Forex Arbitrage Software helps traders to make money by exploiting the inefficiencies in different forex pairs being traded in different markets. It is also known as Forex Arbitrage Bot or Forex Arbitrage EA (Expert Advisor).
Arbitrage might sound like technical jargon to you but at its core, it’s one of the oldest forms of trading. You buy something from a market at one price and sell it at a higher price to someone else in another market.
The price difference is the profit that you generate from this arbitrage activity.
Forex Arbitrage Bot or Forex Arbitrage EA automates the entire process based on this strategy.
Forex Market is the largest among different securities markets with daily global traded volumes of more than USD 6.6 trillion. As you would know, all securities markets are inefficient and constantly trying to get efficient in terms of the price of trading instruments.
How does one make money in FOREX Market?
There are primarily 2 ways one can make money in Forex Market
- Forex Trading activity in simple terms is when Forex Traders make money by price fluctuations in a trading instrument within a trading intermediary like a forex broker.
- Forex Arbitrage activity in simple terms is when Forex Traders make money by exploiting the difference in price of a forex pair in different markets. They buy a currency pair in one market and sell the same in another market simultaneously.
- Forex Brokers do make money in differet ways but they are businesses.
What is Forex Arbitrage Software?
Forex Arbitrage Software connects traders with different forex brokers and trading platforms and place trades in the same currency pair in the same quantity but in opposite directions simultaneously.
Forex Trading Arbitrage software works when traders exploit the price differences arising due to inefficiencies in the market. The same forex pair can be quoted at slightly different prices on different trading platforms at the same time. If you buy and sell it at the same time, you get to earn the difference as a profit. This is called Forex Arbitrage Trading.
At the core, a Forex Arbitrage Software is an arbitrage bot or EA (Expert Advisor) that keeps looking for trading opportunities based on entry-exit rules, risk management, and position sizing conditions fed to it.
Forex Arbitrage Trading Software keeps looking for price differences in different forex trading venues and executes trades with set criteria without manual intervention.
Since the order processing is so fast and rapid, it’s also called HFT Arbitrage bot.
5 Key elements of Forex Arbitrage:
1. Same Currency Pairs
Trading happens mostly on the same currency pairs and sometimes in related currency pairs.
2. Substantial Inefficiency
There must be a substantial price difference to not only cover the trading cost but give the reasonable profits that make it worth the risk that you put into a trade.
3. Simultaneous Open & Close
The trades in opposite directions should be placed simultaneously. Delay of even a second can cause the price to move and prices could even out resulting in a lost arbitrage opportunity.
4. Fully Automated Trading
The Forex Arbitrage Trading cannot be done manually and as the trades are executed within a fraction of seconds. You not only need the neat codes but an efficient infrastructure of software, hardware, and lightning-fast internet to run a successful forex arbitrage bot.
5. Forex Brokers that allow Scalping
Forex Arbitrage essentially is scalping at its core wherein the positions open and close within seconds. B Book brokers can’t stand it and even the ECN or STP brokers don’t like it as this increases the load on their system.
But there are brokers that do allow arbitrage trading.
Forex Arbitrage Software Cost
A good Forex Arbitrage Software could cost an individual USD 99/per year with 5 live accounts and support.
And a lifetime no-limits package of Forex Arbitrage Trading Software could cost you USD 1000.
Honestly, there are thousands of good Arbitrage EA software in the market with their unique features. You need to choose which one suits you best. Do insist on getting a FREE DEMO of the arbitrage bot and test it properly.
Arbitrage in trading is not a new phenomenon. It has been happening for decades and technology has made it easier for traders to do arbitrage trading.
But that same technology has increased the risk as well. Back in the day, the inefficiencies in price could remain there for hours and days but now it comes and vanishes in seconds.
You have a window of seconds to do the forex arbitrage trading and if you really want to make money with it, you need a super-fast and efficient forex arbitrage trading software and internet connection.
You will also need a set of forex brokers that allow arbitrage trading. Don’t try to do arbitrage trading without clearly telling them.
And last but not the least, do test the arbitrage software rigorously for several weeks and months if possible before deploying large capital to it. It should work on different days, different times and should be able to generate profits that make sense.
Wish you success.