Latency Arbitrage

Alec  

Hello all,


I have been reading into 'Latency Arbitrage' recently and I am curious to know what your thoughts and/or experience was like? I am interested in gaining knowledge as to what the pros and cons are to this method of trading, its sustainability, and what is actually required for a 'successful latency arbitrage' strategy/EA to function. I understand the main limitations such as brokers not allowing this trading method, and how commissions and/or spreads can quickly eat into overall profit. 

There are a few questions which are listed below:

1. Is there such a method where an EA can scan different multiple broker's quotes to ensure there is a constant way of determining a 'fast' and 'slow' broker?

2. What is the typical shelflife for a latency arbitrage EA from experience and/or knowledge?

3. What are your views of latency arbitrage as a viable strategy? I understand there is conflicting views around this as you are profiting from price discrepancies between brokers.


Any input and knowledge/experience passed on in good faith is appreciated and I welcome any discussions.


Thank you!

Enrique Dangeroux  
Alec:

Hello all,


I have been reading into 'Latency Arbitrage' recently and I am curious to know what your thoughts and/or experience was like? I am interested in gaining knowledge as to what the pros and cons are to this method of trading, its sustainability, and what is actually required for a 'successful latency arbitrage' strategy/EA to function. I understand the main limitations such as brokers not allowing this trading method, and how commissions and/or spreads can quickly eat into overall profit. 

There are a few questions which are listed below:

1. Is there such a method where an EA can scan different multiple broker's quotes to ensure there is a constant way of determining a 'fast' and 'slow' broker?

2. What is the typical shelflife for a latency arbitrage EA from experience and/or knowledge?

3. What are your views of latency arbitrage as a viable strategy? I understand there is conflicting views around this as you are profiting from price discrepancies between brokers.


Any input and knowledge/experience passed on in good faith is appreciated and I welcome any discussions.


Thank you!

1) Yes.

2) There is no answer.

3) I would not bother if you are talking about forex brokers. The slow ones usually are those who care little about providing good trading conditions and take the other side of the trade. They might allow to withdraw your deposit, but null the profit. A broker with true ECN  has a less quality of execution vs market makers, which in turn makes it more difficult to profit.

Your best bet would be arbing exchanges, this does require a hefty infrastructure to do so, even with crypto exchanges these days.

Alec  
Enrique Dangeroux #:

1) Yes.

2) There is no answer.

3) I would not bother if you are talking about forex brokers. The slow ones usually are those who care little about providing good trading conditions and take the other side of the trade. They might allow to withdraw your deposit, but null the profit. A broker with true ECN  has a less quality of execution vs market makers, which in turn makes it more difficult to profit.

Your best bet would be arbing exchanges, this does require a hefty infrastructure to do so, even with crypto exchanges these days.

Thank you for your input Enrique!