The success of the hedge arbitrage trading, like the latency arbitrage trading, is largely dependent on the correct software setup. I would like to share some of my observations.
Lot size 1 and Lot size 2
We recommend to trade not more then 2% from account size for 1 lot. You need to be careful. Sometimes brokers have different contract size.
Max pips value
This parameter determines the maximum value in pips on the price that can be changed from the beginning of the opening of the order. When the price changes on that value, software will close both orders. This parameter “Max Pips” allows you to control negative equity arising on one broker/symbol. We recommend to use 50-100
Min pips value
Software will not close orders if opposite arbitrage situation appear (price difference is reached Diff to close value), but price is not changed by a min pips predetermined value. This parameter helps you to avoid orders that may be assigned by the broker as scalping orders. We recommend 5-10 pips.
Min Time value
This value allows you to specify min time for order duration. We recommend 60
This parameter “Trade Pause” allows you to set pause between trades. We recommend to use small value 10-15
“Allow Buy 1″, “Allow Sell 1″, “Allow Buy 2″, “Allow Sell 2″
allow you to open only buy orders, if statistically this broker has more winning ‘buy’ orders; or only sell orders, if broker has more winning sell orders. We recommend to check all.
This parameter is very important if you trade on FIX API account with FOK or IOC orders. In this case you can control slippage.
For example if you send BUY order by price 1.34560 and your slippage value =5 order can be executed by price 1.34560 + 5 pips = 1,34565 or by the better price.
We recommend to use 0.3-0.8
Difference to open
We recommend to use 2 -3 for majors, 7-8 for gold, 3-5 for DAX
Diff to close
We recommend to use 1.5- 2.5 for majors, 4-5 for gold, 3-4 for DAX
Max Spread Fast and Max Spread Slow
These filters should be adjusted to avoid any losses when a broker increases spread. For example, on news. This values should be 3-4 times lower then Diff to open.