F.A.Q.

Q: What is the difference between arbitrage trading and news trading?

A:
Arbitrage trading and news trading are both popular strategies in financial markets, but they are fundamentally different in their approach and execution:

• Arbitrage Trading:
  Arbitrage trading exploits price discrepancies for the same asset across different markets, brokers, or trading platforms. The primary goal is to profit from these temporary differences by buying low in one place and selling high in another, often within seconds or milliseconds. This strategy relies heavily on speed, technology, and direct market access, and typically involves a large number of small, low-risk trades.
  
  

• News Trading:
  News trading focuses on profiting from sharp price movements that occur immediately after significant economic or political news releases, such as central bank decisions, employment reports, or geopolitical events. Traders anticipate volatility and react quickly to breaking news, often placing trades within seconds of the announcement. This approach requires fast data feeds, quick decision-making, and a thorough understanding of macroeconomic factors.
  
  

In summary:
Arbitrage trading profits from structural inefficiencies and price differences, while news trading aims to capture profits from market volatility triggered by news events. Arbitrage is usually more systematic and technology-driven, whereas news trading is event-driven and depends on interpreting new information faster than the market.   Read article: "Advanced News Trading Strategies: Execution, Technology, and Profit Potential"

What is forex arbitrage?

Forex arbitrage is a trading strategy where a trader takes advantage of price discrepancies between two or more markets, buying a currency pair in one market at a lower price and selling it in another at a higher price, thereby making a profit from the price difference. 

Is forex arbitrage risk-free? 

No trading strategy is entirely risk-free. While arbitrage can present low-risk opportunities, it's still subject to execution risk, slippage, broker interventions, and technology failures, among other factors. 

Are there any risks specific to forex arbitrage? 

Yes, some risks include broker interventions (where a broker may close or prevent an arbitrage trade), liquidity risks (inability to execute a trade at a specific price), and technological risks like software or internet failures. 

What kind of arbitrage strategy is better for Forex market?

Please read this article  where we made some comparisons between different forex arbitrage strategies: "Using Arbitrage Strategies in Trading on Financial Markets"

Can I use latency arbitrage if my broker is A-book broker and allows arbitrage trading?

We do not recommend you share information with your broker about what kind of trading strategy you plan to use. It is good if the broker allows latency arbitrage strategy in his terms, but we recommend trying the strategy without any discussion with a broker. And you need to consider that many brokers have hybrid solutions A + B Book. Read more: "Arbitrage Trading in the Forex Market"

Why don't all traders use forex arbitrage?