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 arbitrage trading.
- 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. The list is very limited as not many brokers directly state they support arbitrage trading. One of the few exceptions is Tickmill which is very transparent about this.
Best Forex Brokers Which Allow Arbitrage Trading
Tickmill
Tickmill offers no restrictions on trading strategies. The broker directly states on their site that they support all trading strategies including 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 classic account, the raw account and Tickmill raw trader account. The raw account offers spreads as low as 0.0 pips with a small commission of $3 per lot per side. On the other hand, the classic account has a spread of 1.6 pips for major currency with no commission. Lastly, the Tickmill raw trader account has spreads as low as 0.0 pips with a commission of $3.5 per lot per side (this account is for traders who wish to use their proprietary mobile trading app)
All Strategies (including arbitrage) are allowed on all 3 account types.
Screenshot is taken from the official Tickmill website.
RoboForex
RoboForex is the another broker that supports arbitrage trading. 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.