Protecting Your Trading Strategy from Forex Brokers’ Plugins: How SharpTrader’s Safeguards Help You Avoid Losses Wednesday September 4th, 2024 – Posted in: Arbitrage Software – Tags: ,

Forex brokers often monitor traders who consistently use winning strategies like forex latency arbitrage, forex scalping, trading on economic news, etc. When brokers detect such strategy, they may apply various plugins to interfere with trading performance, ultimately impacting the trader’s profitability. One standard plugin used by brokers is the “Virtual Dealer” plugin. This plugin-in has different variations based on various algorithms to identify toxic flow, including neural networks. However, the main concept artificially increases the time it takes to execute orders. In an active market, this can lead to significant slippage—orders are filled at prices much worse than expected, causing the strategy to lose its edge and, ultimately, its profitability.

The Problem: Plugins That Disrupt Your Trading Strategy

Arbitrage is a popular trading strategy that capitalizes on price discrepancies between brokers or markets. It relies on rapid order execution to take advantage of tiny price differences before they vanish. However, brokers may apply plugins like the Virtual Dealer when detecting arbitrage strategies. This plugin manipulates order execution times, especially during periods of high market volatility. By delaying order execution, brokers create slippage that erodes the profitability of the trades.

Slippage occurs when the price at which an order is executed differs from the expected price. In an active market, where prices can move quickly, even small delays can result in significant slippage. For traders who cannot monitor their strategies around the clock, this delayed execution can quickly turn a winning strategy into a losing one. Once the broker applies these unfavorable trading conditions, the arbitrage strategy no longer functions as intended, leading to potential losses.

The Solution: SharpTrader’s Built-In Protection Against Plugins

To address this critical issue, we’ve integrated a unique safeguard into our SharpTrader platform. SharpTrader includes advanced protection features that are literally called “Avoid broker’s plugins” that automatically disable the trading strategy if the order execution time or slippage exceeds predefined thresholds. This protective mechanism is designed to shield the trader’s deposit from unnecessary losses caused by broker manipulation.

avoid broker's plugins

Key Features of SharpTrader’s Protection:

  1. Order Execution Monitoring:
    SharpTrader continuously monitors the time it takes for orders to be executed. If the execution time exceeds the acceptable limit set by the trader, the platform will automatically halt the strategy. This prevents prolonged exposure to poor trading conditions, safeguarding your account from potential losses.
  2. Slippage Control:
    SharpTrader also tracks slippage levels in real-time. If the slippage exceeds the set thresholds, indicating that the broker may be manipulating order fills, SharpTrader will suspend the strategy to protect your funds. This feature is particularly useful in volatile markets where slippage can dramatically impact profitability.
  3. Customizable Safeguards:
    Traders can customize the parameters for execution time and slippage, tailoring the protection to fit their specific needs and risk tolerance. This flexibility ensures that the platform responds appropriately to different market conditions and broker behaviors, maintaining the integrity of your trading strategy.
  4. Automatic Alerts and Actions:
    When the protective thresholds are breached, SharpTrader disables the strategy and sends automatic alerts to the trader via the Telegram bot. This allows the trader to assess the situation, contact the broker if necessary, adjust the trading parameters, or move to another broker if necessary.

How SharpTrader’s Protection Works

SharpTrader’s protection system is straightforward to set up and highly effective. Traders can specify maximum acceptable execution times and slippage rates within the platform’s settings. When these values are exceeded, SharpTrader instantly halts trading, ensuring that the strategy does not continue under unfavorable conditions that could lead to losses.

For example, if a trader sets the maximum order execution time at 150 milliseconds and the slippage tolerance at four-pip, SharpTrader will monitor these metrics in real-time. If the execution time consistently surpasses 150 milliseconds or slippage frequently exceeds four pips, the platform will automatically suspend trading. This safeguard helps maintain the strategy’s effectiveness and prevents the broker from undermining your trading success.

The Importance of Protecting Your Strategy

Forex trading is a 24-hour market, making it impossible for traders to monitor their strategies constantly. Brokers, however, are always on the lookout for methods that consistently generate profits, and they can change trading conditions without notice. This puts traders at a significant disadvantage, as they may not realize that the conditions have changed until they see losses.

SharpTrader’s protective features are essential for maintaining the profitability of arbitrage and other high-frequency trading strategies. By automatically disabling strategy under adverse conditions, SharpTrader ensures that your capital is not exposed to unnecessary risks. This built-in defense is not just a safety net; it’s a critical tool for serious traders who rely on precision and speed in their trading.

Conclusion

Brokers using plugins to manipulate trading conditions pose a significant threat to the success of profitable trading strategies like arbitrage. Traders are vulnerable to unexpected losses without the ability to control or constantly monitor these conditions. SharpTrader addresses this problem by providing robust, customizable safeguards that monitor execution times and slippage in real-time. By automatically disabling the strategy when conditions become unfavorable, SharpTrader protects your deposit and ensures that your trading strategy remains effective.

If you’re a trader looking to protect your arbitrage strategy from broker manipulation, SharpTrader offers the tools and protection you need. Explore the advanced features of SharpTrader and see how it can help you maintain your trading edge in the challenging forex market.

Book Reference:

Fesenko, B (2024). Traders Treasure, Broker’s Nightmare: Unveiling Controversial Forex Strategies. Amazon.