HERE IS A LIST OF FOREX BROKERS WHICH ALLOW ARBITRAGE TRADING
Best Brokers for Latency Arbitrage
To understand the meaning of Latency arbitrage we have to first know the importance of latency in arbitrage trading. Latency refers to the measure of delay. More specifically, latency refers to the delay between the time you place an order and the time it takes for the trading platform to execute it. On the other hand, arbitrage is a trading strategy that involves buying and selling an asset in different markets at the same time and exploiting price discrepancies. Therefore, latency arbitrage is a high-frequency trading strategy used to front-run trading orders.
This article will look at some of the best brokers for latency arbitrage. But before that, we are going to cover our basis on two essential things.
Is latency arbitrage trading legal?
Latency arbitrage not only is permitted but is encouraged, as it contributes to market efficiency. This practice helps ensure price discrepancies don’t last long and the value of an asset is the same across all markets. Also, it helps in identifying the gap in the market.
Our criteria for choosing
The Best Broker for Latency Arbitrage
There are four key features when identifying the best broker for latency arbitrage.
- 1) The broker has to support latency arbitrage.
- 2) Regulations and licenses – We will only review brokers that are regulated by reputable organizations.
- 3) Variety and availability of assets – Brokers that offer a variety of trading instruments will be highly rated since it will help traders spread their investments.
- 4) Trading fees – We will consider trading fees. Knowing no trader wants to pay large sums of money when trading, brokers with cheap fees will rank higher.
- 5) Trading platform – The platform the broker offers must be market standard and suitable for all kinds of traders.
Now let’s see some of the best brokers for latency arbitrage.
Best Forex Brokers Which Allow Arbitrage Trading
FP Markets was established in 2005 and continues to be one of the go-to brokers for many traders today. The experience gained over the years makes this broker one of the best in the market. Better yet, latency arbitrage strategy is supported on the broker site and traders can find information on this strategy under algorithmic trading.
In terms of regulations, the broker has oversight from several reputable organizations including the FSCA in South Africa, the CySEC in Cyprus, and ASIC in Australia. With such regulations, traders can expect a fair trading environment on this broker site.
FP Markets offers over 10,000+ trading instruments for traders to choose from that include forex alongside CFDs on shares, commodities, indices, bonds, EFTs, and cryptocurrencies. With such variety, traders can spread their risk across the various asset classes. These assets are traded using market-standard trading platforms offered by the broker. The platforms include MT4, MT5, Iress, cTrader, and mobile apps.
Further, FP Markets has two main accounts with different spreads and commissions. These include the standard and the raw account. The standard account has a low spread of 1.0 pips for major currency pairs with no commission. Contrarily, on the raw account, spreads go even lower starting from 0.0 pips but the account features a small commission of 3$ per side per lot. On another note, the broker supports Trading Central for research and analysis.
FP Markets supports arbitrage among other trading practices.
The screenshot is taken from their official PDF file called exchange metatrader product disclosure statement (page no. 27)
Tickmill offers no restrictions on trading strategies. Traders have the freedom to operate any trading strategy they see fit, which includes latency arbitrage. Tickmill has regulations from various jurisdictions. The company has regulations from the FSCA in South Africa, the CySEC in Cyprus, ASIC in Australia, the FCA in the UK, and the FSA. Therefore, traders can invest while knowing they are dealing with a broker that is heavily regulated.
Further, Tickmill provides several trading instruments across the market. Some of the instruments available are forex, stock indices, commodities, bonds, cryptocurrencies, and stocks. With this kind of diversity is no surprise that the broker is highly regarded. Moreover, the broker offers advanced trading platforms that are easy to use for both novice and advanced traders. The platforms offered include MT4, MT5, WebTrader, and mobile apps.
Clients can choose between three account types that have different spreads and commissions. The accounts depend on the trader’s trading style or experience level. The accounts include the pro account, classic account, and VIP account. The pro account offers spreads as low as 0.0 pips with a small commission of 2 currency units per side per 100,000 traded. On the other hand, the classic account has a spread of 1.6 pips for major currency with no commission. Lastly, the VIP account spreads are as low as 0.0 pips with a commission of 1 currency unit per side per 100,000 traded.
RoboForex is the last broker we will cover that offers Latency arbitrage. the broker has regulations from one reputable organization, the CySEC in Cyprus. Additionally, the broker has regulations from the FSC in Belize. Positively, the broker provides several trading instruments for traders to diversify their investments. The instruments are from markets such as forex, stock, metals, indices, cryptocurrencies, and ETFs.
Notably, traders on RoboForex can invest using popular trading platforms that include MT4, MT5, and cTrader. The platforms offer some of the fastest execution speeds in the market. What’s more, the broker offers five main accounts: the prime account, the ECN account, the cent account, the R StocksTrader account, the Pro account, and the ProCent account. The minimum deposit at RoboForex is 10 Dollars.
The accounts are spread-based, with each account offering different spread charges. The Prime and ECN accounts offer spreads that are as low as 0.0 pips for major currency pairs with commissions paid. The commission is variable and depends on the asset a client is trading. Traders can find the specific commissions under the contract specifications page.
Conversely, the procent and the pro account have spreads as low as 1.3 pips for major currency pairs. The R StocksTrader spread is from $0.01. Lastly, the broker streams prices directly from liquidity providers so as to provide traders with low spreads, ultra-fast speeds, and minimal slippage.
Latency arbitrage requires fast reaction speeds and constant market attention by a trader. It’s a good choice for cautious traders as the risks are fairly low. The downside is that the market usually corrects itself quickly and the profit is usually small. Nonetheless, latency arbitrage helps identify price gaps in the market and thus helps to rectify them. Lastly, traders should do a lot of research to find the best way to invest their money and find the best strategy that best suits their needs.
Since we have listed here only a few brokers, our list may not be exhaustive. Therefore, we call upon individual traders to do their analysis to find the broker that they prefer, whether they are on this list or not. Nonetheless, we still believe that the companies listed here offer quality services to their clients. We advice on double-checking if a broker of your choosing still supports arbitrage as their conditions may change over time.