Unlocking the Full Potential of SharpTrader™ Arbitrage Software: A Comprehensive Guide Wednesday July 5th, 2023 – Posted in: Arbitrage Software, cryptoarbitrage software – Tags: , ,

SharpTrader™ Arbitrage Software is more than just a top-tier platform for arbitrage trading with standard and innovative built-in arbitrage strategies. It also offers a suite of tools for sophisticated, in-depth analysis.

In my extensive experience with arbitrage strategies and while providing support assistance, I’ve observed that traders often need to pay more attention to the full capabilities of the software they use, not fully grasping the market structure. In this guide, I aim to elucidate the key challenges an arbitrage trader encounters and how they can harness the full power of our platform to address them.

Fast Feed: The Lifeline of Latency Arbitrage

Irrespective of the type – one-legged or any lock arbitrage, all forms of latency arbitrage necessitate a source of quick quotes, i.e., a fast feed. A quicker feed means higher chances to enter the coveted arbitrage window first and secure maximum profit. The connection point of the fast feed, or ‘endpoint,’ also plays a crucial role. For instance, if your broker is in London, you’d need a fast feed in London, and the same rule applies to Asia. So, when choosing arbitrage trading software, you can look for options that provide a fast feed at various endpoints. They should also allow you to connect your feed via the FIX API or ITCH binary protocol.

Hosting: Setting the Stage for Arbitrage Trading

Ideally, your arbitrage program should be installed on a dedicated server or VPS in the same data center as your brokerage’s server. Traders often need to pay more attention to the server quality where they plan to trade, opting for the cheapest available. A common mindset I’ve encountered is to make a small initial investment in arbitrage trading, test it out, and, if successful, invest more. This approach, however, needs to be revised. Arbitrage trading was often unsuccessful on a cheap VPS but yielded consistent profits when transferred to a high-quality VPS server for HFT, maintaining the same accounts and settings. Another common issue arises when traders want to manage significant funds using arbitrage strategies meant for substantial deposits. Yet, they make a minimal deposit and then complain about the software not working.

Optimizing Connection: Building a Seamless Trading Infrastructure

The strength of your arbitrage trading depends on the quality of your connection, as it is on the effectiveness of your chosen strategy. Could you consider setting up your arbitrage trading system near your broker’s servers to ensure minimal latency? The physical distance between your system and the broker’s server can affect trade execution speed, so I suggest using a dedicated server or VPS in the same data center. Avoid shared hosting solutions or low-quality VPS, as they might not provide the consistent high-speed connection necessary for effective arbitrage trading.

Selecting Brokers for Arbitrage Trading

Active dealing from brokerage companies is the primary challenge for about 90% of traders using arbitrage strategies. Brokers often employ plugins to increase the order execution time, thus boosting slippage and rendering arbitrage trading unprofitable. Therefore, it’s essential to analyze trading results to discern acceptable execution time and slippage for profitable arbitrage trading. As execution time varies for different instruments, each must be analyzed individually. SharpTrader™ integrates a comprehensive analysis system to facilitate the trader in making informed decisions.

Traders can examine individual sessions (accounts) to understand the slippage and order execution time during different trading periods. They can also scrutinize specific orders that seem suspicious. Often, I’ve noticed traders put blind faith in their brokers, finding it hard to believe that brokers may deceive them using plugins. They tend to look for software or fast-feed source issues, where our software’s analysis capabilities come into play, highlighting the natural causes behind the scenes.

Selecting the Right Strategy: Fine-Tuning Your Arbitrage Approach

SharpTrader™ offers myriad built-in arbitrage strategies that cater to various trading scenarios. You can use these strategies based on the specific context of your trades. Each strategy is designed with different market conditions in mind and understanding which strategy to employ at the right time can significantly enhance your trading efficiency.

Continuous Learning: Staying Informed and Adapting

The financial markets are ever-evolving, and so should be your arbitrage trading approach. Stay updated with market trends, economic news, and technical advancements. Keep learning and adapting to maintain your competitive edge in the arbitrage trading landscape. SharpTrader™ Arbitrage Software is continually updated to incorporate these changes and provide cutting-edge tools for your trading needs.

Using Integrated Analysis Tools: Understanding the Bigger Picture

SharpTrader™ comes equipped with an integrated system of analysis tools designed to help traders gain a broader perspective of their trading performance. These tools allow for in-depth evaluation of individual trading sessions and specific orders, helping you understand the cause and effect of various factors affecting your trades. Use these tools to diagnose issues, strategize future trades, adjust risk management settings, and optimize your overall trading approach.

SharpTrader Arbitrage session analysis window

Pic. 1 – SharpTrader™ session analyzing

SharpTrader Arbitrage situation analysis window

Pic. 2 – SharpTrader™ order analyzing 

In conclusion, maximizing the potential of SharpTrader™ Arbitrage Software involves a multi-faceted approach that considers quick quote feeds, optimal hosting, broker selection, strategic approach, and constant learning. By utilizing all the features and tools available, you’ll be in the best position to succeed in arbitrage trading. Remember, the key to successful trading lies in your software and how well you understand and utilize its features.

Boris Fesenko

BJF Trading Group