should also be unfiltered if it is to gain an advantage in terms of speed. The software should use camouflage – the broker should not be able to identify your system as an arbitrage system. Even if the broker does realize that you’re engaging in arbitrage trading, the software you’re using should make it impossible for the broker to prove that – e.g., your per-trade profit should be greater than one pip; your order duration should be in excess of two minutes, etc. Complying with these guidelines will make it impossible for the broker to prove you’re using arbitrage and, as long as the broker is a regulated one, the broker will not be able to withhold your profits.
Once you have the right software, (2) you need to find the right broker. We receive many requests for broker recommendations on a daily basis. We have shared this kind of information with our clients liberally over the years, falling back on our own experience or on recommendations provided by other clients. However, it’s worth bearing in mind that our primary objective, as a trading software developer, is to provide the best trading software on the market – and we’ve met this goal, having developed, among many other products, locking arbitrage, an application that offers order duration of more than two minutes (and up to several hours) and that fully conceals arbitrage activity from brokers. However, broker selection is not something that we specialize in, so you’d be better off using other channels for this kind of information.
Also, please remember that recommending the same broker to hundreds of traders will quickly alert the broker to what’s happening and give the game away. Last year we recommended a number of brokers to our clients, who were able to make millions of dollars; however, these brokers can no longer be used. The upshot is that the best broker is a broker that you find on your own. That way you can use our arbitrage product with that broker without having to worry about other traders coming to the same broker with the same product – this can help you stay with the broker for years and make money consistently. No one will know about this broker, and the effect of your own profitability on the broker will be negligible, so your arbitrage trading will not attract attention. We therefore advise you to look for your own broker (or brokers) and not rely on recommendations made by us.
(2.1) What should you look for in a broker? First of all, it is highly desirable that the broker is a regulated one. We find that the Australian regulatory environment offers the best client protection. While FCA-regulated brokers, for example, were ultimately unable to withhold profits in cases of disputes, correspondence was still required to prevail upon the broker to release the funds to the investor; no such cases have arisen under the oversight of the Australian regulator. Brokers operating in the Australian jurisdiction prefer not to wrangle with clients. When you find a broker, try to determine the liquidity provider as well as the technology provider used. Australian regulations make it obligatory for brokers to disclose their liquidity providers; once you identify the liquidity provider, you can look for similar brokers for your trading. For example, if you find that your broker’s PrimeXM bridge through liquidity provider ABC is working well with your arbitrage trading, your arbitrate trading will probably work well with another broker using the same bridge and the same liquidity provider.
Many of our clients tell us that they do not want to use arbitrage trading, that they prefer other trading strategies, that they don’t want to spend time on broker selection, and so on. While it’s true that arbitrage trading is not as simple as it might seem and that broker selection takes time, once you find the right broker, you’ll find that your high profits and low risk put any forex advisor to shame. Having developed thousands of expert advisors, often based on algorithms provided by our clients, we can say with confidence that, when applied correctly and with the right software that allows you to camouflage your orders, arbitrage trading is the best trading strategy from the standpoint of profitability and risk.
We help our clients adjust the application to ensure that’s optimized for successful performance and remains off the broker’s radar. We also assist our clients in installing our products, and we provide free lifetime support. Our clients need only find a good broker.
One final word of advice: you do not have to invest a lot of money; you can open small accounts and monitor the speed at which brokers fill your orders, gauge slippage levels, and so on. If you see that your orders are being filled quickly and there’s no slippage, you can then open an account with a deposit of several thousand dollars; until then, to test brokers, you can use small amounts (under $100) that will not drain your financial resources.
Source from BJF Trading Group
Highlanders
