How to use software to make arbitrage trades

One of the methods that people use for trading forex is ‘arbitrage’, which basically means spotting some inefficiencies in the markets and being able to take advantage of this and make trades in your favour. Sometimes, these trades can even be automated and this is where software methods come into play.

Using forex arbitrage software can help you to track the markets and spot when there is an opportunity to make some money, based on the forex markets not being priced correctly.

Can you really switch off, kick back and watch some television, and wait for an alert to make an arbitrage trade? We explore in this guide.

Example of arbitrage

To help you to properly understand how arbitrage works, consider that there are often discrepancies on the marketplaces – for example, between the exchange rates in two currencies. Two marketplaces or brokers might be asking for different rates, which means if you are quick, you may be able to take advantage of lower rates.

Also, when it comes to buying assets, some brokers may provide a slightly better price than others for a brief period, as the market updates. This is where the speediest people and those with software and alerts can dive in and take full advantage.

What is forex arbitrage software?

Forex arbitrage software encompasses a lot of different types of software that you can install, which will show you opportunities to make trades, mainly based around things being priced incorrectly on a forex market, whether this means trading stocks or currencies.

This is one of the best ways to automate the process. Nobody can really be expected to stay on top of trading 24/7. There aren’t enough hours in the day for somebody to manually keep checking for arbitrage opportunities, so the FX community has taken advantage of software solutions, including:

  • Automatic trading software programs. These allow you to set up the parameters for trades and the software can make them automatically for you, meaning you don’t have to be involved in the process at all.
  • Alert programs. These come in many different formats, but you effectively get an alert when the software detects that there is an opportunity for you to trade and make a profit. Some of these can even send you information about the opportunity directly to your phone.

Automatic trading programs are sometimes preferred due to the fact that they can take action almost instantly. In some instances, the time that it can take for an opportunity to be seen and recognised, and to take action, is enough time for the opportunity to disappear.

There are some automatic trading programs out there that aren’t as trusted as others, so choose with care and attention when you decide you are going to go for this level of automation.

Trade alert software 

Software that doesn’t automatically make the trades, but that does give you the information you need in order to make the potentially profitable trades, can be thought of as your own version of Jarvis from Iron Man! You get alerts and warnings from the software that runs in the background, scanning the biggest forex markets and looking for opportunities.

A lot of trade alert options give you the chance to set your own parameters for exactly what you are looking for. They will pop up with the information you require so you can take action. 

Remote alert trading services

Some alert trading services can tell you all about the opportunities in the market without having to run the software yourself. For instance, you receive a message or an email via a subscription, often from companies running powerful analytical software to provide their customers with information about potential opportunities on the market.

Remote services can be more reliable, as the companies running them often need to provide very detailed and excellent tips for their users in order to provide them with trades that are useful. If this doesn’t happen, it is possible that the company would lose subscribers.

Summary – taking your first steps into arbitrage

Arbitrage is seen by many as one of the best ways to get into trading, as it has relatively low risk compared to making some of the buying decisions yourself. 

Having software available to help makes all the difference, and while it cannot guarantee your success, a notification service can be a very good way to learn about trading forex as well as a potential way to try and make some profit. 

Author Profile

Adam Regan
Adam Regan
Deputy Editor

Features and account management. 3 years media experience. Previously covered features for online and print editions.


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